Companies are embracing employee incentive programs as the key to increasing employee engagement, retention and job satisfaction.
What are employee incentive programs?
According to the Society for Human Resource Management (SHRM), employee incentive programs stem from the theory that rewards drive behavior. An organization that rewards employees with extra benefits above and beyond standard salary and benefits is often more sought out by employees than an organization that does not.
Using a structure of rewards and recognition, employee incentive programs, sometimes referred to as employee recognition programs, are implemented by companies to help motivate employees and make them feel more invested in their jobs and the company for which they work.
Employee incentive programs work by offering “perks” in the form of extra benefits, such as health and wellness and flextime to opportunities to earn extra money through years of service or referral bonuses.
Incentive programs can go a long way toward employee retention and helping attract new talent as well. Businesses with successful employee incentive programs often have a positive company culture and the reputation of being “great places to work.”
What are the benefits of incentive programs?
According to a Cornell University study, effective employee incentive programs can increase employee performance by as much as 44 percent and motivate up to 66 percent of employees to remain with their company.
Employee incentive programs have been proven to help increase employee and company productivity, assist in retaining high performers, motivate staff to exceed their goals, create a company culture of high performance and improve overall employee morale.
According to a study by Achievers, an employee recognition and engagement platform, 69 percent of employees cite recognition and reward programs as motivation to stay at their current job. And organizations that rate their culture of recognition highly are three times more likely to see increased employee retention and over twice as likely to see increased employee engagement.
Giving incentives to high-performing employees can be considered as an act of success sharing. This gives your workforce extra motivation to take ownership of their work.
Evaluating an Employee Incentive Program
Before you even begin building an employee incentive program, there are a few things you should do. First, do some research on your options to help assess the scope of your program.
Decide what your goals are for your incentive program, the outcomes you’re seeking and how you’re going to measure them. Then, take the time to set a clear budget.
It doesn’t matter whether you’re a small business owner with a few employees or a large corporation with a dedicated human resources department; the cost of implementing your benefits can be tailored to your company’s budget.
Next, you may want to survey your employees to get an idea of what incentives would move the needle for them. For instance, you may find that employees value more flexibility in the workplace versus additional time off, or that they rank health and wellness benefits higher than tuition reimbursement.
Make sure the program aligns with your goals as a business. Effective employee incentive programs can draw parallels between employee satisfaction and business objectives. Think about what your company needs to accomplish, and find ways to use your incentive program to move employees toward that end.
That said, when asking for employee feedback, be cautious about asking them about incentives you have no intention of offering – if those rank high on the list and are not included in the final package, employees will notice.
Receiving feedback on a comprehensive list of incentives you are considering is more likely to set you up for a more effective employee incentive program.
What are some effective employee incentives?
When looking at building an effective employee incentive program, companies have a number of choices when it comes to the benefits they can offer.
There are a number of options in which to recognize employees.
Health and Wellness Incentives
Company wellness programs not only improve and promote employee health, they can help the bottom line of an organization by reducing the amount of employee sick time as well as employee burnout.
Wellness programs could range from offering specific company perks, such as an on-site gym or discounts on gym memberships, standing desks and vending machines with healthy snacks to investing in a corporate wellness platform that offers incentives, such as points-based wellness challenges, nutrition counseling, virtual fitness classes and more.
Some ideas for components of a health and wellness incentive program include:
- Employee “swag” like water bottles, yoga mats, gym bags or fitness trackers
- Discounts on gym memberships or health equipment
- Time off to exercise during work hours
- On-site fitness classes over the lunch hour
- Onsite health and biometrics screenings
- Smoking cessation programs
- Ergonomic office accessories, such as “deskercise” balls
- Health premium reduction for preventative care, such as dental cleanings, mammograms and colonoscopies
- Onsite walking paths
- Onsite wellness workshops or health fairs
- Wellness challenges on a regular basis that reward goals, such as weight loss or minutes of activity per day
- Destress zones where employees can meditate, stretch or take a quick nap
- Personal mental health days
- Educational webinars related to physical and mental health
- Wellness newsletters full of articles, tips and recipes
Employee Assistance Program
An Employee Assistance Program, or EAP, is a benefit that provides free, confidential resources to employees for personal, legal, financial and other problems that may be impacting their performance, lifestyle and physical and mental well-being.
Employees typically have access to an EAP hotline 24 hours a day, so there is no need to wait to seek assistance. If an appointment with a medical professional or counselor is necessary, the employee can arrange to see one in just a few days. Because employees can call anytime, they do not have to worry about calling from a work phone.
This important employee incentive can help organizations by lowering risk and liability, improving employee satisfaction and decreasing overall employee stress.
Another popular component of incentive programs is financial. Financial incentives can drive healthy competition, increase productivity and ambition among team members. Some ideas for monetary incentives include:
Monetary rewards like bonuses can be given as a percentage of company profit, which incentivizes employees to work harder to meet company goals. They can also be given for meeting a sales quota, production requirements or other levels of productivity.
You can also offer monetary bonuses to celebrate birthdays or years of service.
These rewards can come in the form of cash, gift cards, a gift selection from a company catalog or some other monetary compensation like a free gym membership, company merchandise or tickets to a local event.
A profit-sharing plan gives employees a share in their company’s profits based on its quarterly or annual earnings. It’s a benefit that directly ties how well a company does financially to employee performance.
It is up to a business to decide how much of its profits it wishes to share. Contributions to a profit-sharing plan are made by the company only; employees cannot make them, too.
An organization can think out-of-the box when it comes to pay raises.
Above and beyond a yearly cost of living wage increase, employers can offer raises to team members as incentives for meeting certain production or sales goals, completing training programs or years of service.
Pay raises are seen as recognition of a job well done and go a long way toward overall employee satisfaction and job retention long term.
While not an actual monetary reward, this perk can help your employees financially in the long term.
Offering free one-on-one sessions with a financial adviser can help your employees manage their budgets, save for the future and plan for retirement. Offering a financial group class or lunch-and-learn is another popular reward that companies can easily implement.
Another popular incentive is to reward employees for referring talent to your company. Before posting an open position externally, let your employees know the position is open and offer a bonus for a referral.
Some organizations offer the bonus once the referred candidate has been hired and been with the company for a specific period of time. Other companies use a points-based system, in which they provide the monetary incentives based on the journey of the candidate.
For instance, an employee may receive 100 points for submitting a referral to the human resources department, another 100 points if that candidate is interviewed, then another 500 if the candidate is hired. Those points can then be redeemed for cash.
Professional Development Incentives
Professional development is another potentially important aspect of your employee incentive program.
Professional development covers a number of areas, from completing a formal education to obtaining a certification in a specific area to taking training to keep up with changes in a particular industry.
Some ideas include:
For many employees, the costs for continuing education – or any education, for that matter – can be prohibitive.
An organization that offers tuition reimbursement as part of its employee incentive program shows its team members it’s invested in them by offering to pay all or a portion of the costs for employees to:
- Complete a degree
- Obtain a certification
- Complete industry-related educational classes or training
- Attend a conference or seminar
An organization that offers tuition reimbursement may also provide employees paid time to study, pay for books, costs of certifications and offer monetary incentives for completing a course.
Formal and Informal Professional Development Opportunities
Structured classes, whether in person or online, are examples of formal learning that encourage employees to set aside and devote dedicated time periods to the educational opportunity.
Webinars and podcasts are examples of informal learning that give your employees options that can be done at their leisure. Offering a combination of formal and informal learning appeals to the varied work styles of your employees. Offering paid time to attend and complete these courses is important to encourage participation and completion.
Work-Life Balance Incentives
One of the most important factors in employee satisfaction today is the balance between their work life and home life, and it can be a critical component of your employee incentive program.
More and more, employees are making work life balance a priority. In some cases, these incentives rank higher in importance than employee pay. Here are some work life balance incentives that you may want to consider for your employee incentive program.
Flexible schedules can involve anything from the time employees start and end their day, floating holidays, time off for appointments or a child’s school activity, longer days and a shorter week or the ability to work from home.
Offering flexible work as an employee incentive is a great way to help take the pressure off of employees who continually try to balance their work obligations with their personal lives.
In fact, flexible schedules are becoming more and more desirable to employees and an important part of a company’s work culture; and therefore an important component to consider in an incentive program.
Extended Leave Policies
Offering paid leave policies over and above maternity leave can be quite palatable for employees. Benefits like paternal leave and parental leave for adoptive parents, time off to care for an elderly family member, educational leave or sabbaticals are examples of extended leave policies to consider.
Additional Time Off
Employee burnout is a real thing, and hoarding precious vacation days doesn’t help employee stress levels. Ensuring your employees have adequate vacation days as part of your employee incentive program will enable them to take time off as they need it, rather than “saving” the days in order to use them when their kids are off school or home sick.
Some organizations are moving away from separating sick days from vacation days, lumping them into “paid time off,” or PTO. This makes it easier for employees to take the time off as they see fit, without having to necessarily explain the reason.
Volunteer Time Off
Employees and employers alike are also finding the benefits of offering volunteer time off, or VTO, in their incentive program.
Volunteer time off gives employees the chance to help out in their community, and if performed as a department or team, can be a great employee bonding opportunity. Employee incentive programs that include VTO also help promote the company as one that gives back to its community, which can help build a company’s reputation and desirability.
Other Fun Incentives
There are a number of incentives and rewards that may seem small, but can go a long way toward improving productivity, employee well-being and even the morale around the office. Some ideas of small ways to reward employees include:
- Relaxed dress code
- Dry cleaning service
- Bring your pet to work day
- Office happy hours
- Team retreats
- Onsite massages
- Coffee bar
- Fresh fruit once a month
- Company picnic
- Lunch with the CEO
- Catered lunches or food trucks
Implementing Your Employee Incentive Program
Now that you have some ideas on components to consider, how do you implement the program?
Again, the most effective employee incentive program is engaging and offers rewards that are important to employees, while still benefiting the business owners long term.
Take the time to survey your employees to find out what’s most important to them, then implement those incentives based on your business’s capabilities and budget.
Promote the Program
Be sure to promote the program heavily, both to employees, candidates and potential candidates. Ensure that leadership and other managers in your business are touting the different aspects of the program and encouraging employees to take advantage of the offerings.
Incentive programs work only if employees are aware of them. Consider branding your incentive plan as a package and including it prominently in your benefits brochure, website and social media page.
If your company has a newsletter or intranet, provide employees with updates on these incentives, or consider highlighting one or more periodically to keep them front of mind.
Employee benefits like health insurance and retirement plans are standard for most businesses nowadays. Employee incentive programs are becoming a way for companies to set themselves apart from each other as employees look for more than just pay as a determination of where they want to work.
Offering a robust employee incentive program will set your business apart from the others and will go a long way toward increasing employee engagement, productivity, retention and morale. Do you need help planning an employee incentive program? Contact our Employee Benefits Services today.