A well-designed incentive program can fuel employee productivity, boost engagement, and more.
In the digital age – when organizational change is becoming more and more common – an incentive program can prove especially valuable.
Below, we will learn about these programs, including:
- What incentive programs are and how they work
- The benefits of creating an incentive program
- Common incentives to include in a program
Let’s start with the basics, by learning what these programs are and how they are applied.
What an Employee Incentive Program Is and Why It Works
An employee incentive program provides employees with rewards and incentives in order to motivate workers and improve performance.
In short, an organization:
- Chooses a work process, metric, or behavior. A sales department that wants to increase the number of follow-ups or sales, for instance, would choose one of these metrics and assign a target.
- Assigns a reward or incentive. An incentive, such as financial bonuses, gifts, or recognition, would then be chosen and announced to employees.
- Offers those rewards to employees who meet or exceed criteria around those metrics. Incentive programs can differ in structure – rewards can be provided to anyone who meets a target criterion or the program can be more competitive in nature, offering incentives to individuals or teams that meet the target first.
Similar to a meritocracy, incentive programs reward achievement.
However, incentive programs specifically target specific types of activities or performance metrics.
They are one useful way to increase targeted metrics, engagement, and productivity – after all, employees, like all people, are self-interested and will pursue activities that generate tangible rewards.
The Benefits of Using Incentive Programs in Change Management
Incentives can also provide encouragement and an additional purpose, particularly during difficult work processes, such as organizational changes.
They are particularly useful in motivating employees during change management programs, which can be difficult and trying for employees.
After all, employee resistance can derail change programs if it is not handled properly.
Here are a few of the biggest benefits to using incentives in change management programs:
- Increased accountability
- Clearer expectations
- Improved employee performance
- Greater motivation and engagement
- Employees take the initiative
Naturally, an incentive program is not a complete solution to improving employee productivity. Many other areas of the employee experience can also be optimized to improve workers’ performance.
However, these programs are relatively easy to implement, making them a useful method for increasing effectiveness in the workplace, as we will find out in the next section.
How to Design an Incentive Program for Employees
Here are a few straightforward steps to follow when designing an incentive program:
- Set performance goals
- Communicate expectations clearly
- Create suitable incentives
- Monitor the program with metrics and KPIs
- Make adjustments based on performance
Of course, not all incentives are created equal – some motivate employees more than others.
How to Choose the Right Incentives
There are several variables that can affect the outcome of an incentive program.
The actual incentive, of course, is one of those variables.
Common incentives include:
- Business rewards
- Learning and development opportunities
The incentives matter, but there are other equally important aspects to consider
How to Make an Incentive Program Successful
Incentive programs can fail to deliver value.
Or they can deliver value in the short-term, while failing over the long-term.
In order to maximize the outcomes of an incentive effort, it is necessary to follow a few principles:
- Consistency. Consistency is fundamental – if incentives are provided inconsistently or if managers ignore timelines, then employees will quickly lose faith in the program. And, as a result, it will lose its effect.
- Gamification. Gamification, through contests or by making incentive programs fun, can improve engagement and dramatically improve a program’s results.
- Clear communication. Employees must understand the nature of the program, the rewards they will see, and what is expected of them. This messaging should be repeated regularly, to ensure that the program stays top-of-mind for employees.
- Optimization. Incentive programs may not deliver expected gains during the first implementation. Rather than shelving the program, though, organizers should collect data about the program, assess its strengths and weaknesses, then devise ways to make improvements – which, in turn, can enhance the program’s outcomes.
- Tying incentives directly to performance quota. It may sound simple, but unless incentives are immediately linked to target performance metrics, employees will not make the connection between incentives and their performance. And if employees cannot make the connection between incentives and their workplace behavior, the organization will not see performance gains over the long term.
When these guiding principles are followed, an incentive program can help businesses streamline organizational change projects, while reducing employee resistance and negative sentiments.
They can also, of course, be used to generate performance gains in organizations that aren’t undergoing change.