Rolling out incentive programs can be a great way to motivate employees and improve productivity – but are they always the best choice?
There are advantages to using incentives to spur engagement and enthusiasm, but they do have downsides as well.
Below, we’ll explore both sides of incentive programs – the upsides and the down – then look at some tips for implementing these programs in the workplace.
The Pros and Cons of Incentives Programs
Incentive programs are one among several approaches to increasing productivity in the work environment.
Let’s start with the benefits of incentives:
A Few Reasons to Use Incentive Programs
There are a number of benefits to using incentive programs:
- They are easy to implement. An incentive program, unlike some of the other solutions mentioned later, can be implemented quickly and easily. Depending on the incentive, the costs can be quite low, making it easy to gain approval and move forward with the program.
- Employees become more motivated, productive, and engaged. Incentives, such as financial rewards or gifts, motivate workers to work harder and increase their output. As long as quality controls are established, these productivity improvements can outweigh the costs of the incentives, resulting in a net gain.
- Incentive programs increase support for a variety of business processes. These programs can be applied across any human-driven process, making them suitable for a wide range of business units. Finance, accounting, sales, marketing, IT, customer service, and virtually any other business function can benefit from an incentive program.
- Project output improves. Incentive programs can also be used for short-term projects, such as a digital adoption program. They can be useful ways to improve the outcomes of critical business projects.
- Incentives can decrease resistance to change. In the modern enterprise, organizational change is constant. Motivating employees during change projects is a must, and incentive programs offer one good way to boost motivation and reduce resistance.
Before implementing these programs, it pays to be aware of the downside.
Disadvantages to Using Incentive Programs
However, incentive programs are not perfect.
- They operate well in the short-term, but are not long-term performance fixes. Long-term engagement requires more than a quick incentive, whose novelty can quickly die down. For sustainable long-term engagement, employers need to develop a much more comprehensive employee performance improvement plan.
- Incentive programs are not “cure-alls.” Incentives do have their weaknesses and cannot be used to solve any productivity problem. If, for instance, poor productivity stems from a lack of digital skills, an incentive program will do little to fix the problem.
- Quality can suffer. In an effort to earn an incentive, it is not uncommon for workers to cut corners, causing quality to suffer. Needless to say, this result runs counter to the entire purpose of an incentive program, which is why quality control mechanisms or other measures should be put in place to prevent quality lapses.
- Results vary depending on the workplace, the incentive, and the circumstances. In some cases, an organization will implement an incentive program, then dissolve it if the results don’t meet expectations. The problem, though, could be solved if the incentive structured were changed. In some cases, it takes time and testing to find an incentive that generates real results – and sometimes organizations simply don’t want to expend that amount of energy.
- Incentives can create an atmosphere of competitiveness. When incentives are distributed on a bell curve, employees will often compete with one another to obtain those incentives. The result, unfortunately, can breed negativity in the workplace.
If steps are taken to mitigate these negative effects, however, it is possible to create an incentive program that generates a positive return.
Tips for Rolling Out Incentive Programs
Execution matters and can mean the difference between an incentive program that succeeds and one that fails.
Here are a few tips for rolling out an incentive program that gets results:
- Have a specific purpose
- Understand the workforce
- Choose the right incentives for the situation
- Continue to test and optimize
Of course, since incentive programs are not the only way to increase productivity in the workplace – and in many cases they are not the best approach.
Alternatives to Incentive Programs
Here are a few other ways to enhance employee performance:
- Accountability systems. Performance reviews, corrective action, and similar measures can be used to maintain accountability. These systems can be very effective when it comes to improving employee performance, but they should be balanced with more positive and encouraging approaches.
- Workplace improvements. Improving the employee experience is another way to increase productivity. There are many ways to do this, from improving the physical work environment to implementing corporate well-being programs.
- Training systems. The right employee training programs, such as digital adoption programs, can provide employees with the skills they need to become more productive and more confident.
Since there is no one-size-fits-all solution to improving workplace performance, managers should experiment with several approaches. And, ideally, they should implement a mix of solutions that include incentives, as well as some of the others mentioned here.
Chris is the Lead Author & Editor of Change Blog. Chris established the Change blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Change Management.