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How much money are you losing due to employee attrition? Sure, turnover is expensive for any company. But in today's challenging market, the cost of losing your best employees is even higher.
Hiring and training a replacement does not come cheap, and on the downside, you also lose the value that former employees produced for your company. So how can you change that?
By recognizing employee efforts, you see that everyone wants to be appreciated at work—that is human nature. But how many companies take employee recognition seriously? Shockingly, only 33% of employees feel engaged and valued at their workplace. (Source: Gallup)
In an AttaCoin study, 88% of respondents agreed that it was essential for employers to reward employees effectively. However, only 41% felt that their employers were incentivizing them properly.
What is an Employee Incentive Program?
Some of the most popular employee incentive programs include leadership training & development, monetary rewards, non-monetary rewards, team-building activities, office/workplace swag bags, bonus payouts, recognition awards, perks & discounts programs, etc.
Why are Employee Incentive Programs Important?
A structured and impartial employee incentive program at work motivates people to do their best and boosts productivity for the whole company. Here are four data-driven reasons why it makes sense for you to invest in an incentive program for your employees:
1. Huge boost in productivity
Workplaces that recognize and reward contributions make happier employees, improving their productivity. An SHRM study states that companies with an incentive program see 52% higher employee productivity.
2. Higher success rate in achieving business goals
High-performing companies can perform well because of their employees. By providing employees incentives at the workplace, they share success with them.
This helps employees feel a greater sense of ownership in their work and spurs them on to do even better—which translates into a 79% success rate in meeting business goals. (Source: Deloitte)
3. Better talent retention
Employee retention and hiring are ongoing for companies of all sizes, including Fortune 500. However, the talent shortage is prevalent everywhere, and companies do not always feel confident that they can hold on to their best employees in the coming years.
The solution is simple—the top talent is ready to stay with their current organization as long as the proper recognition and rewards are offered. Moreover, such a kind of company culture helps increase revenues by 4X.
A strong employee incentive or a bonus program also improves hiring, as qualified applicants will be more interested in applying.
4. More sales
Greater employee satisfaction also translates into an improvement in your bottom line. An HBR study showed that having a happier sales team can boost sales by up to 37%. "Whether you sell goods online or own a local cupcake shop, ensure all of your departments feel appreciated and engaged in the process."
Types of Employee Incentives for Motivation
Your employee salaries are prominent places to develop a reliable incentive program. Paying employees a sum of money commensurate with their skills and experience is a prerequisite for feeling valued.
However, merely handing out salary hikes every year may not be enough. Employees feel more special when given gift cards to spend as they like or experiences they can share with their loved ones.
Here are various types of employee incentives that you can consider including in your employee incentive program:
Monetary Incentives for Employees
Monetary incentives are those that are given as cash or financial rewards. Here are six monetary incentives that you can include in your company’s employee incentive program:
Many employees seek recognition for specific achievements rather than overall performance. This is where commissions or target-based incentives play a significant role.
In sales, spot incentives effectively appreciate the efforts of those salespeople who have exceeded their monthly targets or bagged a vast client. Companies like Deloitte organize such spot recognition programs for their HR departments.
➡️ Perks and benefits
Non-monetary benefits often matter even more than cash bonuses. For instance, a gift card or a discount coupon for a brand the employee likes is a more personal touch. Companies can also secure team-wide digital rewards and benefits on eCommerce platforms, restaurants, or fitness centres using Empuls.
When a company shares its profits with its employees, it appreciates all the employees' efforts. Huawei, the Chinese telecom equipment company, follows this model.
Its CEO, Ren Zhengfei, holds on 1.4% of its total share capital, while employees take the remaining share from the company's earnings. Zhengfei believes that if employees own the company, they will be motivated to initiate more projects and work harder, which will boost the bottom line.
These are incentives given out for meeting tight deadlines. They are well-communicated in advance and tend to involve senior management. Generous cash incentives are a big part of this and public recognition.
The attrition reduced from 8% to 4.5% after implementing Empuls, the employee engagement platform, cultivating a culture of recognition, free flow of information, and a transparent rewards system.
➡️ Annual performance-based
Regular rewards for meeting targets and being consistent continue to be a big part of incentive-building. Be sure to have a system that allows stronger performers to get bigger raises. Use platform gamification such as Xoxoday Compass to design incentive and commission campaigns for different functions of your company.
➡️ Anniversary/festival incentives
By recognizing an employee's tenure with anniversary gifts, the company demonstrates that it appreciates longevity and is likely to retain its employees even longer. In addition, gifts to mark festive occasions such as birthdays, marriages, and children's birth are also thoughtful touches.
Members who achieved their daily wins had numerous redemption options from Xoxoday Compass, including free goodies, free personal training sessions, and many others. That means incentive programs work great for employees as well as customers.
Non-Monetary Incentives for Employees
Employee Incentives can go far beyond just gift cards or restaurant treats. Many employees might want more learning opportunities, for instance, or more public recognition. Get creative with the non-monetary incentive programs to appeal to different employee needs.
➡️ Career development course
Upskilling is fast becoming a requisite to keep up with the ever-changing times and should be encouraged by every company. Incentivize a motivated employee to learn and grow by paying for an online course or certificate pathway. Today, many great online course platforms are very flexible in offering self-pacing and re-purposing earlier sessions for new employees.
This can also be extended to non-work-related skills, such as music or graphic design. That way, employees can feel like the company values their personal growth. SAS, Amazon, and AT&T have excellent L&D programs for their employees.
➡️ Social media shoutout
Apart from recognizing an employee on the company's internal platform, the company handle can share a social media post for the person. This allows the accomplishment to be viewed by the employee's circle, including friends and family.
Starbucks refers to employees as "Partners." As their social media guidelines mentioned, "We're called partners because this isn't simply a job, it is our passion." This gives employees a sense of belonging and accountability. Here's an example from the Starbucks India Twitter handle.
➡️ Peer-to-peer recognition
It does not just have to be the senior management that calls out accomplishments and contributions. Have a system that enables employees to recognize their peers for a job well done or for help. This highlights good deeds such as covering for a sick colleague or helping a new hire settle in. It also encourages more behaviour like that from the rest of the team.
General Motors frequently practices employee recognition and has achieved a 97% employee engagement rate. They recognize at least four employees every month.
How to Create an Incentive Program for Employees
An employee incentive program should be designed around your workforce and what makes them tick. It should spur them to achieve more and display a personal interest in their wellbeing and desires.
Whether you are redesigning your existing incentive program or building one from scratch, here are some valuable tips to keep in mind:
1. Understand what makes your employees happy
Everyone has different motivators, and what you might appreciate as an incentive may not appeal to your content team.
The first step to building a strong incentive program is conducting surveys to identify what incentives would motivate different departments to perform better.
This will help you find patterns that you can incorporate into your program. Plus, even after you roll out the program, remember to keep surveying your employees periodically to know you are on the right track.
2. Be thoughtful about your incentives
The ideal incentive program targets the employee's wellbeing, professional aspirations, and work-life balance. Have a menu of incentives in place and give your employee the flexibility to choose what they want most. '
Extra paid time off, home office contributions, meal vouchers, gym passes, experiential gifts, and career development opportunities are substantial employee benefits that companies such as HubSpot have used with success in the past.
3. Make sure the program is sustainable
Understanding your company's needs and budget is essential so that the incentive program does not hamper workflow or lead to financial difficulties. Rather than bringing incentives to a halt later because of faulty planning, it is recommended to start small and build upwards based on feasibility.
How to Budget your Employee Incentive Program?
By now, you know the importance of an employee incentive program and how meaningful rewards can make or break the participation rate of your organization's reward and recognition program.
The next question is, how much should you spend on your employee incentive and rewards program? The answer varies based on the number of employees and the company's total recognition and rewards.
As per World at Word, most recognition programs have a budget of 0.3% or less of the total payroll budget.
On the other hand, SHRM suggests a successful reward program with a budget of 1% or more of the total payroll. In addition, the incentive program should consider other factors that influence the final budget and the budget consideration. They include:
1. Administrative time
Running a manual recognition program takes up much time for the administrative and HR departments. Ensuring employees are appropriately rewarded and recognized for their hard work is no easy task.
Did you know cash and prizes awarded to employees can be considered a taxable income? Therefore, running a manual rewards program can be a liability when you are running a manual rewards program. Also, you have to rely on managers to track the expense receipt. To avoid losing your peace of mind over this, recognition software keeps all the information in a central dashboard.
As per a report, high employee engagement correlates to employee recognition. In simpler words, the ROI of increased employee engagement directly impacts your profitability. Companies with high employee engagement are more profitable products and experience reduced absenteeism than their counterparts with disengaged employees.
The key benefit of an employee incentive program is increased employee engagement. This is crucial to keep in mind while considering a rewards budget.
Summing it up
Creating an employee incentive program is the first step toward building a unique company culture where employees are happy, productive, and engaged. Great brands constantly re-evaluate how they reward employees and ensure that their program meets the needs of both their people and the market.