How to Build a Tailored Employee Incentive Program
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You already know how valuable your employees are to your organization. It may be as simple as them being hard workers who ensure that your targets are met and that profits continue to grow. Or they could be an important part of your decision-making process, coming up with innovative ideas that streamline and improve your systems and processes.
Whatever their role, your employees add value to your business - and it’s important to recognise that. Unfortunately, many businesses don’t, and a lack of recognition is the third most common reason people leave their job. One way to ensure your staff feel valued is to build a tailored incentive program.
What is an employee incentive program?
An employee incentive program isn’t just about rewarding your employees, or providing holiday gifts. It’s also about maintaining good staff retention rates as well as attracting the best candidates when you have vacancies.
To achieve this, consider incorporating tools like recruitment CRM software into your strategy. These tools can streamline your hiring process, making it easier to identify and engage top talent right from the start.
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There’s no one-size-fits-all program, however - it should be tailored to your own business and staff. You may want to reward productivity or you may want to encourage innovation. For example, if your teams meet certain sales targets on a Vonage cloud phone system, you may decide to award the team bonuses. The incentives you offer should align with the values of your business but should also meet the desires of your employees. Let’s look at some common perks these programs might include.
Common things to include in an incentive program
The first thing you are going to think about is what ‘rewards’ to include in your tailored employee incentive program. Some of the most common things that businesses add to their incentive programs include:
- Salary raises. This may not seem like a reward, but it can act to both retain existing staff and to attract new ones. Adding an annual salary raise to contracts can be a foundation of your overall program.
- Monetary bonuses. These can be given out for many reasons, from meeting targets to pitching ideas that save you time and money. However, it should be clear to all your staff what objectives or metrics they need to meet to be considered. It’s important to think about how these rewards are delivered - do staff prefer checks or direct deposit?
- Extra vacation time. Depending on the hours they work, most of your staff will have their length of vacation time stipulated in their contract. Rewards can take the form of adding to that time. It may even be a single day off so the employee can have a long weekend.
- Recognition. You may already be doing this in the form of ‘employee of the month’ or similar. While it may not have the same tangible benefits as other rewards, people like to be highlighted for their contributions.
- Health and wellness. The health of your employees should be as important to you as it is to them. After all, days lost through absence can affect productivity. Depending on what your employees want, this incentive can take the form of everything from subsidized gym membership to financial contributions toward mental health counseling. You should also include some form of (or contribution to) health insurance.
- Referral incentives. No matter how good an employer you are, you will always have some level of staff turnover. When you advertise roles, tell your staff that they will receive a referral bonus if they recommend someone who successfully applies for the position.
- Development plans. People want opportunities to grow. Offer staff regular meetings/appraisals to see where their career is at now, where they want it to go, and how you can help with that. Make sure to consider non-exempt vs exempt employees; both sets will want to see career progression of some type.
- Tuition reimbursement. This is closely linked to career development. Are there courses which will make your staff more knowledgeable and help them to work with new technologies? Meeting some or all of any tuition costs can be attractive to employees and can help improve the skill sets in your business.
- Swag. We all love free stuff. That said, there are some things we simply won’t use - a branded ‘Only Domains’ cap might not go down as well as you hope. Find a balance between company-related products and what your staff will actually use.
Image from SwagUp
- VIP treatment. This is another incentive that can take several forms. A good example would be if you had a corporate box for your local baseball team. As a reward, you may decide to offer ‘winners’ a VIP day out at a big game.
- Team-building. This is something that can benefit both your employees and your organization. A team-building weekend away not only offers a fun experience, it can also help team members to bond which in turn can lead to better teamwork and increased productivity.
The benefits of an employee incentive program
There are very good reasons so many companies offer some form of incentive program. If you don’t have one in place now, what benefits could you see from implementing one?
- Increased morale and productivity
This is perhaps the primary benefit of incentive programs. When your employees feel recognized and engaged with, then they work harder and become more involved in company goals. Research has shown that these programs can improve everything from staff’s sense of opportunity to well-being to appreciation. Happier workers are likely to be more productive in every area.
- Higher retention rates
If you have a high rate of staff turnover, it could be affecting your bottom line. You have to shoulder the costs of advertising a role, the recruitment process, and then any onboarding and training needed for new hires. When you recognize and reward employees’ contributions to your business, then they are less likely to want to switch jobs.
- Lower costs
You may be worried about the costs of an incentives program. There are two things to consider here. Firstly, incentives can be low or no cost. For example, partnering with a local gym to offer membership discounts does not need to cost you much. Secondly, and perhaps most importantly, the costs of any incentive program should be offset (hopefully) by the increased profits and reduced turnover you see as a result of better productivity.
- Better work environment and company culture
With incentive programs, all these benefits are intrinsically linked. Imagine joining a team that instantly greets you with onboarding swag! You’re going to be positive about your role right from the start. Happier employees and team-building exercises can help foster a better spirit of collaboration. Better teamwork and collaboration can improve the work environment and your overall company culture.
How to build a tailored employee incentive program
Now you know the sort of incentives to offer and the sort of benefits you might see. But how do you tailor the program to your business and your employees?
- Ask your staff
Yes, it’s that simple. Ask your employees what sort of rewards they would like to see included in any incentive program. Of course, you will always get the odd flippant answer such as a Ferrari F40, but most of the data you collect will be useful and can help you build a robust program. You can even narrow the choices by asking them to select their preferred options from a list.
Free to use image from Unsplash
- Seek partners
Once you have an idea of what incentives your employees want, look at ways of offsetting or subsidizing the costs of those incentives. Seek out potential partners where working together will have benefits for you both.
Every business has some form of competition and that extends to providers of some of your incentives. Whether it’s Paylocity’s small business payroll offerings, or a company that provides team-building adventure weekends, they want you to choose them. Negotiating good rates and discounts can help offset the cost of that incentive.
- Think about ‘triggers’
For a good tailor-made program, you also need to consider what you are rewarding or recognizing. There are two sides to your program. One includes things like annual salary raises for all employees which can help encourage employee retention. The other side consists of rewards for particular achievements.
Let’s say your company has received a large order from a customer. However, if the goods are not delivered by a certain date, you may face financial penalties. When your employees work harder to meet that deadline (maybe even working overtime, or coming up with creative ideas about insourcing vs outsourcing), then you will want to reward them. Having a transparent incentive program can help workers engage with it.
- Monitor and tweak
You will want to know how well your incentive program is working and make adjustments where needed. That means you want to monitor metrics such as increases in productivity or improved profits, utilizing employee tracking systems to gather data on performance, engagement, and satisfaction. You also want to compare any improvements with what the program is costing you so that you can be sure your money is well-spent.
You can monitor and fine-tune your incentive program with a data-driven approach. You'll want to assess its effectiveness based on HR statistics and employee feedback. Regularly track metrics such as increased productivity, improved profits, and HR statistics on employee engagement and satisfaction. By analyzing this data, you can make informed adjustments to ensure your incentive program aligns with your business goals and remains a valuable investment.
The takeaway
As you can see, an employee incentive program is beneficial to all involved. Tailoring that program to the wants of your employees and your own needs can elevate those benefits further. When your staff sees rewards offered that they have asked for, then they will feel listened to, appreciated, and you’ll see an increase in employee motivation.
Of course, your incentive program needs to work within a certain budget, initially at least. If you do reap rewards from it, then you can look at increasing the program’s budget. Partnerships are also a great way of offsetting costs.
Finally, don’t forget to regularly evaluate your offerings. Check in with your team, monitor your budget, and keep track of what works and what doesn’t. That way, you can ensure it’s perfectly tailored to your business.
