Rewarding Excellence: 10 Employee Incentive Programs Your Staff Will Love

“Disengagement is often defined by its symptoms, which include slow working tempo, lack of interest in work, easy and prolonged distraction, and minimal output,” the authors of a research paper published in the Handbook of Business Strategy wrote.

Sounds like a manager’s nightmare, right? Employee disengagement has a devastating impact on business outcomes, too: It costs the global economy $8.8 trillion dollars – or 9% of global GDP, according to Gallup’s 2023 State of the Global Workplace report.

Enter employee incentive programs, which can help you combat these negative effects and boost the enthusiasm of your staff. An employee incentive program is a structured system designed to motivate and reward employees. The types of incentives can vary, but the benefits are undeniable – think, enhanced morale, improved productivity, better retention, and more.

So, if you don’t already have an employee incentive program, consider implementing one. If you have one, consider optimizing it. With trends like an increasingly remote workforce and challenges such as the rising cost of living, it’s important to arm yourself with the right knowledge and tools to offer employees incentives that will make a difference.

Here are 10 employee incentive programs your staff will love – along with everything you need to know to successfully implement yours. 

What Are Employee Incentive Programs?

Employee incentive programs are systems and strategies that you can leverage to reward employees for achieving goals or demonstrating behaviors that align with your culture. These programs aim to increase morale, boost productivity, encourage loyalty, and foster a positive company culture. 

The 3 Different Types of Employee Incentive Programs

There are different types of incentive programs. Some are compensation-based, some are recognition-based, and some are reward-based.

1. Compensation-based incentives take the form of monetary and non-monetary benefits associated with an employee’s job. Salary, commission, bonuses and benefits such as healthcare, paid time off or retirement plan contributions fall into this category. This type of incentive program aims to provide competitive remuneration and perks to employees, which makes your organization desirable to current employees and appealing to job seekers. It's not necessarily performance-driven, though things like bonuses and commission can be role-specific and driven by targets. 
2. Recognition-based incentives are all about acknowledging and appreciating employees’ contributions. From offering verbal praise to encouraging peer recognition and hosting employee awards, this type of recognition can take different forms. While compensation aims to meet employees’ needs in exchange for the work they do, recognition programs help team members feel valued and respected on a deeper level. 
3. Reward-based incentive programs can include cash prizes, gift cards, travel or merchandise. The idea is straightforward: Offer tangible rewards when employees achieve specific objectives or milestones. This is a powerful motivator because it encourages employees to strive for excellence and know that their performance will be rewarded in concrete ways. As a leader or HR professional, rewards can help you encourage certain behaviors, meet organizational goals and increase performance.

The Difference Between Incentives and Rewards

Now that you know more about the nuances between different types of incentive programs, you may be wondering what the difference is between incentives and rewards. They sound similar, after all, and people often use the two words interchangeably.

Both can play an important role in your employee engagement strategies, but they serve slightly different purposes – and provide motivation at different moments of an employee’s journey within the organization.

Incentives are offered before someone reaches a goal, completes an action, or demonstrates a behavior. With incentives, you show team members what they can access in the future. On the other hand, rewards are typically provided after an employee finishes work, reaches an objective or displays a certain behavior. With rewards, you show employees that you appreciate and recognize what has already been done. 

The Top 5 Benefits of Implementing Incentive Programs

Implementing a formal employee incentive program may require extra effort, but it pays off. Here are the top five benefits to consider. 

1. Increased employee motivation: Incentives are powerful motivators. For example, a study conducted by Genesis Associates revealed that 85% of employees reported feeling motivated by monetary incentives. Even non-monetary incentives increase motivation. According to a FlexJobs survey, 86% of workers said that recognition in the workplace is a major driver of motivation. When employees are motivated, they are more likely to go above and beyond and contribute positively to organizational success.   
2. Enhanced job satisfaction: Employee incentive programs also contribute to overall job satisfaction, which refers to the level of contentment, fulfillment and purpose employees derive from their jobs. This is impactful: Happy workers are 13% more productive, according to research conducted by Oxford University and BT. When people feel satisfied with their jobs, they are more engaged.
3. Improved productivity: A well-executed employee incentive program therefore boosts engagement, and engagement is good for performance and productivity. Gallup data shows that companies with high employee engagement levels experience an 81% decrease in absenteeism, an 18% increase in productivity, and a 23% increase in profitability. 
4. Better retention rates: Happy, motivated and engaged employees are also less likely to quit. The right incentive program can drastically improve retention rates and save you thousands of dollars in the long run. For instance, Gallup reveals that employees who are consistently recognized by their managers are five times more likely to stick around instead of looking for another job. 
5. Fostering a positive company culture: Employee incentives and rewards are crucial for creating the right company culture and encouraging the behaviors, values, and standards you want to uphold. When workers are valued, acknowledged, and incentivized for their efforts, it cultivates a climate of appreciation, trust and collaboration. 

10 Creative Employee Incentive Program Ideas

Ready to reap the benefits of an employee incentive program? These 10 unique ideas will inspire you to design the right system for your team. 

1. Performance Bonuses: Rewarding Top Achievers

   High-achievers love aiming for the stars. Provide them with the opportunity to earn monetary rewards and they may just find even more ways to exceed expectations. If you have a sales team, for example, you can associate performance bonuses to individual and team sales targets. However, you can also use this type of incentive program with other roles and functions. Get creative and use bonuses to motivate your staff to strive for excellence while fostering a spirit of friendly competition in the workplace.

2. Peer Recognition Programs: Encouraging Team Appreciation

   Long gone are the days when top-down recognition was the only form of employee appreciation that mattered. Whether you use a platform like Applauz to encourage regular peer-to-peer acknowledgments within your team or create a Slack channel where people can give shout-outs to their coworkers, peer recognition can have a huge impact on morale, team cohesion and camaraderie.

3. Professional Development Opportunities: Investing in Employee Growth

   Employee incentive programs centered around professional development opportunities tap into an underrated form of motivation – the desire to grow and evolve. They involve investing in employees' career development through training, workshops, certifications, or educational opportunities. Not only will this improve the confidence and skill set of your team, but it can also boost job satisfaction and loyalty.

4. Wellness Initiatives: Promoting Health and Well-being

   According to McKinsey, 22 percent of employees are experiencing burnout symptoms at work – and it’s time for organizations to start viewing employee well-being as a holistic experience. Promoting the physical, mental, and emotional well-being of your team members can therefore be the foundation of a strong incentive program, from improving overall health and productivity to demonstrating your commitment to employee health.

5. Flexible Work Arrangements: Valuing Work-life Balance

   Flexibility is one of the most attractive workplace perks. When you create an employee incentive program that allows team members to have greater control over when, where, and how they work, you will most likely see great results. Whether this means adopting an asynchronous work model to allow for flexible schedules and remote work or switching to a four-day workweek, is up to you.

6. Profit Sharing Plans: Creating a Sense of Ownership

   Want to create a sense of ownership in your team? Consider a profit-sharing plan, which involves giving back a portion of the company’s profits to employees. This is typically established based on specific formulas or criteria, but it sends a powerful message: Everybody owns the success of the organization, and everybody gets to reap the rewards when things go well. When you align employee and organizational interests, you motivate people to care about profitability and contribute to it.

7. Company Stock Options: Aligning Employee and Company Success

   Offering stock options is another way to align those interests. With a company stock option incentive program, workers can buy company stock at a predetermined price, usually as part of their compensation package. This motivates employees to think long-term and be invested in the organization’s success.

8. Extra Vacation Days: Offering Time Off as a Reward

   Lots of people would jump on the opportunity to get extra time off. Even the most dedicated workers need a break sometimes – and what better way to feel appreciated than being able to take more vacation time to recharge your batteries or make progress on a personal project? Offer additional paid time off as a reward for performance, tenure, or other achievements. This incentive shows that you value work-life balance and recognize your team’s dedication and hard work.

9. Charitable Donation Matching: Supporting Employee Philanthropy

   Giving back can be an incredible source of motivation. Why not promote community welfare while boosting employee engagement? Charitable donation matching is an incentive that appeals to employees driven by their values and desire to positively contribute to the world. With this type of incentive program, the company matches team members’ charitable contributions to eligible organizations (usually up to a certain amount).

10. Special Experiences: Unique Rewards Like Trips or Events

    An all-inclusive vacation package, a hotel stay, a fancy dinner, a spa day, an exclusive sporting event…These are examples of unique rewards you can use to recognize outstanding performance and achievements. Gifting employees memorable experiences as a thank-you for their contributions leads to positive emotions that will be remembered for months or years to come

The Dos and Don’ts of Running an Incentive Program

As you may have gathered, employee incentive programs are a powerful tool in your HR arsenal. However, they are not all created equal. To ensure the success and effectiveness of yours, follow the crucial dos and don’ts below. 

Do: Align incentives with company goals and values

One of the most important elements of a successful employee incentive program is aligning the incentives offered with overarching organizational goals and values. When team members are able to see a clear connection between their contributions and the company's objectives, they are more likely to give their best at work. For example, if your company values sustainability, your incentive program could reward those who come up with innovative solutions to create more sustainable products. 

Do: Ensure transparency and fairness in the program’s structure

Transparency and fairness are critical when implementing an incentive program. Staff members should have a clear understanding of the way the program works and the criteria used to determine rewards. They should also be able to easily track their progress towards reaching certain performance goals. It’s crucial to avoid favoritism, too. Make sure your program is fair, equitable and inclusive – and reaches all employees regardless of their role or level. 

Do: Regularly review and adapt the program to keep it effective

Keep in mind that it’s normal for needs and priorities to evolve over time – both for the organization and its employees. Regularly reviewing and optimizing your incentive program to ensure it remains effective is key.

This process can involve gathering feedback from your team through an employee engagement survey, analyzing your incentive program's impact on performance and morale, and making adjustments accordingly, whether that means adapting your strategies, revisiting your goals, or both. 

Do: Pick the right technology platform to make managing the program a breeze

Using the right tech and tools can make the process of implementing and managing an employee incentive program much more streamlined and impactful. Applauz, for example, is a comprehensive platform that allows you to set up and customize your programs, track stats and progress, and reward achievements in real time.

By leveraging employee recognition tools, you can take the guesswork out of your workflows and make sure your employees have access to all the information they need to make the most of incentives available to them. 

Don’t: Set unrealistic or unclear goals for employees to achieve

If you want your employee incentive program to crash and burn, set unrealistic or unclear goals. This will kill motivation and undermine the effectiveness of the program, which is basically the opposite of what you want.

Aim to establish performance goals that are challenging yet attainable. Make sure to clearly communicate the expectations and criteria for success. This will help team members know what is expected of them, know that it’s within their reach, and stay motivated to achieve it. 

Don’t: Forget to communicate the program details to all employees

Communication, communication, communication. It’s key to the success of any employee incentive program. Employees need to be aware of the program details, including the incentives available and the steps required to participate. Have regular meetings and email updates about your new program and use various communication channels to make sure that nobody is left in the dark. Remember that you might need to communicate the same piece of information a few times and in a few different ways for everyone to assimilate it.

Don’t: Overlook the importance of non-monetary incentives

While money can be a powerful motivator, don’t overlook the importance of other forms of incentives, such as recognition, opportunities for professional development, or flexible work arrangements. They can be just as effective in motivating people and fostering a positive workplace. The ideal scenario is to offer a mix of both monetary and non-monetary rewards. That way, you can cater to the preferences of the individuals that make up your organization. People are motivated by different things, and your incentive program should reflect that.

How to Choose the Right Employee Incentive Program for Your Team

Still on the fence about the right employee incentive for your team? Follow the three steps below for greater clarity.

1. Assess team needs and preferences:

   Before implementing any type of employee incentive program, it's critical to dive into the specific needs and preferences of your team. Consider running a survey or having one-on-one discussions with team members. Think about factors such as roles and responsibilities, work environment, communication styles, and what motivates the different contributors on your team. For example, some people may value monetary incentives, while others may be more inclined to care about things like extra time off or professional development. These insights should help guide your choices while you tailor your employee incentive program to your team’s preferences.

2. Align incentives with company goals:

   Since aligning incentives with company goals is key, you may feel confused if you’re unclear about those overarching goals in the first place. Take the time to clearly define high-level objectives and figure out how your incentive program can help support them.

   For example, if one of your company's goals is to improve customer satisfaction, you might consider a recognition program with rewards associated with positive customer feedback. This exercise helps you ensure that your program will reinforce behaviors and outcomes that feed into the organization’s success.

3. Ensure fairness and accessibility:

   A successful employee incentive program is a fair one. Flesh out clear criteria for earning rewards. Get feedback from different stakeholders to make sure you don’t have blind spots in terms of everyone having an equal opportunity to participate and succeed.

   Also, consider factors such as transparency around the program's structure, consistency in the way rewards are distributed, and accessibility to all team members, including remote and hybrid ones. Prioritizing fairness and accessibility will nurture trust and further enhance engagement.

Conclusion

Building an employee incentive program that your staff actually loves comes with a host of benefits, from increased motivation to improved performance and reduced turnover. Incentives that align with company goals and values reinforce desired behaviors and promote a positive culture. It’s a virtuous cycle – and one that you have control over by applying the insights mentioned above. Combine your newfound knowledge with a tech tool like Applauz and your incentive program will be that much easier to implement.