Request a demo
Back to Blog

Want to boost retention and morale? 11 incentives for employees to try

September 6, 2022 - 18 min read
Jump to section

     

    The world is changing faster than ever, which is challenging all parts of the business. Some companies might be feeling increased pressure to hit profitability goals while others may be slowing down hiring.

    Regardless, organizations everywhere are constantly reassessing employee compensation. And in a market where top talent remains more critical than ever to attract, how are you rewarding your employees? How are you motivating your employees? Can you actually use monetary rewards to motivate and retain your employees?

     A study by Willis Towers Watson found that only 20% of employers in North America actually believe merit increases are effective in driving high performance.

    Traditionally money was seen as the main incentive used to motivate employees. Higher productivity results in higher salaries and bonuses. For companies, it’s been used as the main tool to attract, retain and engage their people. Today we’ve learned that the key to motivation is much more complex than that.

    Employee engagement is not about the financial rewards you provide, it’s about the intrinsic motivators that drive people at your company. Say your business hits hard times and you can’t provide pay raises that meet the standards you had set in the past.

    Employees who are there for the financial rewards will be the first to start looking for new jobs. Interestingly, Gallup found that 64% of millennials who are engaged at work stated they would not leave their job, even if the job market improves.

    So, in a time where offering incentives might not feel like a high priority, you might want to reconsider. We’ll learn why employee incentive initiatives can be the key to retaining your top talent. We’ll also talk about how incentives can help drive performance and motivation to keep your organization one step ahead.

    inclusive-leadership-report-cta

    What are incentives for employees?

    First, let’s break down what we mean by incentives for employees. 

    {featured snippet: What are incentives for employees?} 

    Incentives for employees can be any reward, program, or recognition in the workplace that helps to motivate employees. For many employers, incentives for employees help reinforce positive behaviors, stimulate employee performance, and inspire productivity. 

    {end of featured snippet} 

    Research shows that incentives for employees do have a positive impact on employee performance, job satisfaction, and organizational commitment. In other words, employee incentives can be levers to help improve employee retention. But it can also help incentivize your employees to reach their goals while also improving their employee experience

    Soon, we’ll get into more benefits around starting an employee incentive program. But first, let’s understand the different types of employee incentives. 

    11 types of incentives 

    There are plenty of types of employee incentives. We’ve rounded up a list of eleven employee incentives that are commonly used in the workplace: 

    • Monetary incentives or financial incentives (like profit sharing, gift cards, even cash) 
    • Employee recognition programs (including awards, 
    • Team-building activities or other ways to build connections 
    • Employee appreciation gifts 
    • Professional development opportunities 
    • A rewards program or some sort of reward system 
    • Tuition reimbursement 
    • Learning and development stipend 
    • Gym membership or other wellness programs 
    • Ability to work from home (especially pre-pandemic) 
    • Employee perks (like discounts to certain retailers, exclusive deals on different products, onsite appointments or experiences) 

    What can employers achieve with employee incentives?

    On its face, it looks like employee incentives can amount to a big expense for organizations. And while it’s true that some organizations may spend money on their incentive programs, it’s also true that employers will reap the benefits. Here are six benefits of using employee incentives at your organization: 

    4 examples of employee incentives that truly matter

    Now that we understand what defines employee incentives, let’s look at some examples. 

    Monetary incentives 

    Financial reward programs are probably one of the most well-known employee incentives. For example, some employers may use a profit-sharing plan where if workers achieve certain milestones, their shares increase. 

    Other businesses may set specific goals, like sales quotas, where if achieved, workers receive cash bonuses or other financial rewards. 

    I worked at an organization that offered company-wide monetary incentives. If our organization hit our company goals for the year, each employee received a certain amount of stock grants. It helped to keep employees focused on goals and motivated to reach those goals. 

    Employee recognition 

    Employee recognition goes further than you may think. While it might not seem like an employee incentive, recognition wields incredible power when it comes to engagement and productivity

    At BetterUp, we recognize employees in every all-company meeting. Employees peer nominate their colleagues who are living our high-impact behaviors and core values. As a result, our leadership team evaluates all nominations and publicly recognizes top performers. 

    Not only does it help to recognize some of our best employees, but it also feels good. It’s a great way to get employees engaged in recognizing some of their own peers and colleagues. It also contributes to the company culture. 

    incentives-employee-recognition-employee-of-the-month

    Professional development

    Hard work and good work are worth rewarding. And when your employees put in the good work to better themselves, your business reaps the benefits. 

    At BetterUp, every employee receives a yearly stipend of $1,000 USD for learning and development. I’ve been able to use my stipend on books, workshops, and courses that help me develop and sharpen my skills. 

    Other organizations, like my last company, offer professional development courses once you reach a certain level in the organization. For example, after I was promoted into a role, I was then given access to a slew of internal learning and development opportunities. Ask your human resources team if there are any professional development employee incentive programs. 

    Well-being and work-life balance 

    Another type of employee incentive program is wellness and work-life balance. 

    Some work environments promote employee well-being through initiatives such as gym memberships, wellness discounts, and other programs. 

    At BetterUp, we have Inner Work® Days. On a few designated days per fiscal year, our entire company shuts down. We dedicate these days off to Inner Work®, the practice of looking inward and doing something for ourselves. 

    I’ve spent some Inner Work® Days hiking and getting out in nature. But I’ve also spent other Inner Work® Days reading, learning something new, or simply just recharging my batteries. 

    Understanding employee motivation around incentives

    In his TEDTalk “What makes us feel good about our work”, behavioral economist Dan Ariely discusses an experiment in which he had participants put together lego figures for a diminishing amount of money. However, in one group, each time someone finished a figure it would be placed under the table. In the second group, each time someone finished a figure an experimenter would immediately disassemble it.

    While being offered the same amount of money, the second group stopped making figures at a much faster rate. Even if nothing was being done with the first group’s lego figures, the act of disassembling them was an extreme demotivator for the second group.

    The reason is that aside from money, people need to feel a sense of purpose in what they’re doing to actually feel motivated. Furthermore, having the number of figures add up could also give the first group a sense of progress.

    Similarly, PWC conducted a survey of employees asking them how much extra time they would work if:

    1. They received a bonus for every 15 minutes more they worked, with a cap of 90 minutes
    2. Customer satisfaction would increase when working 150 more minutes

    Interestingly, they found that about 30% would work up to 150 minutes, even if they stopped receiving a bonus after 90 minutes. In both cases, we see that people are largely impacted by the purpose behind their work and their ability to see progress or improvement.

    Douglas McGregor’s XY Theory was one of the first to make the distinction between the use of extrinsic versus intrinsic motivators. In his 1960 book The Human Side of Enterprise, he outlined two management styles that require different types of motivators.

    Theory X managers take a carrot and stick approach to motivation believing that humans have an inherent tendency to avoid work. Monetary rewards are thus the main tool used to retain and push employees to achieve more.

    Theory Y managers, on the other hand, believe that a sense of ownership and autonomy in reaching company objectives can drive an inherent form of motivation.

    Humans receive natural satisfaction from personal growth and improvement. Taking McGregor’s Y Theory into account, it becomes clear that to motivate employees, managers must provide an environment that can fuse their desire for constant professional development and achievement with a strong sense of purpose and room for self-direction.

    These factors have encouraged managers to break the connection between performance and pay. Instead, it places an emphasis on the work environment that encourages Y Theory management objectives. This has created a paradigm shift away from annual performance reviews based on X Theory incentives and towards a mission-driven environment that fosters creativity, ownership, and self-direction.

    incentives-for-employees-woman-smiling-at-work

    How to kick-start an employee incentive program

    If you’re not sure where to start, we can help you get started. Here are five steps to kickstart an employee incentive program at your organization. 

    1. Examine your current incentive offerings 

    You might have employee incentive programs in place and not yet know it. Or, it could be possible that some teams or leaders are already spearheading initiatives that are working well within their departments. 

    Do an audit to see what sort of offerings already exist. Where can you scale offerings to launch company-wide? What sort of programs can you potentially consolidate? 

    2. Work with your HR team to identify high-impact perks 

    Your HR team will be key players in rolling out employee incentive programs. Oftentimes, it’s HR that will lead these sorts of programs for employees, whether it’s a part of the employee experience or culture programs. 

    So, lean on the experts. What are high-impact perks that they’ve seen work well? What are low-lift ways to start implementing some of these perks, like peer recognition awards? 

    3. Figure out your budget 

    If you have any budget set aside for employee incentives, you’ll want to closely examine how you’re spending your dollars. 

    For example, monetary and financial incentives will obviously need extra budget attention. But other programs — like recognition awards — might simply be free. 

    Work with HR and finance to allocate your budget appropriately. It’s also great to hear from peers and others in your industry about what’s working well for them. 

    4. Gather feedback and data from your employees 

    You might already be conducting employee engagement surveys. Or you might have listening circles with employees or managers to gather feedback about incentive programs. 

    Whatever sort of feedback mechanism you use, gather feedback. Your employees might also have some great employee incentive ideas. Some companies even allow employees to vote on their favorite programs. 

    5. Communicate the incentive programs (both well and often) 

    Ask any internal communication professional. An internal program like an employee incentive plan needs communication support. Your employees won’t know what sort of reward systems exist if you don’t communicate with them. 

    Work alongside your HR professionals to make sure you’re publicizing the benefits and incentive offerings available. It could also help team members be more informed and engaged in the overall program. 

    whats-motivating-you-graphic-on-building

    5 things to keep in mind when offering incentives for employees

    Of course, like any other sort of employee program, it helps to have some best practices. Here are five things to keep in mind when offering incentives for employees

    • Clearly outline employee eligibility. This depends on what type of incentives you’re rolling out to your organization. But make sure that you clearly outline employee eligibility.

      For example, if you’re allowing employees to participate in profit shares, what sort of rules or key milestones need to be achieved? Can full-time employees participate as well as part-time employees? What about interns, contractors, etc.? 
    • Figure out how performance goals will be measured (if goals are linked to incentives). If you have incentives linked to goals, get really granular about how those goals are measured. Make sure employees clearly understand what goals need to be met and how their performance will be evaluated. 
    • Align incentive offerings with your core values. At BetterUp, many of our incentive programs align with the core purpose of our business. We’re here to help everyone live with more purpose, clarity, and passion. So, our incentives empower that mission to come to life.

      Think about how your core values can help guide what incentives you offer. It’s great to help reinforce your company culture, too. 
    • Keep a door open for feedback. Not only should you track data around incentive usage, but keep an open door for feedback.

      For example, some employees might not be using a certain incentive. Ask them why. What barriers are they experiencing? What sort of program might be better received? 
    • Make sure any employee recognition incentive is timely. Recognition is powerful. But it holds a lot more power and weight if it’s timely.

      For example, let’s say an employee just nailed a customer presentation that landed in a big sales deal. If that employee was recognized two quarters down the line, it might feel like the moment has passed. Make sure recognition is timely. 

    Unlock the potential of your workforce with incentives 

    Whether you’re a small business or a big organization, incentives have an impact. Think about ways you can boost employee morale, teamwork, and performance with employee incentives. 

    Creating a strong culture of continuous learning and feedback will win you a motivated and agile workforce. To create these conditions, more managers are prioritizing coaching, employee recognition, and openness by using real-time 360-degree feedback tools. However, compensation decisions still need to be made. 

    Tap into the full potential of your workforce.

    With BetterUp, you can provide personalized support through virtual coaching. In order to create a strong company culture built on psychological safety, feedback, and trust, your people need support. Help your workforce live with more clarity, purpose, and passion with a little help from BetterUp. 

    New call-to-action

    Published September 6, 2022

    Madeline Miles

    Madeline is a writer, communicator, and storyteller who is passionate about using words to help drive positive change. She holds a bachelor's in English Creative Writing and Communication Studies and lives in Denver, Colorado. In her spare time, she's usually somewhere outside (preferably in the mountains) — and enjoys poetry and fiction.

    Read Next

    Employee Experience
    15 min read | November 29, 2021

    8 employee recognition examples to boost morale

    Discover how employee recognition can help grow your business and inspire employees. Plus, learn how to start a successful employee recognition program. Read More
    Employee Experience
    21 min read | April 23, 2021

    How do employee benefits work?

    Employee benefits work to help a business recruit in-demand talent and retain what they have. They also keep current staff healthy, motivated, and engaged. Read More
    Employee Experience
    22 min read | June 23, 2021

    What is an EAP? A guide to employee assistance programs

    Employee assistance programs (EAPs) are a way companies support the well-being of teams. Learn how they can contribute to employees’ performance and wellness. Read More
    Employee Experience
    33 min read | August 2, 2021

    The 6 types of employee benefits: How to go beyond the minimum

    Employee benefits packages are a great way to attract top talent. Learn about the 6 major types of employee benefits, and which ones you should be offering Read More
    Employee Benefits
    14 min read | September 16, 2021

    Humans make mistakes, employee benefits liability covers them

    Employee benefits liability (EBL) insurance is coverage that protects organizations if administrative errors or omissions occur when employee benefits are activated. Read More
    Culture
    27 min read | March 2, 2022

    Boost retention and energy with 26 unique employee appreciation ideas

    Try these employee appreciation ideas to show your teams and individual employees how much they’re valued. Read More
    Employee Experience
    22 min read | February 22, 2022

    The secret to achieving job security — and why it matters

    Whether you're an employer or an employee, job security matters. These 6 tips can help you increase job security and stability — and succeed. Read More
    Employee Benefits
    12 min read | June 10, 2022

    Taking medical leave? What to know before you do

    If an employee isn't well, taking time to recover is always a good idea. Here's what employers and employees need to know about a medical leave of absence. Read More
    Employee Benefits
    16 min read | September 28, 2022

    Understanding pay transparency: 5 reasons to start talking money

    Can pay transparency help or hurt your employee engagement? Find out how to do pay transparency right (and learn what your employees need). Read More

    Stay connected with BetterUp

    Get our newsletter, event invites, plus product insights and research.