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Disengagement among employees is a growing concern, with a lack of incentives leading to high turnover rates, low productivity, and a negative impact on your bottom line. For example, did you know that unhappy workers cost the U.S. a staggering $1.9 billion per year? That’s why effective employee rewards programs are more important than ever.
Leaders and HR professionals have a significant role in sustaining employee engagement and motivation. To do this successfully, you need to understand the current state of recognition, its impact on your workforce, and how best to incentivize our teams in today’s fast-paced work environment.
What is the definition of incentives?
Incentives are things that motivate or encourage someone to take a specific action, or to avoid action. It refers to an external influence, like the expectation of a reward, which prompts an individual to take action. The role of an incentive is to drive desired behaviors and attitudes for a desired outcome.
What is another word for incentive?
Another word for incentive is “motivator.” Both terms refer to something that drives or encourages individuals to achieve certain goals. Incentives often come in the form of rewards and benefits, which serve as motivators by providing tangible recognition and perks. Rewards can include bonuses or gifts, while benefits might encompass additional time off or health insurance. These motivators play a crucial role in boosting performance and engagement by recognizing and valuing employees’ contributions, ultimately driving desired behaviors and outcomes.
What are employee incentive programs?
Employee incentive programs are designed to attract, engage, and retain talent. Incentives themselves are rewards and benefits used to motivate positive behaviors in your workforce. Employee incentive programs also known as employee rewards programs, come in many forms, like tuition reimbursement, more time off, and additional flexibility in work arrangements. You should choose employee incentive programs that suit the desires and personal styles of your staff and align with your company’s values.
What are the most common examples of incentives?
Employees are incentivized by different things. However, the most common employee incentives include:
- Monetary bonuses
- Salary raises
- Additional vacation days
- Public recognition
- Health and wellness reimbursements
- Referral bonuses
- Professional development opportunities
- Tuition reimbursement
- Shared team-building experiences
- VIP experiences
- Company swag
- The option to select a personalized reward
The value of employee incentive programs
To boost employee morale and drive engagement, you need effective employee incentive programs. Recognizing their importance, U.S. businesses collectively spend $176 billion on incentives, recognition, rewards, incentive travel, and corporate gifting.
Incentive programs are effective because they leverage human behavior. Immediate rewards increase intrinsic motivation by linking an activity with a goal, making employees more motivated to complete associated tasks when rewarded frequently. Organizations that use employee incentive programs often see a higher success rate in achieving their goals.
Moving beyond annual years of service awards to embed employee incentive programs into your everyday culture can significantly boost performance and motivation. These programs can increase employee performance and encourage employees to remain with their company. Additionally, companies using tangible sales incentives often see substantial revenue growth, and professionals satisfied with their benefits are more likely to be satisfied with their work.
18 employee incentive programs to improve engagement
Employee incentive programs have tremendous benefits, but where should you start? Here are some incentive examples that have been proven to engage and motivate employees over the long haul.
1. Social recognition programs
Social recognition is a powerful tool for boosting engagement by fulfilling the human need for acknowledgment and validation. Recognizing employees publicly enhances their self-esteem and reinforces positive behavior, creating a culture of appreciation. This leads to higher motivation and productivity, as workers who receive social recognition are 3.7 times more likely to be engaged and 55% less likely to seek a new job.
Additionally, social recognition fosters a supportive work environment. When employees see their peers recognized, it sets a positive example and motivates everyone to excel. Integrating social recognition helps build a culture of continuous improvement and mutual respect, enhancing overall job satisfaction and engagement.
2. Points-based recognition programs
Points-based recognition provides a tangible and flexible way to reward employees by allowing them to earn and redeem points for various rewards tailored to their preferences. To maximize effectiveness, these systems should connect to a comprehensive reward marketplace, offering a wide selection of merchandise, gift cards, travel experiences, charity donations, and concierge services. Employees with access to reward marketplaces are 61% more likely to feel a strong sense of belonging and 60% more likely to feel meaningfully recognized at work.
Points-based systems also foster a culture of ongoing recognition by consistently acknowledging contributions. This creates a positive feedback loop that motivates high performance, maintains engagement, and promotes a sense of accomplishment. Regular reinforcement through points drives sustained productivity and commitment.
3. Referral programs
Referral programs incentivize employees to bring in new talent, often offering rewards for successful candidate referrals. For example, positions filled through employee referrals retain employees 46% longer than other methods — a statistic HR professionals love. Regularly reminding your workforce about your referral program ensures a steady stream of candidates and allows employees to earn monetary incentives for recommending qualified individuals who fit your culture.
To make it beneficial for employees, you can implement a tiered rewards system within your existing recognition program. For example, employees could earn 1,000 points ($10) for submitting a referral, with rewards increasing to 2,500 points ($25) if the referral advances to the interview stage, and 10,000 points ($100) if the referral is hired. This approach integrates seamlessly into your recognition and rewards program, enhancing its effectiveness.
4. Professional development programs
Professional development involves coaching employees to achieve both individual and company goals. A global survey found that companies offering training to engaged employees are 17% more productive and 21% more profitable. Yet only 15% of full-time workers report being “highly involved in and enthusiastic about their work.” Investing in employees’ careers not only boosts their commitment but also benefits your company through the new skills and knowledge they bring, creating more opportunities for internal promotion.
To engage employees in professional development, consider developing your own learning and development (L&D) program or utilizing a third-party learning management system. You could also offer one-on-one mentoring with executives at the end of the program or gamify your existing L&D courses to make them more engaging.
5. Profit sharing programs
Profit sharing provides employees with a portion of the company’s profits, either through contributions to their retirement accounts or direct payments. It serves as an alternative or supplement to traditional retirement plans like a 401(k). Employers can adjust contributions based on earnings, offering flexibility to manage expenses.
Beyond financial incentives, profit sharing helps employees feel like owners, boosting loyalty and motivating them to contribute to the company’s growth. If profit sharing isn’t feasible, offering to match a portion of 401(k) contributions is another way to incentivize employees, typically limited to a percentage of their income.
6. Health and wellness programs
Health and wellness programs incentivize employees to adopt healthier lifestyles and fitness choices, which is crucial for preventing burnout and promoting overall well-being. With 80% of employees reporting burnout and 66% struggling with work-life balance, it’s essential for companies to support physical and mental health to ensure peak performance.
Practical wellness incentives include offering free healthy lunches, on-site health screenings, bike-to-work reimbursements, standing desks, and annual wellness fairs. Additionally, rewarding employees for achieving wellness milestones, such as quitting smoking or completing a steps challenge, can be highly effective. A centralized rewards marketplace that promotes healthy habits both at work and home can further enhance employee wellness initiatives.
7. Tuition reimbursement programs
Tuition reimbursement programs help cover the costs of employees’ education, either partially or fully. With ongoing education increasingly valued by employees, 82% report that skills or degrees gained through their employer’s tuition reimbursement program have made them more effective in their roles, while 84% feel it has prepared them for future work challenges. Additionally, 76% of employees are more likely to remain with their employer because of this benefit.
Encouraging continuous learning at all levels, including the CEO, can be reinforced through tuition reimbursement. Recognizing educational achievements, such as new certifications or advanced degrees, with team-signed digital cards and public acknowledgments helps build a culture of recognition and supports ongoing employee development.
8. Bonuses and raises
Bonuses and raises are additional monies paid to employees for attainment of specific goals or metrics. Rewarding employees with bonuses and raises can be incredibly powerful. For example, a recent survey by Robert Half International Inc shows that 52% of workers say receiving an annual bonus makes them feel more appreciated at work.
That said, you need to lay out crystal clear metrics and objectives so that employees know exactly how they can achieve their bonus. Strike a balance with your policies 一 the requirements shouldn’t be too difficult or too easy to meet. Be careful not to pit employees against each other, either. This can backfire and lead to resentment or even alienation from your company.
9. Fun gifts
Fun gifts are personalized or unique employee rewards given to employees showing appreciation for their work or to celebrate achievements. Celebrating your employees through gift-giving shows that you care. Gifts are great incentives for company-specific holidays, like work anniversaries, customer service week, global wellness day, or boss’s day. Try gamifying each of these holidays with fun contests and quizzes, and reward and recognize employees who participate the most.
Popular employee gifts run the gamut, from onsite massages, to catered lunches, to a half-day off work. Tech gadgets, delicious snacks (delivered or in-office), and quality swag (branded or unbranded) are great ideas as well. And for employees who would rather choose a gift themselves, providing gift cards is a great solution.
10. Additional time off
Additional time off is an incentive that provides employees with extra paid vacation time beyond their standard leave. This additional time off allows employees to better maintain their work-life balance, which can significantly boost motivation and productivity. It’s important to encourage employees to use their allotted paid leave, as 46% of workers take less time off than they are offered. By offering extra vacation time and flexibility when employees meet specific goals, companies can further enhance engagement and address rising issues of burnout and disconnection.
The value of flexibility extends beyond just paid time off. Many employees would consider accepting a lower-paying job if it meant having more flexible working arrangements. This highlights the growing importance of work-life balance and the potential of flexible work options to attract and retain talent.
11. Choice of projects
Choice of projects is the ability for employees to choose what they want to work on based on their interests or areas of expertise. Giving high-achieving employees the right to choose their own projects is a wonderful way to empower and incentivize them. Managers build trust when they permit employees to decide what to work on, something that many companies struggle with.
Of course, the project options you offer should be personalized and appealing to each employee. A blanket, one-size-fits-all incentive isn’t as impactful. Team leaders and staff should communicate with their employees about their short and long-term goals and career interests and offer projects to match.
12. Employee benefits program
Employee benefits encompass a range of tangible and intangible rewards provided to employees beyond their base salary or hourly wage. These benefits can include various forms of insurance coverage, such as medical, dental, and life insurance, which help protect employees and their families from unexpected expenses.
According to Gallup, pay and benefits — or lack thereof — is the most common reason employees left their job in 2023. Offering a comprehensive benefits package not only helps attract and retain top talent but also enhances overall job satisfaction. By providing a range of benefits that address different aspects of employees’ lives, companies can support their well-being, foster loyalty, and create a more engaged and productive workforce. These benefits demonstrate a commitment to employees’ long-term success and satisfaction, contributing to a positive organizational culture.
13. Human resources development
Human resource development (HRD) encompasses the strategies and practices aimed at enhancing employees’ personal and professional skills, knowledge, and abilities. By investing in HRD, organizations not only improve individual competencies but also boost overall organizational effectiveness. While training typically focuses on creating immediate improvements in job performance and addressing specific skills gaps, HRD takes a more strategic approach to foster long-term growth and alignment with organizational goals.
HRD contributes significantly to employee engagement by demonstrating a commitment to employees’ continuous development. When employees see that their organization is invested in their personal and professional growth, they are more likely to feel valued and motivated. This commitment can lead to higher job satisfaction, increased loyalty, and a greater sense of purpose.
14. Performance management programs
Performance management involves continuous communication and coaching between managers and employees to align individual goals with organizational objectives. This process includes clarifying job responsibilities, setting priorities, defining performance expectations, and creating development plans. Despite its importance, only 2 in 10 employees feel their performance is managed in a way that motivates them to excel, and just 14% strongly agree that their performance reviews inspire them to improve.
Effective performance management can significantly enhance employee engagement by providing clarity on how individual roles contribute to broader strategic goals. Regular feedback and recognition help employees understand their value to the organization and foster a sense of purpose. When performance management is executed well, it supports personal and professional growth, leading to increased job satisfaction and loyalty. By addressing these gaps and ensuring performance management practices motivate and inspire employees, organizations can boost engagement, improve productivity, and achieve greater overall success.
15. Travel incentives
Travel incentives are a compelling way to boost employee engagement by offering rewarding experiences for achieving specific goals. These incentives typically involve fully paid trips for individuals or teams who meet predetermined targets within a set timeframe. By providing such rewards, organizations can shape employee behaviors, drive engagement, and improve performance.
The effectiveness of travel incentives is underscored by their high value among senior leaders. According to the Incentive Research Federation, 53% of senior leaders view incentive travel as a “need to have,” while 48% consider it an “essential strategic differentiator.” Only 13% see it as an “area to cut.” This strong endorsement highlights the significant impact travel incentives can have on motivation and engagement. Offering these memorable rewards not only recognizes employee achievements but also fosters a sense of value and appreciation, creating a powerful motivator for continued high performance and commitment.
16. Commission programs
Commission is additional compensation earned by an employee based on their job performance, commonly used within sales teams. Employees in commission-based roles agree to be paid a certain amount that depends entirely on hitting specified goals or metrics. This structure creates a direct correlation between effort and reward, driving employees to perform at their best to achieve higher earnings.
The value of commission as an incentive is clear, especially given the massive investment U.S. organizations make in their sales forces — over $800 billion, with $200 billion devoted to compensation alone. Commission-based compensation directly links effort to reward, aligning individual goals with organizational objectives. This approach boosts engagement by making employees feel accountable for their success, enhancing productivity and profitability. By rewarding high performers with substantial earnings, companies can foster a competitive, motivated, and highly engaged workforce, ensuring teams always strive for excellence and deliver top results.
17. Flextime programs
Flextime, or flexible working hours, allows employees to adjust their workday based on personal needs or preferences. This could mean starting and finishing work at different times to accommodate childcare, aligning with colleagues in different time zones, or working during their most productive hours. Such flexibility supports a better work-life balance, reducing stress and increasing job satisfaction.
The appeal of flexible working hours is reflected in a telling statistic: 80% of employees said they’d be more loyal to their employer if provided with flexible working arrangements. By offering flextime, employers can boost employee engagement and retention. When employees have control over their schedules, they feel more trusted and valued, which enhances their commitment and productivity. Additionally, flexible hours can reduce burnout, as employees can better manage their personal and professional responsibilities. Overall, incorporating flexible working hours into company policies can significantly improve employee morale, loyalty, and overall engagement.
18. Employee resource groups (ERGs)
Did you know that employees who participate in relevant employee resource groups are 34% more likely to demonstrate high job commitment? According to the 2024 Engagement and Retention Report from AWI, this is because ERGs create a sense of belonging and community, which significantly enhances employee satisfaction and loyalty.
ERGs help break down silos and build stronger relationships across departments, contributing to overall efficiency and collaboration. This improved connectivity leads to higher levels of trust and advocacy within the organization. For instance, AWI also reports that employees who feel supported in building relationships are over 20% less likely to job hunt, and when ERGs are combined with other connection tools, employees are more likely to recommend their company to potential candidates, showing that ERGs not only improve engagement but also bolster long-term retention and organizational success.
5 best practices for employee incentive programs
After you choose the right employee incentive programs for your company, you need to put them into practice. Here are some best practices that can help you implement impactful incentive programs:
1. Make your program inclusive
Ensure all team members have access to your incentive programs by implementing a variety of programs that fit every area of your business. You should also recognize every stakeholder who helps lead your incentive programs, as well as all those who participate in them. And make sure your incentive program comes with an engaging, user-friendly platform where team members can easily participate and reap the benefits. All these practices can help employees feel involved and part of an inclusive work environment.
2. Promote your incentive programs
Ensure that everyone knows about your incentive programs to raise awareness and encourage company-wide participation. To accomplish this, HR should build a promotion and communications plan to make every employee aware of the available incentive programs. They can follow this up by working with leaders to run ongoing campaigns that engage employees and keep them participating. These campaigns might include marketing tactics like posters, fun messages using the company email or intranet, or games that tie into the incentives. Also, provide information about your incentive programs in your employee onboarding checklist so that every new hire is educated on day one.
3. Have leaders show the way
Leaders must serve as examples by actively participating in and advocating for incentive programs. After all, the success of employee incentive programs relies on leaders promoting and building awareness of incentives programs within their teams. Your HR team should train leaders on how your employee incentive programs work and on the value of using them as engagement tools. This could take the form of reference materials, training sessions or webinars, and even online learning courses. They can then effectively encourage their team members to adopt your company’s incentive programs.
4. Personalize your incentives
Personalizing your employees’ incentives experience is a must. Team members won’t work hard towards a goal if they aren’t compensated for it in a way that’s meaningful to them. Leverage technology like AI and advanced analytics to start tailoring each employee’s experience. Some HR leaders are using HR hackathons, employee-journey mapping, and design thinking to uncover employee needs. And of course, seeking feedback from employees is the best way to personalize their incentives.
5. Ask for feedback
Listening to your employees is essential for gathering accurate feedback on your incentive programs. Take the time to understand how well your current incentives are being received and what your employees truly want. Use an employee feedback platform to conduct pulse surveys and gain invaluable insights, as employees can provide ideas you might not have considered. An always-on feedback channel can also be beneficial, allowing employees to share their input anytime, anywhere. Customize your incentive programs based on this feedback to demonstrate that you value and consider their opinions and continuously check in with employee engagement surveys to ensure your adjustments are effective. Additionally, leaders should set up meetings with their teams to review survey findings and build collaborative action plans together. This approach not only improves your incentive programs but also fosters a culture of open communication and continuous improvement.
What are common incentive mistakes?
These are the top four common incentive mistakes and how to avoid them:
1. Launching a plan without input
Be sure to gather feedback from individuals who will be engaging with the incentive plan to ensure that what you’re offering is something that they want and will work towards achieving.
2. Failing to communicate or be consistent
When launching an incentive plan, be sure to clearly communicate how it works, how to participate, and what the outcomes will be. And, be consistent in how you maintain the program, ensuring that when achievements are made, individuals are rewarded as promised.
3. Being inflexible
Not everyone wishes to be rewarded in the same way. To achieve wide-spread participation and enthusiasm for the program, be sure that it’s agile and can flex to fit what works best for certain individuals or teams.
4. Offering one type of reward
Some people value cash rewards, while others prefer to choose from a catalog of options. Before you set the reward types, talk to your teams to understand what they value and what would motivate them.
Make your incentives meaningful
A recognition and rewards solution is the best way to create and manage employee incentive programs by consolidating them all in a centralized platform. Achievers Recognize is an award-winning platform that gives every team member (from staff to managers to the C-suite) the opportunity to quickly send social and points-based recognition to each other. And with over 2500 global brands, the Achievers Reward Marketplace lets employees redeem their points for rewards they truly want.
In 2024, Achievers received several prestigious awards recognizing its excellence in various categories. We won multiple Stevie Awards, including Customer Service Management Team of the Year, Front-Line Customer Service Team of the Year, and Customer Service Department of the Year. Also, we earned a Silver in the Brandon Hall Group Excellence in Technology Awards for Best Advance in Rewards and Recognition Technology and first place in Customer Satisfaction Ratings from the HRO Today Bakers Dozen Recognition.
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