Incentives are Essential for Employee Motivation

“People leave when they don’t feel appreciated. That’s why we’ve made recognition a really high value. Our business is people-capability first; then you satisfy customers; then you make money.” David Novak

I love the lucidity and succinctness of this quote and despite that it speaks eloquently of how being appreciated and incentives are essential for employee motivation. When the people who work for you know that they can work in a peaceful and stress-free environment and that when they speak they will be heard, this on its own contributes to employee motivation. It is one of the best incentives. As the leaders and owners of companies it is your duty to ensure that your company’s culture and set of operating processes are such that they enhance employee motivation and keep each one happy.  Incentives are essential for employee motivation and can take on many different hues and forms but the ultimate aim must be to recognize and reward great performance, encourage positive behaviour and keep your employees with you for a long time. What incentives do you have for your employees?

To make incentives a regular feature, it is highly recommended that companies put in place a structured employee incentive program. Just knowing that there is such a robust method to boost employee motivation works to get high calibre employees and keep them with you. Incentives are a tangible way to show employees that their efforts will be rewarded and that hard-work will not go unnoticed thereby contributing to their success in the company. Obviously incentives programs and schemes vary from one company to the next but the one thing that must be constant for an incentive to qualify as one is that it must have some kind of value, does not necessarily have to be monetary though. The employees must be able to ‘gain’ something out of it – so in effect a thank you note does not qualify as an incentive. Some examples of incentives are extra paid days off, a team offsite for the best performing team, free movie tickets or lunch coupons, cash prizes and such.

We believe that incentives actually work best when they have a monetary value – at the end of the day everyone is working to gain that edge by earning more.

  • A higher salary increase than others for a top performer is a sure shot way to encourage better work performance and motivate others to follow suit. The advantages far outweigh the extra sum you pay the employee. Almost all companies have pre-decided percentages of salary increases and this is common across all teams and levels. So for example the highest percentage is 15%, it would be a major boost to give the top performer over and above that.
  • Higher cash bonus amounts are also extremely gratifying as incentives. This could be for an entire team or for some top performing employees. As an incentive this conveys a loud and clear message that the person or persons receiving it are highly valued members of the organization and this serves as an extremely strong motivating factor for the employees. This incentive is normally connected to the completion of a major project that will have a high impact on the overall business success of the company. It should be paid immediately after the successful completion to have the right impact. With so many new companies emerging and current breed of companies also fighting to gain the best talent, it would be prudent to keep employee motivation high lest you lose some of your best.
  • Many large companies offer Stock Option Plans. This allows the top performers to buy a specified number of the company’s shares at a pre-determined price within a specified time frame. The share prices grow as the company gains success adding huge profits for the employee who has the stocks.
  • As mentioned, attracting the best talent is getting tougher and one of the incentives that companies use is a joining bonus. The amounts are seriously attractive and companies have been able to get the best in the industry in the shortest possible time. The greater the figure, the better the company’s chances at attracting the crème de la crème in a particular field. Some companies also pay off a prospective employees notice period amount i.e. the current place of employment of the ‘prospect’ would normally ask the employee to either serve a notice period or pay the company in lieu. This in lieu payment is paid off by the company seeking to hire this employee so that the person can join them immediately. From my experience it works really well.
  • Many companies structure the salary in such a way that the employee can save on tax. These incentives are a major lure since they are able to make savings in non-taxable schemes thereby saving taxes and also being able to invest in plans to secure their future. Such incentives not only attract but also retain employees – great for employee motivation.
  • Another great incentive program is health, accident and life insurance for employees and their immediate families. Given the insecurities and rising health and lifestyle related illnesses, most people certainly buy insurance and when the company they work for recognizes this need and pays for this extremely critical investment, it increases productivity and raises employee motivation.
  • To show your staff that they are indeed the first customers and valued members, many companies take the route of offering very high discounts to the employees and their families on products and services of their company. They also tie-up with other vendors, hotels, clubs, large stores to get sizeable discounts for their employees. Employees have been known to get club memberships at almost half the market price. This allows them recreation time with their families and also to gain entry into well-equipped gymnasiums and spa facilities.
  • Sponsoring international holidays is a great incentive. Imagine the delight of the employee who has worked hard and consistently and receives an all-paid family holiday to an exotic location halfway across the world! The employee may or may not be able to afford such a holiday with the family and this incentive is therefore a serious motivator – not just for the employee but also for others too. Some companies also add a fixed amount of dollars as ‘spending money’ for the employee and the family.
  • Spot incentives based on peer and manager recognition. This involves the co-workers and or manager of an employee recommending the performance. Based on such recommendation the employee is rewarded with some kind of reward – either a cash prize, shopping or dining coupons, or a smart device or gadget. The great part of this kind of incentive is that it is immediate and lets the employee and others know that their performance is not only being monitored but will also be appreciated when it goes over and above a certain level. It also puts the spotlight on this high performer, which is a great boost and makes those around want it too.

There are many other incentives too like team lunches, corporate outing with a stay at a luxurious hotel, a lavish dinner at a 5 star hotel and others. Whatever the incentive chosen, the truth is that incentive programs are gaining popularity and importance for both employers and employees. Employee motivation sees a surge when there is a structured incentives program that is effectively implemented.  Do you have an incentive program for your employees?

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