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The Complete Guide to Creating Employee Incentive Programs That Work

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Employee incentive programs are key in boosting employee morale, motivation, and engagement. But finding the right incentive programs for your organization can be a challenge.

In this guide, we’ll go over the many types of employee incentive programs as well as best practices for choosing one for your organization.

How to Create Employee Incentive Programs Your Team Will Love

There are various types of employee incentive programs. Here, we’ll cover a few of them and discuss how each can help boost employee motivation.

Use Recognition and Rewards

Offering recognition is a great way to make your employees feel appreciated and motivated. In fact, 40% of American workers would put more energy into their work if they were recognized more often.  And according to one study, 88% of employees believe that it’s important for employers to reward them for great work. 

Part of why employees value recognition and rewards programs so much is because they incentivize team members to perform well in their roles. This positive reinforcement has proven to be a successful employee motivator.

Before implementing a recognition and rewards program, it’s important to understand the characteristics of effective recognition. Doing so will help maximize the effectiveness of the program.

Here are some essential characteristics to keep in mind:

  • Timely: Make sure you give recognition or rewards as soon as possible. This ensures that you establish a clear connection between rewards and positive behavior.
  • Frequent: Don’t just provide recognition once or twice a year. Doing so on a regular basis, you’re likely to have more engaged employees, lower turnover, and stronger business results. So, no matter how small the milestone or achievement, let employees know how important their contribution is to your company.
  • Specific: If you’re not specific about the achievements you’re celebrating, team members won’t know which of their actions contributed to your organization’s goal. SImply saying, “Thanks, great job” or handing over a gift card isn’t enough if there’s no explanation. In fact, it can come across as insincere or unclear.

You should also consider the different types of recognition, such as:

  • Social recognition: Tangible rewards are an effective way to keep employees motivated, but there’s nothing like social recognition. Appreciating team members in front of their colleagues offers a meaningful way to express your gratitude.
  • Points-based recognition: A points-based reward system allows each employee to collect points and choose rewards based on how many points they’ve accumulated. There’s a wide range of rewards in different categories you can offer. For example, you can offer an extensive catalog and let employees choose from products, gift cards, experiences, concierge, and more.

Leverage Referral Programs

Another excellent way to incentivize employees is to use a referral program. You can encourage your team members to help recruit or refer qualified candidates in exchange for a reward. Rewards might include things like gifts, trips, or vouchers.

Using a referral program is also a great way to encourage friendly competition among team members. For example, you can give employees that bring in the most candidates a large reward. You can also set up a tiered system where employees get more rewards based on how far their referral goes in the interview process.

So, let’s say that your employees receive 100 points ($10) for referring someone to your organization. But if the referral comes in for an interview, you can raise the reward to 250 points ($25).

If your employees are doing a great job of referring candidates, it’s likely to lead to a boost in confidence. And this can transfer to the work they do for your company. So, not only will you be cutting down on recruitment costs and hiring time, but you’ll also be improving employee engagement.

Invest in Professional Development

Investing in your employees’ careers can help your business thrive with strong talent. Doing so can also make them feel like you care about their growth and improvement. This is a win-win for you and your staff.

Creating a professional development program can give your employees opportunities and clear direction on improving their skills and advancing their careers.

You can either create your own professional development program or leverage a third-party learning management system. To create a career development program that works, you should:

  1. Consider business goals. Identify talent gaps to figure out what areas of your employees’ work need improvement. Then, align those needs with your business needs. Based on your goals, create a learning and development program that bridges the gap between current employee skill sets and those needed for the future.
  2. Talk to your employees. Meet with each team member and ask them about their career goals. Then, ask about any challenges they’re having in their current role and where they struggle the most.
  3. Incentivize. Before implementing your professional development program, provide incentives that encourage your employees to participate. For example, you might explain to your team that they’ll have the chance to win recognition points. You could also gamify your L&D courses to make them more interesting and fun.

Encourage Employee Profit Sharing

With profit-sharing, an organization gives employees a portion of the profit it earns. How much you reward will depend on your company’s earnings over a set period of time, usually once a year.

And the better your employees perform, the more profits your business is likely to bring in. The more profits you make, the more your employees earn in a profit-sharing system.

Because team members know that the work they do correlates with how much they get paid, they’ll be more motivated, efficient, and productive.

Keep in mind that this system works best for small businesses. That’s because, in a profit-sharing system, you’ll be dividing net profits among each team member. And the larger the team, the smaller the reward will be.

Implement Mandatory Mentorship Programs

Employee disengagement is one of the biggest contributors to employee turnover. In fact, according to Gallup, most employees aren’t engaged with their work, which has been a strong contributor to the Great Resignation.  And even if disengaged employees stay at their jobs, they often lack motivation.

They’re also unproductive and inefficient. When this happens, teams often fall apart. Even one disengaged employee can negatively impact the entire team, which jeopardizes the work and your organization’s processes.

Having a mentorship program in place that allows employees to develop their skill can be the key to getting team members back on track. A mentor can give regular feedback and advice on improving a team member’s performance. Plus, you can offer benefits for mentees with recognition and rewards.

Tips for Building the Best Employee Incentive Program

Now that you’re familiar with how some employee incentive programs work, let’s look at some best practices for implementing one for your organization.

1. Begin with Business Goals

Picking a type of program shouldn’t be the first step in creating an incentive program design. Instead, it should begin with you thinking strategically about what business goals you’re looking to achieve first with incentives.

For example, maybe you want to boost employee engagement. Or perhaps you’d like to raise retention rates. Whichever goal you want to work towards, make sure your employee incentive program properly aligns with it.

2. Keep Things Simple, But Challenging

Never create an employee incentive program where it’s extremely difficult for employees to earn rewards.

Instead, keep the performance bar high enough to challenge your employees to improve their work performance and get results, but low enough so that they’re not overworking themselves. Incentives can be lofty goals but attainable; however, consider having some smaller rewards that are easier to obtain and then build from there.

3. Don’t Completely Rely on Money as an Incentive

Money can be a great motivator, but it can lose its effectiveness after a while if you’re not engaging employees with other incentives.

For example, imagine that you’ve created a robust annual bonus program. As a result, you saw a significant boost in morale and productivity. But by the fifth year, your employees no longer see the bonus as an incentive. Instead, they expect the bonus as a normal part of their compensation.

So while monetary bonuses can be worthwhile, using them as a sole motivator may not produce the long-term results you desire. 

4. Ensure Your Incentive Program Revolves Around Employee Satisfaction

We talked about money as an incentive, and while it can be effective, it’s important to dig deep into what employees really want.

A simple way to figure out what employees want is to ask. So, start by asking them how satisfied they are with your company. Are they engaged with your company? Consider doing a survey asking them what aspects of your organization need improvement.

Then, talk about incentive programs. What types of rewards do they care about? Do they want more time off? What about paid vacation?

Earlier in this article, we discussed a few types of incentives your team members might be interested in. Below are many more:

  • Health and wellness
  • Tuition reimbursement
  • Team retreats
  • Flexible schedule
  • Personal fitness classes
  • Volunteer time
  • Office happy hours
  • Bring-your-own-pet-to-work day
  • Subscriptions
  • In-house amenities
  • Catered lunches
  • Entertainment
  • …and the list goes on.

And to maximize employee participation in your survey, offer them a certain number of points that can go towards the employee incentives program.

Consider Using an Employee Incentive Platform

Instead of creating your own employee incentive program, you can work with a company that does it for you.

First, the company can learn about your business goals, who you’re selling to and your budget before they custom-curate a catalog of merchandise. That way, employees can easily log onto the platform and “purchase” with their incentive points they earn from good work.

They can accumulate points for bigger items or spend them as they get them. They can also help you with goal-setting, training and education, and targeting communications to engage sales teams.

When searching for an employee incentive platform, look for one that offers:

  • Dynamic leader boards and social feeds that help foster collaboration and friendly competition.
  • Robust management features and visualization tools like dashboards, budget tracking, and reporting for an organized, metric-based approach to sales incentives.
  • Meaningful, exciting rewards, like digital and e-gift offerings, travel and experiential rewards, branded gifts, and white-label offerings – all based on your employees’ locations, culture, and other pertinent factors.

Choosing the Right Employee Incentive Programs for Your Company

The ultimate goal of employee incentives programs is to provide value to employees to boost engagement and retention. This is why it’s so important to make sure you build an employee incentive program that’s sustainable and offers long-term feasibility.

Unfortunately, it takes considerable strategy, planning, and time to build an employee incentive program that lasts and gets real results. And choosing the right program is tricky because it takes a lot of time and resources to figure out what employees actually want.

If this sounds like you, we can help. At Xceleration, we help organizations like yours figure out the best ways to create and sustain a culture of recognition. Our software solution offers a full suite of features, including:

  • Points-based program structure
  • Manager & peer recognition capabilities
  • Individual & team-based awards
  • Customizable internal controls for program administration
  • Gamification tools
  • Training & education modules and hosting
  • Quizzes
  • Custom contests for individuals and teams

So, don’t go it alone. Xceleration can help you achieve your engagement and recognition goals. If you’d like to learn more about how we can help, don’t hesitate to contact us today.

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