Why the Best Employee Incentive Programs Succeed

If you want to put one of best employee incentive programs in your workplace, you might need to step out of your own comfort zone and move away from cash rewards.

Traditionally, employee incentives programs use cash rewards tied to a specific individual achievement. And if you ask your employees, they’ll tell you that this is what they want. A bonus. A higher paycheck. Or some kind of cash reward.

You never change your life until you step out of your comfort zone; change begins at the end of your comfort zone.

— Roy T. Bennett

But studies show that while cash incentives for employees’ motivation might work for a short-term boost, they can be counterproductive in the long run. The best employee incentive programs use completely different strategies.

Let’s look at a tale of two hospitals to see why it’s time to rethink cash.

Each hospital wants to improve their patient interactions. Both put patient surveys in place so that they can measure how they’re doing. But then they take different approaches to reach the goal.

Why cash doesn’t always work in incentive plans

Hospital A puts a competition in place. The nurse who gets the best ratings in a month will get a $200 bonus.

Jackie, a staff nurse, likes to make people smile. She’s always gone the extra mile for her patients, and likes to mentor some of the newer nurses to help things go more smoothly. Because she wants the bonus, she needs to get better reviews than the other nurses, so she doesn’t mentor them as much. She wins the $200, but now her coworker relationships aren’t as good. She doesn’t have quite as much fun going in. And her patient reviews show it in the following months. The department ratings go down overall.

Studies going back to the eighties show that people are most motivated when they’re working on things that they like. But cash-based employee incentives programs can take that joy away. And, they get stale. As soon as your employee gets the reward, it’s done. And so is its effect. You have to make it bigger to make it meaningful next time.

What do some of the best employee incentive programs offer?

The best employee incentive programs use recognition award ideas that are specific, meaningful and somewhat unexpected. They move from an approach of trying to motivate your employees (“do this awesome thing to get a reward”) to helping them motivate themselves by recognizing and reinforcing what they’re doing well (“thank you for doing that awesome thing!”)

Take Hospital B for example. Hospital B uses a recognition platform. They use only $100 and let the nurses use it to give small rewards to each other with each recognition.

When working at this hospital, Jackie gets lots of smiles. She mentors the new nurses, so they’re all focused on better patient interactions. Each time she sees a coworker do something great for a patient, she posts a note, so everyone else can learn from their work. Other nurses also thank Jackie for her mentoring tips and suggestions. Overall patient ratings go up, and the nurses are all happier to come to work.

Best Employee Incentive Programs

So, by focusing on using rewards that build employees’ internal motivation – Hospital B gets a lot more from their investment.

The latest trends in performance management show these five things work to improve job satisfaction and performance:

  • Tie rewards to recognition.
  • Show your gratitude regularly.
  • Let your employees reward each other.
  • Don’t just use cash. Include experiences and charitable contributions in your reward mix.
  • Give employees time with leadership and a chance to lead.

Putting the best employee incentive programs in place might be out of your comfort zone. But then, that’s where the best growth happens.

To find more meaningful ideas for employee incentives programs and a review of the science of reward and performance management, download our guide Reward and Recognition Systems that Work.

And – if you are working in healthcare, you might also like to see our guide on Employee Engagement and Healthcare.