Employee Incentive Programs: How to make them effective

Making Employee Incentives Effective

What are you hoping to get out of an employee incentive program?

Some companies want to build employee engagement. Others want to reward performance. Maybe building team connection is the goal. Or maybe it’s just a checkmark in a box of what companies think they need to provide.

Whatever the goal, many traditional employee incentive programs fail to deliver. It doesn’t have to be this way.

Motivation science shows that using employee incentives as part of a bigger program to deliver a great employee experience delivers shockingly positive results. Our research proves that offering a great employee experience delivers better earnings, productivity, retention, customer experience and absenteeism rates.

What does that employee incentive program look like? Read on.

Building Employee Engagement through Incentives

Employee engagement is crucial for your company’s bottom line. It affects revenue, retention, productivity, customer experience, safety and even how many employees show up every day. But employee engagement doesn’t just happen on its own. Building successful engagement programs takes more than a few surveys and an annual review process. Engagement takes structured support.

Download our Blueprint for Employee Engagement for more ideas on building an employee incentives program that also builds engagement.

Employee Incentives as Motivation

Dan Pink’s research in Drive clearly shows that the traditional “carrot and stick” system doesn’t motivate employees.

Employees work best when they are intrinsically motivated – meaning their motivation comes from inside themselves, rather than from outside or external forces. Employees perform best when their job itself is motivating, rather than being there just to get a paycheck or bonus.

Traditional rewards and recognition programs are typically external motivators. Many studies have shown that those external motivators work… for a while. And then they don’t. The London School of Economics has shown that external motivators can actually rob employees of their enjoyment of their jobs.

Does that mean employee rewards programs don’t work? Not at all. Employee incentives that reinforce the four pillars of a great employee experience — Connection, Appreciation, Meaning and Impact — build employees’ internal motivation.

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Step-by-Step Guide to Employee Incentives

Step One: Get Employees Involved

No employee incentive program is going to deliver engagement or business results if it doesn’t resonate with employees. That’s why many service award programs or employee-of-the-month awards aren’t all that motivating.

Instead, give employees a voice in their employee incentives, so that they are engaged with the incentive program. Here are three steps to building an employee incentives program where employees participate.

  • Tie employee rewards to recognition given to specific actions that move your business forward.
  • Make employee recognition spontaneous and timely so employees can’t work just for the reward.
  • Offer a variety of rewards that an employee can choose from, so that each reward is meaningful.
Step Two: Build Connection

Connection: Feeling connected to my manager, colleagues, company, and community.

People want to connect with their coworkers, managers, and company. Our research for the Employee Experience Defined showed that 94% of employees surveyed said that connection at work was important to them — but only 50% thought that their companies did a good job of building that connection.

How do you use employee incentives to build connection?

  • Let employees give peer-to-peer recognition and rewards.
  • Empower employees to work together to get a bigger reward.
  • Offer options for rewards for teams or departments.
Step Three: Build Meaning

Meaning: Knowing my company, and the work I do, has meaning and purpose.

Having a sense of meaning at work matters more and more. The 2016 Cone Communications Millennial study showed that 64% of millennials won’t take a job if a company doesn’t have strong corporate social responsibility values. Researcher Adam Grant has shown that a five-minute conversation with a student who had received a university scholarship was enough to make that university’s fundraising callers boost performance by 500%.

Our own research of more than 2,000 employees shows that having company leadership live out a clearly communicated set of company core values has a tremendous impact on the quality of the employee experience – and therefore, on employees’ performance.

What are some easy ways to create an employee incentives program that builds meaning?

  • Tie pieces of recognition to company core values – so they are clearly communicated.
  • Incentivize employees to volunteer in the community.
  • Add donations to charitable causes as part of your employee rewards mix.
Step Four: Show the Impact

Impact: Knowing the work I do impacts my colleagues and my company for the better.

When we show up, log on, or sign in to work every single day, we don’t just want to perform random, meaningless tasks. We want to know how our work helps our colleagues, company, and careers move forward.

Having clearly defined goals — which your employee can use to measure their impact — is one of the most critical factors in building an employee’s own intrinsic motivation to do their job. Gallup’s 2017 Reengineering Performance Management study found that employees who can link their goals to their organization’s goals are 3.5 times more likely to be engaged. So, how do you use an employee incentives program to build these results?

  • Give recognition that details how employee actions are helping get to company or team goals.
  • Acknowledge employees’ outstanding performance in company and team meetings.
  • Offer spot bonuses for specific behaviors that can move the company forward.
Step Five: Show Appreciation

Appreciation: Feeling acknowledged and appreciated for my contributions.

Everyone wants to be appreciated. Glassdoor did a study that showed employees will stay in jobs longer if they’re appreciated. We found that 94% of employees that have an excellent employee experience also feel appreciated in their jobs.

Yet it isn’t enough to give generic appreciation. Giving someone a sense of being appreciated for the great work they do requires timeliness, specificity, and authenticity. For example, if an employee gives up a whole weekend to deal with a crisis – getting a thank-you pen two months later can be underwhelming or even counterproductive.

Effective appreciation should be authentic, specific, and timely. Here are some tips for using the recognition portion of an employee incentives program to build a sense of appreciation.

  • Tie incentives to pieces of recognition for specific actions.
  • Give that recognition regularly.
  • Make that recognition public, so peers and managers can see it, amplify if, and learn from it.
Step Six: Track Your Investment

How will you know that your investment in an employee incentives program is paying off?

With a set of gift cards, an employee-of-the-month plan, or even a manually administered nominations process — there’s no easy way to tell what your incentive program is giving you. It may be difficult to track your overall costs – including the cost of people’s time to administer the program.

Using an automated employee experience platform to manage your employee incentive program enables you to amplify other corporate activities – and measure the impact. With Kazoo’s platform, you can:

  • See which skills employees are getting recognized for most often.
  • Measure and track employee engagement trends.
  • Track participation in corporate wellness and learning programs.
  • View which of your corporate core values are resonating most with employees.

If you want to learn more about how Kazoo’s Employee Experience Platform can make your employee incentives program more effective, see a demo of our product.