Did you know 88 percent of employees believe employers need to reward hard-working employees, and those who feel recognized are less likely to leave a company? Simply put, for your company’s continued success, you must reward your employees’ efforts. And that’s where incentive rewards programs come in.
If planned and executed correctly, these incentive rewards programs can have a significant impact on your business and help your company grow its bottom line.
That said, there are four main questions to explore as you prepare to implement a great rewards program. What are incentive rewards programs? How do they work, and why do companies use them? How can you develop an incentive rewards program that works for your company? Let’s dig in and look at these questions in more detail.
What Are Incentive Rewards Programs?
Incentive rewards programs are strategies companies use to drive positive behavior, as well as to help employees reach their full potential and achieve their goals. These programs reward employees for performing well, inspire them to continue doing so, and help companies create a positive workplace culture. In most cases, recognition tactics are crucial components of these programs.
Companies often offer rewards and bonuses like gift cards, merchandise, travel rewards, or a combination of these to drive efficiency and productivity.
Remember, though, what rewards and perks you offer will largely depend on your company’s specific goals and budget. No matter what you choose, the key is that the incentive must benefit the employee and be of value, and that means one size won’t fit all.
The best incentive rewards programs are customized, so employees have plenty of options. They can select a gift card to their favorite merchant, a fancy coffee maker, or even save up reward points to go towards a vacation.
What Are Some Examples of Incentive Rewards Programs?
When it comes to incentive rewards programs, people often picture basic cash incentives like spot and performance bonuses, merit-based pay increases, and profit-sharing schemes.
While these monetary incentives can be effective, they have some drawbacks. For instance:
- A well-developed incentive program aims to encourage positive behaviors that drive the success of a company. Conversely, if an incentive program is not well thought out, it will have the opposite effect. In other words, it could prevent a company from reaching its goals.
- With poorly developed incentive plans, it frequently happens that employees are unable to reach their targets and, by implication, earn less. These employees will then look for ways to make their performance seem better than it is. This behavior has a direct impact on the company’s bottom line.
- It’s normal that some employees will earn incentives and some not. However, to some, this could seem unfair, and they could feel as if they forego their incentives to help others achieve theirs. The result of this is conflict between employees and an overall decrease in morale.
With this in mind, and to eliminate some of these disadvantages, let’s consider some examples of effective non-monetary rewards and incentives. These include, for example:
- Merchandise. Companies can reward employees with high-quality merchandise and desirable brand-name items their employees want to use. This can include anything from homeware to tech to sporting goods and accessories.
- Gift cards. Another option is to reward employees with gift cards for anything from food to electronics to clothing and sporting and outdoor goods. The possibilities are endless as employees will be able to redeem these gift cards at some of the world’s most popular retailers.
- Branded items. Companies can reward their employees with selected, branded items. These include anything from merchandise, gift cards, and even experiences. The benefit of this approach is that the company will be at the top of an employee’s mind every time they use the product.
- Personalized travel. Here, companies can reward their employees with travel rewards to desirable locations. This makes for a highly sought-after reward and offers a significant return on investment and benefits for the company. Companies can use high-touch, concierge travel to provide them with once-in-a-lifetime experiences for those high achievers.
It’s important to remember these are just some examples of rewards you can use when implementing an incentive rewards program, and there are many more. Work with an experienced rewards and incentives partner to design a program that fits your employee base, providing the right level and variety of incentives that perfectly fit your company’s needs. Based on your team’s likes and dislikes, you’ll be able to choose the right rewards that fit your preferences and your brand.
Related: 4 Employee Rewards Trends We Expect for 2021
Why Do Companies Implement Incentive Rewards Programs?
Now that we’ve looked at what incentive rewards programs are and what rewards you can consider when designing and implementing one, it’s time we look at why companies are finding it so important to implement incentive rewards programs.
Well-designed incentive rewards programs offer a wealth of benefits to companies, including:
Boosting Employee Morale
As we’ve said, incentive rewards programs are a simple strategy to show your employees you appreciate what they’re doing. In turn, they feel valued and their motivation and morale will increase.
A 2017 study found that, when you’re able to improve employee morale and motivation, your employees will be more productive and competitive. The study also recommended that to increase productivity, companies should focus on increasing employee satisfaction by, amongst other things, providing incentives. This, in turn, leads to more efficiency and gives your company the ability to generate more revenue.
Encouraging Collaboration and Better Teamwork
Incentives can help you improve collaboration and teamwork among your team members. Perfect examples include incentive programs that recognize employees who work in teams towards specific goals, or programs that allow team members to nominate coworkers for their contributions.
Promoting a Healthier Corporate Culture
Studies show that workers value strong company culture, even over higher pay. In fact, three out of four workers say they’d consider company culture before they apply for a job there. Incentive rewards programs can promote a healthy and positive corporate culture by providing a platform to regularly recognize employees’ efforts, which develops a sense of respect among team members.
Enhancing Company Reputation
Your employees are more likely to talk positively about your company when you create a healthier and more positive work environment and culture. When they do, you’ll be able to attract the best talent through recommendations. In fact, according to Harvard Business Review, companies find 48% of new hires through employee referrals.
Improving Employee Retention
By rewarding your employees for their efforts, you’ll show them your company values them. And as we said, when workers feel like their contributions and efforts are seen, they are generally happier.
Increasing Customer Satisfaction
When your employees are more motivated and feel appreciated for their efforts, they’ll serve your customers better and keep them satisfied. This allows you to
increase the lifetime value of every customer.
Related: It’s Time to Rethink Managing Recognition Programs Internally
How Do Employees Feel About Incentive Rewards Programs?
We’ve now looked at incentive rewards programs from a company’s perspective. However, this is only one piece of the puzzle, and how employees feel about rewards and incentives is a critical consideration.
The problem is, when companies plan to implement incentive rewards programs, they often lean toward providing monetary rewards. But according to a study by the Incentive Marketing Association, 65 percent of employees prefer non-monetary rewards.
So, apart from the drawbacks we mentioned earlier relating to monetary rewards, employees don’t prefer them. As a result, you should consider the non-monetary rewards, incentives, and strategies when you implement your incentive rewards program.
How Do You Set Up an Incentive Rewards Program?
We’ve now come to the stage where you’ll learn to develop your company’s incentive reward program. Here, we’ll look at the steps you’ll follow, but it’s important to remember these steps are not set in stone. Your process for developing the program could differ based on your specific needs and requirements.
Define Your Objectives
The first step in the process is to decide what you want to achieve. This lays the foundation for the goals you’ll set for your employees and the incentives you’ll offer. And speaking of goals, you’ll need to create specific goals for your employees to reach to qualify for the incentive.
It’s also essential that these goals are attainable. As mentioned earlier, if they’re not, your program will have the opposite effect of what you want to achieve. In other words, if these goals are too hard, employees will become discouraged and you’ll damage motivation and morale.
Align Your Incentives With Your Objectives
The next step is to align the incentives you’ll provide with the objectives you want to achieve. So, your incentives will need to encourage positive behavior and motivate your employees to perform the tasks necessary to reach the set objectives.
You’ll need to be transparent for your incentive rewards program to work. Your employees should know what you expect from them and what they’ll need to do to qualify for the rewards or incentives. They should also understand how the program will benefit them and the company. In this way, they’ll know their efforts will be valued and worthwhile.
Your program should reward good work and employees equally. This requires you to develop specific metrics and, if employees meet these metrics, they’ll qualify for the incentives. This ensures everyone on your team stays motivated and produces high-quality work consistently.
Give Your Employees Options
Offering your employees a variety of incentives is a good idea. If a specific incentive does not appeal to an individual employee, they’ll be less inclined to do what’s necessary to achieve it.
One way to ensure variety is to use an online rewards platform that offers a catalog of rewards options. This will allow you to incentivize all your employees. Regardless of their personal preferences, if you’re got your finger on the pulse of your company culture, you can make sure there will be something for everyone in your reward offerings.
Promote Your Program
The final step in the process is to promote your program. Fortunately, you have a variety of options for doing this, including special announcements, posters, office memos, emails, social media, and the like. Also, announcing it once is not enough. Create a campaign around it to help employees remember it.
When you do this, you’ll create excitement about your program and the potential rewards and incentives your employees will be able to earn. This ensures that your program will work better and that your employees will be excited, even before the program starts.
Are You Ready To Create an Effective Incentive Rewards Program?
Now that you’ve seen what incentive rewards programs can do for your company culture, how can you get started to create your own effective incentive rewards program? The answer lies in using the right technology. Technology not only streamlines and improves employee incentive processes but also allows you to effectively integrate rewards into every layer of your business. This results in more employee engagement and better results.
And when it comes to technology, Xceleration is the perfect solution. We’re a full-service recognition and incentives company offering streamlined, effective reward solutions through our proprietary web-based platform, RewardStation. To learn more about our platform and how we can help you, contact us today to discuss your unique needs and goals.