Table of Contents
- Benefits of Employee Incentive Programs
- Types of Employee Incentive Programs
- Paid Time Off
- Wellness Incentives
- Training & Education
- Flexible Work Options
- Experience Rewards
- Recognition Programs
- Key Considerations When Implementing Employee Incentive Programs
- Measuring the Success of Employee Incentive Programs
- Pick the Right Programs
One of the most persistent problems for companies all over the world is the lack of employee engagement. According to Gallup, only 23 percent of workers globally feel engaged on the job. The number in the U.S. is only slightly better at 32 percent. Considering that in the United States, roughly half of employees feel unengaged while at work, organizations have a serious problem they need to solve. One possible solution is through employee incentive programs.
Fortunately for companies, employee incentives can take many forms. Incentive plans may offer personalized vacation time, debt repayment, and flexible arrangements, all of which can motivate employees to work harder and stick around longer. While not every inventive program is the right fit for every company, picking the right ones can prove extremely beneficial for everyone involved.
In this article, learn the benefits employee incentive programs can offer, examples of the many types of programs, and how best to implement an incentive program for any organization.
Benefits of Employee Incentive Programs
“An incentive is a bullet, a key: an often tiny object with astonishing power to change a situation.”
Steven Levitt
An incentive program can prove beneficial for a company depending on what the program is. For example, an organization’s incentive plans may include employee recognition. In such a case, a survey from the Workforce Institute shows that 87 percent of workers felt a high level of inclusion when the company has a strong culture of recognition.
Other data shows that companies that implement these incentive strategies see additional benefits. Some research has shown that incentive programs can improve employee motivation by 85 percent while also increasing profits by more than $100,000 each week. A report from Gartner found that when a reward and recognition program is designed and implemented correctly, employee performance can improve by up to 11 percent. Additionally, the Incentive Research Foundation discovered that performance incentives led to more employee engagement, improved employee retention, and more loyalty to the organization.
Types of Employee Incentive Programs
“Every company, every boardroom in which I sit, has a plan, and they have objectives, goals, and a process. And to make it work, the pressure and incentive have to come from the top.”
Vernon Jordan
Today’s leading companies use a variety of incentives to engage their employees and increase performance. Below are some of the most effective employee incentive programs organizations are using.
Paid Time Off
1. Extra Vacation Days
Providing additional vacation days that employees can earn through goal achievement, tenure milestones, or other criteria is an incentive many workers would jump at. Employees see extra vacation as a coveted reward that provides a needed break from their daily responsibilities. Structuring the reward so that the extra days must be earned ensures stronger performance from those who want it. Just think of the difference between having 15 and 20 vacation days is.
2. Unlimited Sick Days
Traditional sick day policies that limit the number of days employees can take off due to illness or injury can lead to work burnout. By removing caps on sick days, company leadership gives employees flexibility to focus on recovery without worrying about attendance points. This prevents employees from dragging themselves into work while unhealthy, protecting the wider team. It also supports work-life balance by easing the stress of balancing sick time off with vacation days.
3. Sabbaticals
Providing employees with a paid, extended leave every 5-10 years of service gives them the chance to recharge. These multi-week or month-long sabbaticals allow employees to pursue personal goals like extended travel, passion projects, or skills development. A long break helps employees return to work with renewed focus and creativity. Sabbaticals can even entice employees to stick around in the years leading up to eligibility. Employees will enjoy these opportunities for self-improvement and family bonding outside of their vacation time.
Wellness Incentives
4. Exercise Facilities & Gym Memberships
Providing employees with exercise facilities or gym memberships encourages daily exercise and stress relief. The convenience and low cost of an onsite fitness facility make it easy for employees to exercise at some point during the workday. For organizations without space for an onsite gym, subsidizing gym memberships provides similar benefits. Regular exercise boosts energy, focus, and overall health. Gym access demonstrates the company values employee health and wants to provide the resources for employees to maintain physical fitness and strong mental health.
5. Healthy Office Snacks
Stocking nutritious snacks like fresh fruit, mixed nuts, Greek yogurt, and protein bars can give employees a healthy boost during the day. It also pushes them away from junk food like what is found in vending machines. Providing quality snacks shows the company cares about their employees’ well-being. The investment in quality food also makes employees feel valued. Healthy snacks power performance while also promoting overall nutrition.
6. Fitness Classes
Group exercise classes like yoga, Zumba, CrossFit, and boot camps offered onsite provide employees with fun exercise options. The convenience of taking a class right in the office makes it easy to fit in exercise before or after the workday. On-demand virtual classes are another option. Group classes build camaraderie and boost energy. Companies will see that fitness classes help elevate employee focus, positivity, and performance.
Training & Education
7. Tuition Reimbursement
Offering tuition reimbursement for advanced degrees, vocational coursework, and professional development classes enables continuous employee learning. Employee incentive programs like this shows workers their growth is a priority for the company. It incentivizes employees to build skills that prepare them for higher positions. Employees appreciate and take pride in companies investing in their education. It boosts employee morale while supporting career advancement.
8. Certification Funding
Many industries encourage specific certifications to signal proficiency and expertise. Covering exam costs for employees to obtain professional certifications in fields like HR, project management, IT, and more allows them to prove and advance their skills. Obtaining credentials gives employees a sense of accomplishment while also helping them progress in their careers. Along with funding exam fees, allowing time off for studying shows meaningful support.
9. Student Loan Repayment
Employees saddled with substantial student loan debt can find it distracting and stressful. Companies that create programs to help pay off all or a portion of student loans provide major financial relief that employees are exceptionally grateful for. Loan repayment assistance demonstrates deep commitment to employees’ overall well-being. When employees don’t have to worry about debt, they can redirect their focus to their work and career growth. It also boosts loyalty and tenure, as repayment often requires a commitment to remain with the company for a set time period after disbursement.
Flexible Work Options
10. Remote Work
Enabling employees to work from home fully or on selected days of the week provides schedule flexibility and freedom. Remote options can alleviate stressful commutes, make it easier to focus, and allow employees to combine work and personal errands more seamlessly. Remote work can provide the autonomy that top performers thrive under. Offering remote work signals trust in employees and accommodates individual work styles. Just be sure to provide collaborative tools like Slack and Zoom to keep remote staff connected.
11. Flexible Scheduling
The traditional 9 to 5 doesn’t accommodate every every employee’s needs. Allowing adjustable start and end times within a core band—like 7 in the morning to 7 at night—gives employees control over their schedule. Parents can better manage school drop-offs and pickups. Employees can avoid traffic by commuting earlier or later. Set core hours for necessary collaboration, but otherwise enable employees to self-direct. Make flex scheduling available to all staff to prevent resentment.
12. Unlimited PTO
Vacation day limits can lead to employees avoiding taking time off. With unlimited PTO, employees have complete control over their paid time off. This signals deep trust in employees to take appropriate time to recharge their batteries. Unrestricted PTO empowers employees struggling with burnout to take extended breaks when needed. You may still want to set guardrails like requiring manager approval for extended absences.
Experience Rewards
13. Paid Conference Attendance
Covering the costs for employees to attend relevant industry conferences, seminars, and events expands their knowledge and networks. These professional learning opportunities expose employees to new ideas, best practices, and technologies to bring back to the organization. Paid attendance motivates participation and shows the company is willing to invest in development. Even small local events can give workers a fresh perspective. No matter the size of the conference, employees return energized and eager to apply what they learned.
14. Company Retreats
Company retreats that bring together teams for immersive experiences outside the office build trust between coworkers. Unique destinations help with team-building and creative thinking. Away from regular work routines, employees will get new ideas. Bonding with colleagues and leaders in relaxed environments also breaks down silos between departments. Company-wide retreats with team building activities thoughtfully blend connection, learning, and fun. Employees feel valued through these memorable adventures shared with their coworkers.
15. Sports/Concert Tickets
Offering employees tickets to popular sporting events, concerts, shows, and other local entertainment is a great way to reward good performance. Attending exciting events together as a department or company builds up professional relationships. These outings help employees connect on a more personal level to foster trust and communication. Activities like these outside of work remind employees they are valued. Memorable perks can improve interpersonal relationships that positively influence collaboration and performance.
16. Group Meals
Connecting over catered lunches, happy hours, dinners, and other company-sponsored group meals can also creating bonding opportunities. Casual conversations over meals enable colleagues to gain more understanding of each other. New hires especially benefit by getting to know seasoned team members personally. Recurring group meals demonstrate culture is a priority, allowing employees to plan for them. Employees feel recognized and included through this dedicated face time.
Recognition Programs
17. Employee of the Month
Singling out an exceptional employee each month with an “Employee of the Month” award calls positive attention to truly outstanding work. Highlight employees that go above and beyond their usual responsibilities to demonstrate values like teamwork and customer focus. Consider throwing in an additional incentive, such as an extra vacation day or gift card. Celebrating top performers, other employees will want to work harder to earn the same award. Monthly awards build pride and may even trigger some friedly competition.
18. Peer Bonus
Enabling employees to reward teammates through peer bonuses boosts teamwork and collaboration. A typical program has employees nominate and vote to select the most deserving peer recipient each month or quarter. It’s a way to personalize recognition. Earning bonus money from coworkers has a special meaning for the recipient. Giving employees a voice builds accountability and bonding between colleagues. A points system where employees receive recurring allotments to award others also works. Essentially, peer bonuses motivate employees to bring out the best in each other.
19. Birthday Acknowledgment
Celebrating employee birthdays shows you care for your staff as individuals. You might send them ecards, throw a party, or give them gift cards. Handwritten notes recognize each employee’s special day. Costs are minor relative to how well these events build relationships. Knowing their birthday won’t go unnoticed either. And being recognized in front of colleagues can make someone feel appreciated.
20. Work Anniversary Acknowledgment
Honoring employee work anniversaries demonstrates that companies value loyalty and longevity. Celebrate milestones like 5, 10, or 15+ years of service. Organizations may even reward employees with plaques, apparel, or gift cards. Company-wide announcements call attention to long-serving employees and their hard work. Recognizing work anniversaries shows that the organization is a place where employees enjoy building their careers. Additionally, workers feel valued for their commitment when receiving this acknowledgment.
Key Considerations When Implementing Employee Incentive Programs
“Incentive structures work, so you have to be very careful of what you incent people to do, because various incentive structures create all sorts of consequences that you can’t anticipate.”
Steve Jobs
While incentives for workers can be effective if executed well, there are some important factors to weigh when you develop a program. Conducting due diligence will help ensure your incentives achieve their full potential. The following are some key items you should consider.
- Understand Employee Preferences: Get input from employees on what incentives would provide maximum motivation. Conduct surveys and focus groups to identify top choices, and emphasize those offerings. Don’t assume you know what employees want. Instead, go straight to the source.
- Choose Appropriate Incentives: Consider your company size, industry, budget, and culture when coming up with employee incentive ideas. For example, unlimited PTO may not work for small teams, while flex scheduling won’t help much in manufacturing. Choose perks that make sense.
- Budget: Factor the costs of employee incentives into your budget. Some offerings, like training stipends, have defined costs, while others, like unlimited PTO, depend on utilization.
- Develop Clear Reward Criteria: Tie incentives to defined goals, performance levels, or tenure milestones. Vague reward criteria will only undermine motivation. Be specific on what merits an incentive and communicate this with the entire organization.
- Allow Customization: Not every incentive will be for everyone. Provide choices from a menu of options. Allowing personalization can improve satisfaction and will ensure employees take advantage of the programs.
- Monitor for Overuse: If you offer unlimited incentives like PTO, occasionally review usage data to confirm employees aren’t abusing it. Transparency and moderation are key to preventing overuse.
Measuring the Success of Employee Incentive Programs
“The desire of reward is one of the strongest incentives of human conduct; … the best security for the fidelity of mankind is to make their interest coincide with their duty.”
Alexander Hamilton
Employee incentives can be beneficial for workers and the organization, but you also need to determine the level of effectiveness with data. Here are several ways you can quantify the impact of incentives.
- Employee Retention: Compare retention rates before and after you started an incentive program. A positive change can indicate the program is working as intended.
- Employee Surveys: Conduct annual surveys to measure employee satisfaction. If they like the program, they’ll let you know.
- Goal Achievement: If incentives are tied to goals, track performance data. Improved results show that the incentives are having a positive impact.
- ROI Calculations: Add up program costs and benefits. Increased productivity, lower turnover, and other benefits should outweigh costs.
Pick the Right Programs
“Call it what you will, incentives are what get people to work harder.”
Nikita Khrushchev
Offering up perks at the office is nothing new. For years, many companies have offered up basic incentives like snacks or casual Fridays. But if organizations really want to move the needle when it comes to performance and retention, they need to tailor their incentive programs so they reward employees in the most effective way. Ultimately, the right kind of incentive program will show that leadership truly cares about how they treat their employees, and that can inspire better work and more loyalty in a way few other policies can.
There are other types of programs that can also help employees be better workers. For example, employee wellness programs focus on the long-term health of employees. These programs consist of health fairs, seminars, and screenings to help workers improve their health and deal with the stress and burnout they may face regularly. Like incentive programs, a wellness program can improve productivity among the workforce while also decreasing overall absenteeism. Combining an incentive program with a wellness program may be a smart strategy for any business leader looking to maximize both.
If you’re looking for another program to offer your employees, specifically to improve leadership behaviors, check out the following article:
What to Know About Leadership Development Programs
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- Bucketlist Rewards. (2021, September 14). Performance incentives for employees: Motivating and rewarding excellence. Bucketlist Rewards. https://bucketlistrewards.com/blog/performance-incentives-employees
- Gartner. (2020). Optimizing reward and recognition programs. https://www.gartner.com/en/documents/3969676
- ZIP Training. (2022). How incentives play a role in motivating employees. ZIP Training. https://ziptraining.com/employee-engagement/role-of-incentives-in-employee-motivation.html
- Forbes Technology Council. (2021, August 13). How innovative incentive and recognition programs motivate employees to do more. Forbes. https://www.forbes.com/sites/forbestechcouncil/2021/08/13/how-innovative-incentive-and-recognition-programs-motivate-employees-to-do-more/?sh=7197730d729a
- Gallup. (n.d.). Global indicator: Employee engagement. https://www.gallup.com/394373/indicator-employee-engagement.aspx