U.S. companies spend nearly $77 billion a year on non-cash, employee incentives. If your company isn’t running an employee incentive program, then you are missing out on an opportunity that, research shows, will make a positive impact on your company’s bottom line. Employee incentive programs are effective. They attract and help companies retain quality employees. Plus, your company could see a performance gain of nearly 50 percent, according to recent research conducted by Towers Watson.
You have to put some thought into your employee incentive program. A half-hearted incentive program is as effective as not having an incentive program. Don’t assume that the millennials, Gen Xers and baby boomers in your workforce are going to be motivated by the same incentives. Furthermore, the 2014 Global Workforce and Global Talent Management and Rewards studies found that companies don’t have a firm grasp on the incentive programs their employees value most.
When to Use Incentives
Organizations typically use incentives for the following reasons: to boost morale, show concern for workers, to generate leads, to improve customer service, to improve quality and productivity and to foster teamwork. The Incentive Federation identified the five conditions under which incentive programs work best:
1. A need for improved performance.
2. Poor performance caused by decreased motivation.
3. Performance goals must be quantifiable.
4. Goals should be achievable, yet challenging.
5. Everyday organizational goals should still be paramount to incentivized goals.
Incentives can be cash or rewards such as travel, paid time off, gift cards, or public recognition. While you must decide which of these are the best fit for your company, failing to offer incentives may send your employees looking for companies that do.
Cash – Everybody likes cash, but this isn’t the best reward for an incentive program. It isn’t very memorable and your employees will actually end up with less than the reward after taxes.
Smartphones & Gadgets – Sixty-three percent of millennials say that benefits are an important reason why they stay with a company. Gadgets are an incentive that will get their attention. iPads and iPhones are popular amongst this age group. Boost the benefit by including a data plan, too.
Gift Cards – Like cash incentives, the IRS will want a their share. However, an employee, especially a Gen Xer, will appreciate being able to take their spouse to a nice restaurant on the company’s dime. Consider iTunes cards and movie cards for the younger employees, but be sure to ask your employees if gift cards are something they would enjoy.
Travel – This is an incentive often cited by Fortune 100 companies. Forty-six percent of companies offer travel incentives and spend a total of $22.6 billion per year on incentive travel. Smaller companies don’t have to spend a fortune on travel incentives, either. Simply use the points accrued on your corporate credit cards to employ your incentive travel program.
Tickets – Sporting events, concerts, and the theater are fun to attend, especially when the company foots the bill. If your company has box seats or season tickets that are typically used to woo clients, let your employees enjoy a few games, too. Remember: food, drinks and parking can add up really fast to make for an expensive night. Reimburse your employees for these expenses to make for a more memorable night out.