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Want to Boost Employee Productivity? Offer an Incentive

Max Freedman
Max Freedman

Offering employees a little incentive can go a long way in boosting productivity. This guide will give you ideas for workplace motivation that can have a material impact on overall productivity.

  • Happy employees work more.
  • Employee incentive programs can improve employee morale.
  • Both companywide and individual incentives encourage employees.

Most workers need a bit more than a virtual pat on the back from the boss to stay motivated. That's why many employers implement employee incentive programs to keep their staff engaged and working hard. These employee incentives can help you get more out of your team while keeping them motivated and satisfied.

What are employee incentives?

Offering rewards like gift cards, extra time off and free lunch isn't just a nice thing to do for your employees; these employee incentive programs are great for businesses in the long run. A 2018 study by Genesis Associates – a U.K.-based recruiting firm for the engineering, sales and creative sectors – found that 85% of the workers surveyed felt more motivated to do their best when they had an incentive. In theory, this increased motivation could lead to stronger employee retention, loyalty and engagement. In addition, 73% described the office atmosphere as "good" or "very good" during an incentive period. Employee incentive programs also increased a company's overall profits by upward of $104,000 per week on average, the study found.

Just as an incentive may motivate you, offering your employees rewards encourages them to work hard and grow. People like to feel appreciated and recognized for good work, and incentives are one way to show them that good work garners rewards.

What are examples of employee incentives?

So, what kinds of employee incentive programs really push employees to work their hardest, increase employee retention and decrease employee turnover? Unsurprisingly, a compensation incentive such as a bonus is likeliest to drive employee engagement: 40% of the Genesis Associates survey respondents cited money as their most motivational incentive, followed by a free vacation or similar incentive travel (29%) and extra time off (23%). Other popular rewards are meals out, drinks and the option to finish the workday early. [Read related article: 3 Proven Ways to Motivate Your Sales Team]

Here is a larger, more detailed list of potential employee incentive programs:

1. Employee recognition programs

Employee recognition programs include longtime workplace traditions such as "employee of the month" placards or another tangible reward. Although such programs have long been used to reward top talent and drive morale, some argue that these employee incentive programs have become ineffective.

2. Compensation incentive programs

A financial incentive, such as a bonus for perfect attendance or the top sales ranking, can drive healthy competition among employees that boosts morale and productivity. You may also want to consider a profit-sharing plan that provides your employees a percentage of your business's profits on top of their usual salaries. Through a profit-sharing plan, employee loyalty – and productivity – may increase.

3. Incentive travel

Through an incentive travel program, you can reward your employees for achieving certain goals by offering them a multiday trip. This can be an expensive undertaking, as your company will cover all or most costs for this trip, but it has immense potential to increase employee productivity and loyalty.

4. Extra time off

In addition to your usual time-off policy, you can offer extra time off to your employees for achieving certain goals, such as perfect attendance or securing an especially important contract with a new client. Your employees may feel more cared for and motivated if you give them more time off following unusually high amounts of labor.

5. Wellness programs

Work can get stressful, and as your employees face more exhaustion and disruptions to their work-life balance, they may find it challenging to attend to their health. Offer an employee wellness program to incentivize not just work, but health. Many employees will appreciate an office wellness program that takes their health needs into account through activities, policies and other changes. See our guide for more details on how to set up a wellness program.

6. Learning and development programs

Learning and development programs can be especially useful for nurturing and retaining top talent. Often, top go-getters at a company will want to learn more or advance to more involved, high-level roles. Through professional development programs, you can give your employees opportunities to refine their relevant skills and explore career options. These programs can reduce employee turnover, especially if you use the career training aspects of these programs to train a top employee for a high-ranking role in your business designed just for them.

7. Unique personal incentives

Although employee incentive programs can do wonders for a company's employee productivity, morale and retention, no two employees are exactly alike in their responsibilities and workflow habits. Consider customizing your incentive programs to fit your individual employees' needs and interests. For example, your employee who spends most of their free time relaxing at home may prefer extra days off over travel incentives. When your employees see that your incentive programs are tailored to their needs, they'll be more likely to appreciate how much you care about them.

8. Strong employee benefits packages

Offering employees benefits such as health insurance, retirement plans and commuter benefits is standard employer operating policy. If you offer especially strong employee benefits packages, going beyond the standard offerings, you can increase employee morale and retention, as not every company will offer similar benefits. [Read related article: 16 Cool Job Perks That Keep Employees Happy]

9. Casual afternoons

It's one thing to let your employees dress down a bit for casual Friday. It's another thing to reward them for an especially productive or stressful week with a full afternoon of snacks, light drinks, a TV marathon in the break room, or a combination of all three options (or more). As you carve time out of your employees' workdays for activities they might normally do at home, you show them you care.

10. A team getaway

If your employees love to travel, you could take your team on a short group vacation – one that doesn't cut into their allotted vacation days or time off. Whether this vacation is a company retreat with a small number of meetings or a full-on break from work, it can give your employees a reason to stick around and perform well year after year.

While incentives based on an employee's individual productivity may offer more valuable rewards, the Genesis survey found that 71% of workers preferred team-based incentives to individual employee recognition programs. Patrick Bell, managing director of Genesis Associates, said this is likely because when employees work toward a goal as a team, there are more people to help maintain high levels of motivation throughout the incentive period.

Why should employers use employee incentives?

Essentially, employees like to be recognized and rewarded for their hard work.

"Working on a team incentive, there is a collective responsibility; you don't want to let your other team members down," Bell told Business News Daily. "Therefore, people try harder and generally achieve better results. Getting the team sizes right is important. Too big and people can hide from their responsibilities; too small and you may lose out on the benefits of higher motivation."

If you're concerned about the budgetary implications of offering rewards, you don't have to offer any sort of compensation incentive, Bell said. For instance, Genesis uses other flexible benefits, such as early leaving times, dress-down days, extended lunches, trophies, or just a picture on the wall – a simple gesture of employee recognition – or the employee's name on a Hall of Fame board as part of a larger employee recognition program.

"Different things will work better, depending on the culture of your business," Bell said. "We often task our group with coming up with ideas that don't have a financial value to them, as well as asking them what they would like to see for the bigger and more expensive incentives."

Bell also noted that, for many employees, inclusion in a recognition program is often more important than a cash amount or prize. Some people love public recognition, while others may be embarrassed by it. As such, it's important to consider what would actually work for your staff.

"We have a monthly award for best trainee/resourcer, best recruiter and team of the month," Bell said. "We don't give out money for these incentives, but we do give a trophy, which is awarded at the start of the month, voted for by all our employees. For some people, a mention in the newsletter or on social media is all the incentive they need."

Another option is to offer more responsibility, a new job title or another type of promotion to recognize employees' efforts and good work.

How to build an employee incentive program

Building an incentive program is not difficult if you approach it correctly. A great place to start is to ask your employees what sort of incentives they might like. You should also set benchmarks or standards of performance for each incentive.

Some employees may prefer monetary incentives. In these cases, it's best to either write those incentives into a budget or set up a fund for them. You also may need to create some sort of measure for tracking employee performance and productivity. Consider calling a meeting to explain the new incentive program so that employees thoroughly understand it.

All in all, offering employee incentives is a fantastic way to reward good work and can transform the way your office functions.

Source interviews were conducted for a previous version of this article.

Image Credit: Prostock-Studio / Getty Images
Max Freedman
Max Freedman
Business News Daily Contributing Writer
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.