5 Benefits of Employee Incentive Programs and How to Start

Let's face it; work is hard, and as humans, we require some motivation and morale boost to perform at our best consistently. Your employees are no different, so when they show up and give their best, contributing to your business's success, it's essential to acknowledge their efforts. 65% of employees even said they’d work harder if they felt management noticed their contributions.

But unfortunately, one in 10 employees say they don’t feel valued at all, including nearly half of the women (48.8%) and people of color (49.3%) surveyed. This statistic presents a significant opportunity to improve productivity in the workplace. Low employee morale in the workplace can lead to low productivity and profitability, ultimately preventing your organization from reaching its goals. And today, more than ever, leaders and HR are responsible for keeping employee engagement high.

There are few better ways to motivate your employees to continue performing at their best and inspire them to achieve even more than an employee incentives program. Employee recognition and incentives make them feel valued and appreciated and make it far more likely that they will keep bringing their A-game every single day.

In this guide, we'll take a much closer look into what employee incentive programs are, their benefits, and how you can use them to drive the success of your business.

What are Incentive Programs?

When employees go the extra mile, expend discretionary effort, and perform duties beyond their job descriptions, it's both fair and practical to implement a system to reward and recognize their contributions. If there’s no reward for going above and beyond or recognition for hard work, they often end up feeling unappreciated and burnt out — and are far less likely to continue putting in the same effort.

That’s why many companies use employee incentive programs. Employee incentive programs are different ways of motivating workers and rewarding outstanding work, leading to increased productivity and performance. They help companies to attract, engage, and retain talent. Incentive programs also aim to prevent employee burnout, which contributes significantly to disengagement, low morale, and high turnover, all of which can harm your business.

Every business looking to grow, increase engagement, and produce better work must have employee incentives aligned with its balance sheet.

5 Benefits of Implementing Incentive Programs

There's no doubt that employee incentive programs have massive benefits for you and your employees. Here’s a closer look at five of those benefits.

1. Increased Productivity

Everyone knows productivity is key to the success of any company. But how do you achieve high productivity if your employees — the driving force of your business — are not motivated to give 100% every time they show up?

Incentives are a great way to encourage employee productivity. Incentive programs boost their morale and enable them to complete more work in less time, which is precisely what your company needs to increase profitability and achieve its goals. Employee performance and productivity are 14% higher when organizations have recognition programs.

2. Better Employee Retention

A study showed that about 46% of employees have switched jobs due to needing more recognition and engagement. Every business should pay attention to this statistic, especially since retaining valuable talent is more important than ever.

There is a strong relationship between employee incentives and employee retention. Offering incentives to your employees goes beyond just motivating them to do their work. It also encourages long-term retention — employees are 56% less likely to be looking for a new job at companies with recognition programs.

Increasing retention helps organizations save on hiring and training costs and boosts engagement, which results in more productive employees and cuts business costs. Implementing effective employee incentive programs is the way to go if you want to keep your best talent while working toward your revenue goals.

3. Positive Work Environment

There's no denying that a toxic work environment is terrible for business. In this environment, employees are unhappy, lack motivation, and are less productive. Employee incentive programs help to create a positive, encouraging, and collaborative environment where every team member is appreciated and valued. Employees are also 73% less likely to say they “always” or “very often” feel burnt out when they receive some type of recognition regularly.

Lowers Costs

Although employee incentive plans often have a cost, there are low- and no-cost ways to recognize employees. Managers can recognize great work with public shout-outs in team Slack channels, and leadership can call out top performers in company-wide meetings. Monetary gifts don’t have to be big bonuses — treating your employees to lunch or buying coffee is appreciated, too.

Any investment in making your employees feel good about their work will pay off by saving you money in other areas. An effective incentive program will save you costs associated with recruitment, employee turnover, and low employee productivity.

5. Promotes Strong Team Culture

Every company's progress is strongly dependent on the collaboration of employees. The more a company encourages the spirit of teamwork, the higher its chances of being successful.

With the right incentive program, you can foster collaboration and teamwork rather than competition. There are several incentives that encourage employee cooperation:

• Bonuses or prizes awarded based on the completion of team or business objectives
• Profit-sharing and stock options
• Company-sponsored retreats or trips

Top 5 Most Effective Incentive Program Ideas

With so many incentive programs, finding the right one that best fits your organization's culture and aligns with your employee's needs might take time and effort. Below, we'll cover some of the best incentive program ideas to achieve your desired results.

1. Start an Employee Recognition Program

Now, more than ever before, employees want recognition in their workplace. Awards and bonuses are outstanding, but often, giving recognition is just as powerful. Celebrate your employee's milestones and achievements publicly with a formal recognition program.

According to Anthony Martin, Founder and CEO of Choice Mutual, "A recognition program is a key component of the employee incentive experience. Organizations that frequently practice employee recognition are likelier to see higher employee retention and engagement rates than companies that don't."

Many top companies host annual awards for the best-performing employees, which creates a culture of recognition and makes employees feel acknowledged for putting in the extra work.

There are also lots of other ways to formally recognize your employees when you use an employee engagement software solution:

• Give Shout Outs that are shared company-wide to highlight outstanding performance
• Celebrate milestones like birthdays and anniversaries, giving everyone the chance to chime in
• See colleagues’ in-progress and completed goals and add words of encouragement to goal updates shared in your internal news feed

2. Provide Performance Incentives

A little bit of extra compensation might be what your team needs to blow their goals out of the water. Try performance-based incentives to reward employees for consistently delivering high-quality work and meeting specific goals and targets. The incentive acknowledges the employee's contribution to the company and gives them the motivation to continue their hard work.

"Offering employees incentives for their hard work is a great way to show them that you appreciate what they are doing,” said Greg Heilers, Co-Founder of Jolly SEO. “It will motivate them to keep up their exceptional performance and push them to go the extra mile.”

Here are a few ways you can incentivize performance:

1. Individual bonuses
2. Commissions
3. Profit-sharing
4. Employee stock ownership plans
5. Additional paid time off
6. Travel incentives
7. Other rewards like prizes or gift cards

It's essential to apply various approaches when building out your rewards. Survey your employees to find out which incentives they’d find most motivating.

3. Health and Wellness Incentives

It's great to encourage your employees to take a much-needed exercise break, but offering them an incentive is even more rewarding. Show employees that you care about their physical, mental, emotional, and social health with employee wellness incentives.

You’ll be investing in your employee's health by giving prizes and bonus health benefits, you will get your return on investment through fewer sick days, better performance, lower healthcare costs, and higher employee engagement.

A few ways you can apply employee wellness incentives in your business include:

• Providing healthy in-office snacks
• Hosting free health screenings
• Offering rebates for gyms or other fitness memberships

Some organizations even reward employees that hit significant health and wellness milestones, such as completing a steps challenge or quitting smoking.

4. Offer Employee Referral Incentives

Offering a monetary incentive for successful employee referrals is a win-win situation for everyone. With an employee referral program, your employees receive a bonus for their referrals while you get top-notch candidates that have a high chance of becoming thriving, longtime employees. 88% of employers say referrals are their best source of candidates.

5. Invest in a Professional Development Program

When you offer professional development opportunities to your employees, it gives them a chance to acquire new skills and knowledge and shows them that your organization cares about their growth. Employee development is also a top priority for job seekers and your workforce — 94% of workers would stay longer if their company invested in their development.

In return, your company benefits from employees that are more efficient and deliver better work.

There are various ways to engage your employees in professional development:

• Create a custom learning program
• Implement third-party learning tools
• Pay for or reimburse employees’ educational expenses for degrees, certifications, or other special credentials

There's enough evidence to prove that employee incentive programs are a great way to drive better engagement and reward your top performers. It's important to note that not every incentive program is created equally. Incorporate employee recognition and choose the right incentive program to motivate and retain your top talent.

Get more ideas for how to boost employee engagement at your organization with our resource bundle, where you’ll find:

• How to start recognizing your employees now
• The tech stack you need to analyze and increase employee engagement
• Ways to get executive buy-in for engagement software investment

Download ClearCompany’s Employee Engagement Resource Bundle.