With a new year about to begin, chances are good that your goals for the next 12 months include increasing the productivity of your company and improving employee retention. In that case, incentive programs are one of the best tools at your disposal. Here, we discuss the basics of incentive programs, from a definition to the different types of incentive programs you can implement.
What Is an Incentive Program?
An incentive program is a set of activities designed to reward the employees of a company when they meet certain goals or observe certain behaviors.
Incentive programs can help increase the productivity of an organization and make employees feel that their efforts are recognized. This, in turn, increases retention levels and keeps employees engaged.
However, in order to be effective, incentive programs must be fair, easy to understand, and in accordance with the values of your organization.
Types of Incentive Programs
- Performance bonus. This is a tried-and-true form of incentive that your employees are sure to appreciate. As the name implies, offering a performance bonus means rewarding monetarily the employees that meet certain performance goals. If you decide to go this route, you should make sure to implement this incentive in a way that doesn’t lead your employees to burnout, which may end up backfiring.
- Social recognition. Money and gifts are great, but they are far from the only effective incentives out there. As humans, we value the recognition from our peers, which can come in the form of awards or even simple “Thank you” notes.
- Profit-sharing. In a profit-sharing program, the company contributes a portion of its pre-tax profits to a pool which is then distributed among qualifying employees. With this type of incentive, there’s a warning to be made: Don’t allow the focus on profits to translate into decreased attention to quality.
- Extra PTO. Allowing your employees to accrue extra paid time off is a powerful way to incentivize positive behavior, but also a good strategy to ensure that your workforce is rested and able to create a positive work-life balance.
- Wellness incentives. Employees appreciate a workplace where their health is a priority, so wellness incentives can do wonders for your employer brand. Some wellness incentives you can consider implementing include gym memberships, worksite exercise, corporate wellness platforms, and wellness-focused gifts.
- Referral bonus. In this type of incentive program, an employee gets a bonus, whenever they help the company recruit new talent. Referrals are important because they help attract candidates who are already compatible with your culture, so referral bonuses are a double win: they help you get fresh talent while rewarding the employees already working in your company.
- Gifts and prizes. This is a straightforward way to reward outstanding employees. Everyone loves gifts, and employees are no exception. Your range of options goes from small, fun gizmos to gifts cards, branded clothing, and even paid trips.
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