Posted on July 25, 2014

4 Tips for Creating Employee Incentive Programs

Incentive programs can be a powerful way to engage employees, improve performance and reach major corporate goals.

Research shows that incentive programs offering financial rewards can increase individual performance by 22 percent and team performance by 44 percent. Incentives also keep employees engaged over longer periods of time. When a reward is offered for reaching a given goal, performance increases by 15 percent. When employees are asked to continue in pursuit of a goal, performance increases by 27 percent.

Achieving these kinds of results requires a well-designed, carefully communicated plan. Here are four best practices for developing a successful incentive program.

1. Tailor your program to your organization

Generally, incentive programs are instituted to solve a particular problem, such as low sales, caused by lack of motivation. But if performance is struggling due to other reasons—outdated technology, sub-par skills, inadequate resources—an incentive program won’t be a cure-all.

Also take into consideration the makeup of your organization and its culture. A green start-up will have different needs than a well-established business of veteran employees. What will most effectively motivate your team?

2. Get high-level buy-in

Obviously for an incentive program to work, employees need to see the value and participate. Upper-level management also must be engaged in supporting the program and reinforcing its importance. You can create buy-in by reframing incentives and recognition not as a cost but as an investment—something to boost productivity and employee retention. Once the program is under way, be sure to track your progress.

3. Define success and keep things simple

Make it clear to employees what they need to do to win. When there’s something tangible on the line, your teams are more likely to dig in and see the value of what you’re asking them to do. To that end, the goals you set forth must be attainable and realistic; nothing is more demotivating than a so-called incentive for a goal you know you can never achieve! In setting up your program, ensure there are frequent opportunities for small victories that keep employees on track and inspired. Provide them a direct, uncomplicated path to success.

4. Measure, refine and communicate

Of course, no incentive program makes sense without measurement to tell the success story. Outline your goals before kicking off the program, then measure progress continually—don’t wait until the end of the campaign. As you see what’s working and what’s not, refine your program, either for the immediate future or for the next phase of your efforts. And communicate to your employees what you’ve concluded: what worked, what didn’t, who won and what the next steps are.

A resource like *Paycor’s Custom Reporting tool enables to you to create reports in an instant for any data you choose to track. With unlimited custom fields, Custom Reporting can power an incentive program or provide visibility into everyday details such as head count and compensation. Learn how Custom Reporting can work for your organization.


Sources: Incentive Research Foundation, Quality Incentive Company