Incentives are a proven way to influence employee behavior and ultimately improve business output. Now there are several types of employee incentive programs that companies commonly use. But the most important thing is for you to find a program that works best for your business.
A study showed that travel incentives are the most popular incentives among employees. It also suggested that people remember non-monetary incentives longer than cash incentives.
Thus, the key to any employee incentive program's success is motivating your employees and making them feel good about their work.
There are so many distinct types of employee incentive programs out there that some can be confusing.
I've outlined several employee incentive schemes to help you determine what kind of employee incentive program will work best for your business.
Let's get started!
Recommended Read: What No One Tells You About Employee Incentive Programs
Examples of Successful Employee Incentives Programs
To simplify things, I have classified the examples of employee incentives programs into two major categories: monetary and non-monetary incentives.
A bonus is paid to an employee as an incentive to perform well throughout the year. Most times, employers award a bonus for a specific achievement that meets the company's expectations.
Many companies are also willing to pay retention bonuses to keep employees on board. A retention bonus is financial compensation paid to employees who have remained with their organization for a specific length of time. They offer it as an incentive to ensure that employees don't leave their company.
Project bonus has also become a very effective way to motivate employees. It is a form of extra payment for completing a project or the proper execution of work.
To know more about employee bonus, click here!
Profit-sharing is a variable incentive that is paid to the employee when the organization earns profits. It is measured by revenue or net profit growth, or both. The company can offer, for example, a certain percentage of the company profits to be distributed among the employees.
Profit-sharing is typically used to motivate employees and encourage them to focus on the company's long-term success.
It is one of the most common examples of employee incentive plans. When done right, it's a great way to reward your employees, particularly if you make adjustments based on performance reviews and individual contributions.
Further Reading: All You Need to Know About Profit-Sharing.
An employee stock ownership plan or ESOP is a type of employee benefit. It gives the employees an equity stake in the business they work for.
ESOPs continue to be a popular way of motivating employees because of the many advantages they offer. It can help to manage equity risk and employee retention, increase employee satisfaction and reduce turnover.
Corporate giants like Disney, Tyson Foods, and Walmart have implemented ESOPs as part of their employee incentive programs with great success.
4. Spot Awards
Spot awards are a hugely effective and fun way to reward your staff. Also, they are quick and easy to execute. Management typically grants spot awards, but some third-party platforms enable peers to do so as well.
Spot awards can be monetary rewards or point-based rewards. A point-based reward system gives awards as points that can be accrued over time or redeemed into some monetary reward.
Vantage Circle provides a customizable solution that allows employees to give their peers quick, easy and timely recognition. It enables rewards and recognition to be quick, public, and convenient.
5. Retirement Plans
Who doesn't want to retire early? Offering retirement plans as a kind of employee incentive program is an attractive concept for all employees. The United States is one of the few countries where the government allows employers to offer tax-deferred retirement accounts.
However, it isn't always that easy. Many people can't retire early because they don't have the means to do so. According to a survey by Economic Policy Institute, most people, even those nearing retirement, have little or no retirement savings.
To ensure a comfortable retirement, more businesses are exploring new ways to offer incentives for employees to save for retirement.
6. Dearness Allowance
Employers use dearness allowance to raise the salaries of their employees. They provide this allowance to workers on top of their basic pay. It is a payment that compensates for the rise in prices and cost of living.
Earlier, the cost of living wasn't a consideration for employers when determining employee compensation. Inflation was expected to be a temporary phenomenon that will subside on its own in no time.
However, the cost of living has increased over the years, and inflation has become a permanent fixture. So offering dearness allowance as a type of employee incentive program is a reliable way to attract and retain employees.
7. Fringe Benefits
Fringe benefits are the goodies that companies offer employees besides their salaries. They are usually non-cash perks, such as health insurance, paid vacation days, or gym memberships.
Fringe benefits are not only attractive to employees but also to the employer. It can reduce overall tax and compensation costs for the employer.
Many employers use a lot of unique ways to get their employees excited and engaged in the workplace. As competitive as the job market is, it is not easy to find and keep qualified employees.
If you want to go the extra mile, check out this article on 7 Noteworthy Fringe Benefits for your Workforce in 2021. Give your employees something different that they can't get anywhere else.
8. Suggestion Incentive
Many companies use suggestion incentive programs to show employees their opinion matters. When an employee's suggestion leads to improved revenue, productivity, or efficiency, managers reward them for their efforts.
The idea behind employee suggestion incentive is simple: people are more productive when they feel valued. Reward employees for their good ideas, no matter if it is big or small. It also creates a win-win situation for your company and your employees.
9. Referral Bonus
Employee referral is one of the most effective ways of recruiting potential employees in a company.
Employees who make referrals are motivated to find the "right" kind of person for a job because their reputation is on the line. So they take the time to find people who are a good fit for the job. A company that offers employee referral bonuses tends to attract better employees because the referee is naturally invested in the person's success they referred.
It is also a very budget-friendly way of hiring.
10. Gift Cards
Gift cards are one of the most popular ways to reward employees . They offer a personalized touch while letting your employees choose the gift that they really want and deserve. Plus, you can hand them out whenever you want and in whatever amount you think is appropriate.
Vantage Circle offers the freedom to choose a gift card from a wide range of products and services from a global catalog.
Recommended Read: 15 Simple-yet-Appealing Gifts for Remote Employees
11. Career Development
If we go by the recent trends, millennials and Gen Z are looking for more than just a steady paycheck with their careers. Companies that provide new training opportunities and support career development are likely to attract and retain the best talent in the future.
To encourage this growth, companies need to facilitate the right learning and development opportunities. One effective way to motivate employees is by offering specialized training sessions.
Sammis & Ochoa, the PR agency, offer this kind of training by providing top performers a chance at personal development events within the state.
Also Read: Why Employee Development Matters in 2021
12. Employee Recognition
The average employee can experience up to five years in a company before they feel like a part of the team. Over half (51%) of employees say that an award or a pat on the back would be more effective in showing appreciation than money.
Employees want to feel valued. Vantage Circle gives you many ways to recognize your employees and show them you care. Our all-in-one solution is designed to make appreciation more meaningful, timely, and quick.
13. Travel Incentives
After year-long travel restrictions, offering travel incentives can prove to be a very lucrative offer to employees.
Business travel has become an increasingly popular commuter choice for workers who want to continue earning money while seeing the world.
Business travelers are entitled to a range of travel incentives and benefits. It can include discounts on flights and hotels, free rental cars, reimbursement of meals, and much more.
14. Awards and Prizes
A special recognition program is a great way to boost employee morale and reinforce company values.
Awards like "Employee of the month" or "Top Performer" are a great way to show the entire team everyone is important and valuable.
With an in-house recognition program, businesses can boost employee satisfaction while saving costs for expensive outside rewards.
Vantage Circle has a powerful yet simple AI-based platform, making employee recognition easy, fun, effective, and globally accessible.
Explore more such incentives here: Top 9 Non-monetary Incentives To Motivate And Retain Your Employees.
Flexibility and an understanding of the changing face of business are two important work perks that have gained popularity in recent years.
Whether you're promoting a more flexible workplace or you already offer it, it's important to recognize the difference between telecommuting and flexible work schedules. The former refers to working from home on non-work-related tasks. At the same time, the latter encompasses flexibility with when and where you work.
16. Employee Mentorship
According to an article by the Society for Human Resource Management (SHRM), “Employees who have an employee mentor are more likely to report the following: a sense of job satisfaction, actively participating in decision-making, feeling valued by their organization and supervisor, and feeling that they can use their strengths to do their job.”
This is just one of many reasons why companies are starting to understand the value of employee mentorship as an employee incentive. In the grand scheme of employee perks, employee mentorship is low-cost, but the biggest impact.
17. An Extra Day Off
Everybody loves an extra day off from work! That's why providing employees with a bonus day off is a perfect incentive. If they achieve the goals set out for them, you can reward them with a few hours off.
As well as feeling motivated to work harder, employees will feel valued in their workplace because their employer recognizes the hard work.
18. Volunteering Opportunities
Some employers let their staff volunteer for a good cause to get the most out of their employees. This encourages employees to bond with each other meaningfully. It is also vital to the growth and development of any company.
By doing so, businesses improve employee engagement and help build their company's brand image.
19. Virtual Corporate Events
Encouraging a culture of work hard-play hard environment can be a great cultivator of employee engagement.
Virtual corporate entertainment events are a unique way to add fun to an event, conference, business meeting, or convention. Whether your goal is to lighten the mood or entertain your audience with an interactive presentation, you can customize these events to suit your needs.
20. Experiential Rewards
The perception of what an employer should provide for its employees has evolved. Today’s companies are adopting a more experiential approach to rewarding and recognizing employees.
Experiential rewards are an excellent option to mark big achievements. It can be anything from local painting classes to day-long trips. When employers curate rewards based on what employees love, they experience less stress, are happier, and work better.
Employee incentive programs have become widely popular in the corporate world. Though the military originally started this program, it has spread to most companies as a great way to motivate employees to perform better.
We often use the term employee incentive program interchangeably with employee reward programs, employee recognition programs, or employee benefit programs.
All these terms come under the same umbrella of total rewards, whose ultimate aim is to increase employee productivity and the company's overall success.