Definition, Success & Popularity of Incentives
What is an incentive?
What makes incentives do well?
How popular are they?
Several of these terms are used interchangeably, which can be mystifying in conversation. These definitions will help: so read them, know them, live them.
Incentives help engage employees, and engaged employees enhance your bottom line. So yes, incentives are an indirect route to bottom-line results. And no, you shouldn’t let the indirect-ness of their link to the bottom line discourage you.
Organizations with higher than average employee engagement have:
Why Incentives Matter Now
Burned out post-slump employees are poised to jump, but organizations need their talent, knowledge and experience to emerge from the recession. Incentives can help.
Americans Have Many Jobs
Without factoring in the recession.
Company Assets are Intangible
This is knowledge, reputation and human talent.
The Turnover Rate is High
And the cost to replace employees is high.
Job Satisfaction is Declining
That’s more than half who are unhappy at work.
Land of Employee Incentives
It’s amazing how many places there are for employee incentives. Some are massive and obvious, others are unexpected and easy to miss. It’s good to know your options before you map out an incentive plan.
A. Retirement Peak: The close of a career commands respect and acknowledgement from 42% of companies.
B. Service Anniversary Ridge: The most widespread type of incentive is linked to loyalty and used by 90% of organizations.
C. Idea Generation Gorge: 27% of companies use incentives to mine employees for innovative ideas.
D. Employee-of-the-Island: Whether of-the-year or of-the-month, 29% use this personal callout to inspire individuals.
E. Peer-to-Peer Tributary: To keep the idea of great performance circulating, 43% have peer-to-peer programs.
F. Family Event Rapids: Life has lots of ups and downs. 25% of companies support their people with incentives around major events.
G. Performance Recognition Lake: Strong performance has a ripple effect. That’s why 79% recognize it.
H. Safety Harbor: Cars and machinery and chemicals can create problems. That’s why 22% of employers enhance safety programs with incentives.
I. Sales Performance Spire: Sales can crumble without goals, so 40% of employers attach them to sales incentives.
J. Woodlands of Wellness and Other Specific Behaviors: Employee wellness is the fastest-growing of this incentive type, which is found in 34% of organizations.
K. Attendance Marsh: Life’s complications can erode away at attendance. 12% of organizations use incentives to keep it more stable.
Wellness programs are popular because health care costs have ballooned more than 40% in the last 5 years, and they’re able to reduce costs as much as $225 per employee. Plus, wellness programs often improve employee morale. Negative incentives, such as charging higher health insurance premiums for not participating, aren’t effective. But positive rewards can increase wellness program participation from 26% to 90%.
Safety programs are designed to motivate employees to focus on being safer at their workplace, in all sorts of ways: by developing defensive driving habits, taking frequent breaks, choosing ergonomics, and more. A properly designed safety incentive program not only rewards safe work, but also promotes proactive behavior such as making safety suggestions to others, identifying hazards and participating in safety committees.
The Gallup Organization has found that in productive and engaged workplaces, employees receive recognition every seven days. Peer recognition programs are a simple, powerful way to improve working relationships, employee engagement and retention. Peer recognition can work all sorts of ways: employees can show appreciation one-on-one or in public, using paper notes or e-cards, bulletin boards or social media.
Go Long to Send a Strong Signal
The longer the duration of a reward or employee recognition program, the greater the chance that employees get your message and make positive changes.
Is an Incentive the Answer?
Make sure the answer to all these questions is YES before you launch an employee rewards or recognition program. Otherwise, this may not be the right response to the situation.
Is current performance on specific goals too low?
Is the cause motivation, not a lack of skill or training?
Can you measure current and desired performance?
Are the required goals challenging, yet achievable?
Is it possible to continue other work at the current level?
Incentives & the Mind
There are 4 basic human drivers, and incentives are able to tap into all of them.
Researchers have shown it’s physically more likely for the brain to access a real image from the right brain.
Tangible Incentives: are vivid and full of sensory-rich specifics, so they’re stored in the emotional right side of the brain and “pulled up” often in anticipation.
Cash Incentives: are abstract numbers, not a clear image, so they’re stored in the left, logical side of the brain and accessed less frequently and in less detail.
Did You Know?
People weigh an incentive’s value against how hard it is to earn. Ask too much, and people will dismiss your incentive. Choose employee rewards that inherently have higher value, and you can inspire higher performance. Keep in mind that indulgences, especially those that don’t have to be justified, are more valuable. So are things that attract peer attention and stand out from regular pay.
Tangible Items as Incentives
What do all these employee incentives (or rewards) have in common? They go beyond praise and are things you can see or do. Some require a sizable budget; some don’t need any at all.
Perks: Low-to-no-cost incentives are ways to give employees the VIP treatment. For example: front row parking, an extra day off work, or a casual dress day.
Travel: The motivational power of travel can’t be denied, whether it’s a weekend getaway for two or two weeks at an exclusive resort for the whole team.
Merchandise: We’ve come a long way from the gold retirement watch. Now logoed items mark achievements, and reward catalogs provide more choices.
Trophies: Items like certificates, plaques, pins, and medals are lasting reminders of achievement meant for display. This aspect can give other rewards “trophy value” too.
Financial: Gift cards (the most wildly popular incentive), cash and gift certificates give people the chance to pick what they want, and have the company pick it up.
Did You Know?
Gift cards are the number one employee incentive, and a whopping 62% of companies offer them. They may seem the same as cash, but they’re actually quite different.
Why Companies Like Gift Cards
Recognition as an Incentive
Some of the best recognition methods start with “I,” the first letter of the word intangible. This is a nice little memory aid, as intangibility is also what separates employee recognition from rewards.
Types of Structure for Incentives Programs
Employee incentives are used to support safety, wellness, years of service, productivity, sales, recognition and more. They can be structured in a variety of ways.
Peer Recognition: In this “culture of recognition” equals give each other praise or rewards for good work.
Spot Rewards: Employees get handed rewards instantly, or “on the spot” when they show strong performance.
Contests: Teams or individuals compete to win a reward. Popular for highly competitive salespeople.
Points Programs: Employees collect points over time for meeting various goals. Points can be redeemed instantly or saved up.
One-Time Rewards: Incentives at their most straightforward: Meet the goal, earn the reward. This structure is ideal for launching new products and policies.
Key Trend #1: Online & Mobile Incentives
The number of online incentive programs has almost doubled in size every year. And nearly every traditional incentive company offers their clients an online component for incentive plans. Why the increase?
Key Trend #2: Incentives with Gamification
First things first: what is it? Gamification is adding one or more standard game elements into something that’s not a game.
Sound familiar? These are the 4 basic human drivers you saw earlier. Games are designed to tap into our innate motivations to collect, defend, connect, and explore.
Games Enhance, they don’t replace.
Gamification focuses on short-term results, rewarding and encouraging basic, measurable behaviors. This makes it a great tool for encouraging participation in an existing employee incentive program, but not a substitute for elements that foster long-term change and big-picture thinking.
Real World Incentive Stories
Hewlett-Packard Idea Generation
The Golden Banana Award is one of Hewlett-Packard’s most prestigious honors for inventive employees. It began when a company engineer burst into his manager’s office with the answer to a problem they’d been struggling with for weeks. The manager searched his office for a way to mark this accomplishment, but all he came up with was a leftover banana from lunch. Still, he handed over the banana and said “Well done! Congratulations!”
AT&T Employee Recognition
At AT&T Universal Card Services in Jacksonville, Florida, paper is the key element for World of Thanks, one of their most popular programs. The program helps create a culture of recognition and higher performance in a simple way: anyone in the company can write a message of thanks to someone else and send it. To make it official, employees use a sheet from a globe-shaped pad of colored paper. In four years, employees at AT&T have written more than 130,000 thank you notes.
Walt Disney World Employee Recognition
There are 180 different employee recognition programs at Walt Disney World in Orlando, Florida. One of the most coveted is the Spirit of Fred Award. It’s named for Fred, who advanced from an hourly to salary position by exemplifying the values necessary for success at Disney: friendly, resourceful, enthusiastic and dependable. Fred makes each award (a certificate mounted on a plaque) as well as The Lifetime Fred Award, a bronze statuette of Mickey Mouse given to multiple recipients of the Spirit of Fred Award.
Producers Assistance Safety Program
Producers Assistance Corporation provides contract personnel to the oil and gas industry, an area where employee safety is critical. To refresh their safety program, they chose reloadable gift cards as an incentive. Here’s how it works: when an employee takes an action, like attending a safety meeting, points are loaded onto their card. The lure of point collecting (and spending) has focused employees back on doing the right thing to be safe. After a 6-month trial, participation had more than doubled and there was a significant decline in the incident rate.
Pharmaceutical Merger Reward Program
During the merger of two pharmaceutical giants, a task force was charged with making the transition a smooth one. Members worked nonstop over six months, planning how to blend operations of the two companies. The team was rewarded for its sacrifices with gift cards that were, literally, the gift of time. The personalized cards were hand-delivered with a letter from the project leader, and gave recipients their choice of services: housecleaning, lawn care, carpet cleaning, pest control, and more.
Inspired to rethink your approach to employee incentive planning? That’s natural. You’ve just filled your head full of great ideas.
Call to sort them out and pack your program with what’s best. Call 866.219.7533