The Right Way to Build an Employee Incentive Program

The Right Way to Build an Employee Incentive Program

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New study data proves that employee engagement is on the decline — and many organizations don’t know what to do about it. While there’s no instant fix for employee engagement, employee recognition, rewards, and incentive programs are designed to recognize and reward desired behaviors and contributions on an ongoing basis to ensure employees feel seen, heard, and valued. Because of this, a well-thought-out incentives program can be a powerful tool for keeping your team engaged and building a positive culture.

But here’s the key: effective incentive programs go beyond just offering rewards for taking a specific action. Let’s explore what makes an incentive program truly successful.

What is an Employee Incentive Program?

An employee incentive program is a structured plan for recognizing and rewarding employees for achieving specific goals, demonstrating desired behaviors, or contributing to the overall success of the organization. Unlike traditional sales incentive plans, a broader employee incentive program should be inclusive and should encompass all employees across departments – from sales and product to customer success and operations. Company-wide incentive programs are not necessarily tied to financial compensation, either. Organizations can choose how to reward employees who meet the criteria for specific incentives, including with additional time off, points that can be redeemed for an array of reward choices, or other alternatives.

The Right Way to Use Employee Incentives

The true power of an effective employee incentive program lies in its ability to motivate employees while simultaneously also building a culture of appreciation. Here’s how to ensure your program achieves both of these goals:

  1. Focus on recognition alongside rewards: While tangible rewards are motivators when it comes to driving action, timely recognition for a job well done also holds immense value. A simple “thank you,” or a public acknowledgment can go a long way toward incentivizing desired actions.
  2. Align incentives with company values: Tailor your program to recognize actions that embody your company culture. Does your team value innovation? Reward employees who come up with creative solutions to problems. Are you committed to diversity, equity, and inclusion goals? Reward employees who volunteer to lead Employee Resource Groups (ERGs).
  3. Personalize the experience: One-size-fits-all approaches rarely work. Offer a variety of incentives so that employees from a range of departments, seniority levels, and backgrounds have an opportunity to complete at least a few incentives each.

Understanding Employee Motivators

While financial rewards can be a motivator, a well-designed incentive program goes beyond dollars. Employee motivators such as the chance to do meaningful work, opportunities for learning and growth, and a positive work environment, all play a crucial role in employee satisfaction and engagement. By aligning your incentive program with these intrinsic employee motivators, you can create a program that truly resonates with your workforce.

Illustration showing the right way to use employee incentives: accompany rewards with recognition, align incentives to company values, and personalize the experience.

4 Best Practices on How to Build an Employee Incentive Program

Now that you understand the importance of appreciation-driven incentives, here’s a step-by-step guide to building a successful employee incentive program:

1. Define your goals and desired actions

  • Start with the “why.” What are you hoping to achieve with your incentive program? Increased productivity? Improved collaboration? Better customer service? More timely completion of mandatory compliance and IT training? Define clear, measurable goals for your program that align with your overall business objectives.
  • Identify desired behaviors. What employee actions will help you achieve those goals? Do you want to incentivize employees who regularly share best practices? Or those who go above and beyond to help colleagues? Outline specific behaviors that embody your company values and contribute to success.

2. Secure Budget and Resources

  • Determine your budget. Consider how much you’re willing to allocate to the incentive program, taking into account potential rewards, program administration costs (if any), and software platform fees (if applicable).
  • Explore technology solutions. Many organizations utilize dedicated software platforms for Employee Recognition & Rewards. These R&R platforms streamline program administration by offering pre-built incentives templates, automating points allocation and approvals, and providing reporting tools to track progress and measure program effectiveness.

3. Design the Program Structure

  • Variety is key. Offer a diverse range of incentives and associated rewards to cater to different employee preferences. Rewards could include merchandise, additional paid time off, professional development opportunities, or even contributions to employee wellness programs.
  • Set clear guidelines. Establish clear criteria for how employees can earn rewards and how the program operates. This includes outlining the reward tiers, point system (if applicable), and any limitations or caps on incentive claims.
  • Designate an administrator. Identify a point of contact responsible for managing the employee incentive program, approving rewards, and addressing any employee questions.

4. Treat the Launch as Just the Beginning

  • Create initial buzz. Generate excitement for the incentive program’s launch with clear and concise communication. Highlight the objectives and benefits, explain how employees can participate, and showcase the potential rewards earned by completing various incentives.
  • Promote ongoing engagement. Provide regular updates and reminders about the program, including information about seasonal incentives or special events. Utilize multiple communication channels, such as email newsletters, company intranet announcements, and even digital signage in break rooms, to maintain program visibility and reach as wide an employee audience as possible.
  • Gather feedback and evolve. Continuously collect employee feedback on the program. This will help you identify the most impactful incentives and rewards, flag areas for improvement, and tailor the program to better meet employee needs.

Employee Incentives FAQs

Q: Are employee incentive programs effective?

Absolutely!  Research (and our own customers’ experience using WorkTango incentives) shows that well-designed employee incentive programs can lead to a significant increase in employee engagement, motivation, and performance.  Effective programs can also improve  retention rates and contribute to a positive work environment.

Q: Are incentive programs a good business investment?

Yes, employee incentive programs can be a strategic bet with a strong return on investment (ROI).  By motivating employees to achieve goals and contribute to company success, incentive programs can lead to increased productivity, improved customer satisfaction, and, ultimately, higher profitability.

Q: How often should I incentivize my team?

The frequency of incentives will differ depending on your program’s goals and employee preferences.  Consider a mix of short-term incentives for immediate achievements paired with long-term incentives for sustained performance. Regularly recognizing and rewarding employees can help maintain program visibility and engagement.

Q: How do performance reviews work with employee incentive programs?

Employee incentive programs can be a valuable complement to performance reviews.  Incentive programs can provide ongoing recognition for specific achievements throughout the year, while performance reviews offer a more comprehensive look at employee contributions and areas for development.  By aligning these two practices, you can create a holistic approach to employee motivation. Here at WorkTango, we recommend more frequent performance and development conversations versus just one annual formal performance review.

Q: What is the key to a successful employee incentive program?

The key to a successful incentive program lies in understanding and addressing employee motivators.  While rewards are important, a program that fosters appreciation, recognizes desired behaviors, and aligns with your company culture will have a far greater impact on employee engagement and overall success.