How To Incentivize Employees

How To Incentivize Employees

What does it mean to incentivize employees, and how can you do this as an employer?

Also, what benefits come from offering incentives to employees in your organization?

Is money the only incentive that could be given to employees, and is it really the best approach?

These questions and a whole lot more would be discussed as we proceed with this article.

So, stay with us to discover all you need to know.

How To Incentivize Employees

You would probably agree as a business manager that employees need the motivation to be their best.

Even as a leader yourself, you would admit that there are times when you need to work, but there is no motivation.

In short, all of us at one point or the other need an extra push to perform even the most important tasks.

That is what incentives are meant for in a nutshell.

Many organizations have introduced this to boost employees’ morale and give them added motivation to get results, and it has proven to be very effective.

Taking it a little bit further, many organizations also implement incentives for employees and their customers.

In this case, they add extra value to products or services that have already gained popularity.

The incentives might vary, such as; a free delivery, a free item, discounts, bonuses, e.t.c.

The underlying goal remains the same; provide an added motivation or encouragement to the customer to purchase.

We would talk about how to incentivize customers in a separate article.

For now, the focus is on your most important assets, which are your employees.

Before considering what you can do to incentivize your employees, let us understand what incentives really mean.

And then, consider just how beneficial these are to your organization and individual employees.

An Overview of the Concept Of Incentivizing Employees – What Does it Mean?

Since the inception of man, incentives have been around and are on offer on every level of human relationships.

Do you remember the experience growing up when your parent(s) might tell you to carry out a task and incentivize you to do it?

Or it might be that they set targets for you and add an incentive as icing on the cake to push you to accomplish them?

You might not be willing to see that task to completion at first, maybe due to laziness or for other reasons.

It is even possible that you do not believe you have what it takes to meet those targets.

Your parent(s) might then say something like: “If you finish doing the dishes before XYZ time, I will buy you that shoe you’ve always wanted.”

Or if it’s in meeting school targets, they might say: “If you come first in your class, I will get you that video game.”

Generally, most of these tasks or responsibilities are what you are expected to do, and the targets are important ones.

One might think that you do not need to get an incentive to accomplish them, but it is important.

It sorts of gives you an extra reason, encouragement, or motivation to reach the goal and even surpass it.

It’s fair to say that you should already have an idea of what incentives are all about at this point.

What are Incentives?

Simply put, incentives refer to things that motivate a person to act or perform in a particular way.

Employee incentives are valuable items or actions that encourage, motivate, or spurs an employee to meet and surpass set expectations in the workplace context.

It is important to note that not all incentives come from an external influence or factors.

Some are from within and set by the individual who wants an added impetus to do something.

The incentives from within or based on a person’s personal interest are not necessarily linked to a promised reward or outside benefit.

This is just the individual employee wanting to be better or be the best.

On the other hand, other incentives are more external and are driven by a promise of reward(s) for certain accomplishments.

The latter is our focus here, as we review how employers can incentivize their employees.

What Forms do Incentives Take?

When you heard of incentives, what readily comes to your mind?

It is easy to think of monetary rewards because many people use incentives to drive engagement and productivity.

Well, this is a type of incentive on its own and more of a compensation incentive.

This type of incentive could be a promise of bonuses, a pay rise, sales commissions e.t.c.

However, there are other forms that employee incentives can take aside.

Another form of incentive is recognition or appreciation for employees.

While it might appear not to carry the same weight as a monetary incentive, it has equally been used to great effects.

The good thing about this type of incentive is that you do not have to “break the bank” to offer it, and it still works.

This incentive might include; public praise for employees, awards and certificates, or even sponsoring parties in honor of employees.

These incentives are costly but equally beneficial in achieving the goal of incentivizing employees.

Incentivizing Employees – What are the Advantages?

There are many reasons why as a business owner or employer, you should make employees incentives a major aspect of your business.

It is easier to implement an incentive program for your customers quickly.

In fact, a lot of organizations already have that in place.

That is why many times you see businesses offering freebies, discounts on sales, bonuses, e.t.c.

This is very important for obvious reasons, as your customers’ patronage is very integral to the success of your business.

However, it might be difficult to see just how important incentives for employees are to business growth.

But should it be really?

Employees are why your business can keep up with business activities, satisfy and retain customers.

can serve your customers in the first place and also make them stay with you.

Hence, while building structures for customers satisfaction, it is also important not to overlook the employees.

And this too because of the many benefits that come with employees incentives.

Take a look at some of the advantages or benefits of incentivizing employees:

It Contributes to Healthy Teamwork 

Some incentives you provide as a business owner is for employees and not just individuals.

In such situations, the incentives can help improve the team spirit in your organization.

How is that so?

As we’ve earlier seen, one thing about incentives is that they drive people to want to give their best and get results.

This might be because of the recognition, self-satisfaction, or even monetary rewards that come with it.

When you offer incentives to a group of employees while asking them to work on a project or perform a task with set objectives, they are more likely to work together.

This is because they understand that no individual can achieve the goal alone, and besides, the reward is for the group.

Therefore, they will most likely put all hands on deck to achieve the set goal or mission.

Another way incentives can increase teamwork in the office is when rewards are given based on employees’ recommendations.

Some organizations also have this in place, whereby they ask their staff to recommend their colleagues for particular rewards or recognition.

Since you are not allowed to nominate yourself for such awards, it allows the employees to show how much they value their colleagues.

It might surprise you just how much your employees value the input and efficiency of their co-workers from the result of this recommendation process.

As such, by providing incentives, you can improve the culture of teamwork around your organization.

It Improves Productivity  and Performance 

The underlying goal with incentives is to motivate your employees to work harder, faster or smarter to reach a target.

It motivates employees to want to give their best in their given roles.

A high level of productivity is attained when there is enough work input resulting in a corresponding output.

That means your employees should be putting in the right efforts, both in quantity and quality.

And these efforts must be plainly seen in the results they can achieve.

Employees incentives can help you attain this level of productivity.

When there is a prize or reward at the end of it all, chances are high that the motivation would perform.

It Increases Employee Morale 

High employee morale is actually closely related to an increased level of productivity and vice versa.

Keeping morale at the optimum level can really be a challenge for many employees.

And there are many reasons why employees might suffer from low morale or motivation at work.

However, one of the things that work when you want to improve morale in employees is to incentivize them.

Usually, when there is nothing to aim for or no measurable reward for good work, there might be little motivation to want even to try.

In situations like this, you find your employees struggling to find the spark needed to work harder and efficiently.

However, when incentives are attached to results, it can push the employees to give their best.

The situation can be likened to a football team playing a critical match in a competition, like the finals of the world cup, and playing a friendly match.

If you are familiar with football, you will know that friendly matches do not usually reward the winner.

As the name implies, it is just like a play around the park for the two teams.

In games like this, high morale is often difficult to achieve or even demand because there is nothing to play for.

However, in a high-profile game, where personal ego, country pride, a trophy, cash rewards, satisfaction e.t.c. are at stake, the morale is high.

This is because there is something to play for, and it is obvious.

The same is true of employee’s morale in the workplace.

Setting incentives and implementing them can give your employees the needed morale to stay at the top of their games.

Employees Do Not Just Meet Expectations; They Exceed Them

Another advantage that comes with incentivizing employees is that you increase their chances of exceeding expectations.

Without incentives, it is still possible to get your employees to put in a good effort and get results.

But the thing with those results gotten is that they are rarely going to befall in the category of “great” or “extraordinary.”

At best, they will just be good enough and not surpass expectations.

That is what happens when there is no added motivation to do something.

On the other hand, with the proper incentives, not only will your employees meet your expectations of them, but they will surpass them.

It’s usually a consequence of putting in the “extras” to meet a set target and even doing better than expected.

Therefore, you can be sure that they will not just settle for good when you incentivize your employees. They will be better and generally get the best.

It Offers you an Edge over Competitors in Work Attraction 

You would probably agree that there is a scarcity of top talents available out there despite the vast majority of job seekers.

And to make the situation worse, your organization is most likely not the only one selling the products you sell or offering the services you render in your industry.

Therefore, there is a constant battle with competitors on who will attract the best employees to work for them.

One thing that can make you stand out of the competition and edge them is your employees’ incentives.

Many employees have admitted that an organization’s availability and incentives have a role to play in whether or not they will accept a job opportunity.

This is most especially the case with the best talents available.

Because these know their value, they want to be adequately appreciated and compensated for it.

Hence, they are more willing to work for organizations that are committed to incentivizing employees.

Make sure this organization is yours.

It Enables you Retain Employees More 

As you focus on getting the top talents to work for your organization, you should also be concerned about keeping the ones you already have.

Just as incentives can increase the power of attraction of your company and help you get the best employees, they can also help you retain them.

Many employees leave and look for other options simply because they do not feel they get enough rewards and recognition for what they do.

If your organization is also affected by this, you might find that your employee turnover increases and employee retention drops.

However, with the right incentives, the ones the employees really want, you can be sure they will want to remain with you for a long time.

It Improves Employees’ Welfare and Satisfaction

Some incentives, as noted earlier, are not monetary in nature but rather structures put in place with the same goal; to motivate employees.

This might include free health care services, health insurance, free lunch e.t.c.

A system built around incentives such as these can go a long way in helping to improve the general welfare of employees.

And also, it would increase their job satisfaction in the long run.

Your Employees are Happy

Many of the incentives you will offer your employees are things that would relieve them of work stress or allow them to achieve a work-life balance.

And even if the incentive still involves giving them financial compensation, the result is always the same.

They will add to the joy of your employees, and that joy would spread around the workplace and foster unity and growth.

How to Incentivize Employees – Danger Signs to be Wary of

With all the positive merits of incentivizing employees to the employees and your organization, it is not all bed of roses.

There are certain negative effects or disadvantages associated with incentives, which could occur when not implemented correctly.

You must learn about these possible negative effects so that you can prevent them when arranging incentive program(s) for employees.

A few of them are:

A Compromise in Quality for Productivity 

Sometimes, employees who are deemed worthy of receiving rewards are assessed based on their level of productivity.

While this is an important measure for job performance, it is not the only one.

If care is not taking, providing incentives for employees, especially the wrong ones, or done the wrong way might make you lose out on quality output.

Your employees might be too focused on speed of tasks completion and quantity of work done that they compromise on quality.

As an employer, it is your duty to ensure one of these two obviously important areas of job performance isn’t unduly prioritize at the expense of another.

Resentment/Jealousy in the Workplace

Another danger of employee incentives, albeit when not done right, is causing resentment in some employees.

The decision as to who gets the rewards at the end of the day when performance is reviewed is a prerogative of the management.

And this decision can be subjective.

One or some of your employees might feel that a staff who received an individual reward/award does not deserve it.

They might feel they have more data than you do and have cause to believe the contributions of the honored employee isn’t as valuable as theirs.

Because of this, you might have a clique of employees feeling resentful towards others, and jealousy might begin to grow.

This could pose a threat to the unity of your organization.

One way, though, to prevent this is by focusing more on group incentives than individuals.

Also, you want to make the process for rewarding individual employees very transparent, with adequate data and metrics.

Increased Pressure 

Both monetary incentives and non-monetary ones can increase the pressure on employees.

One thing with recognition and high praise is that with it comes added responsibility and the pressure to do more.

When you give rewards to your employees in the form of recognition, they know that the bar has been set very high for them.

Therefore, they put on added pressure on themselves to either match the recent achievements or surpass them.

In a similar vein, when the rewards are monetary, such as a commission on sales, it might also put great pressure on employees.

Especially when the basic salary is small, and the sales commission makes up the bulk of the employee’s income.

This might put immense pressure on the employees to meet set targets to earn more.

An Unhealthy Addiction to Incentives 

One other negative effect that might arise with employee incentives is making some staff addicted to this.

Addiction in the sense that they might become less hardworking and productive without those incentives.

It would happen that these employees would no longer feel motivated to perform their best if incentives are not involved.

They might even forget that top performance is their responsibility and what they are paid for, with or without incentives.

It might appear that you now have to use incentives to “bribe” them before they do what is expected of them.

It May Give Rise to Unethical Behaviours

In an attempt to drive productivity and results using incentives, you might stir up some unethical behaviors in the employees.

Some employees may become so desperate to get the rewards attached to the job.

As a result, they might throw good work ethics out of the door.

Such employees might begin to cheat or “cut corners” to be better than their colleagues and win the “prize.”

This is how unethical behaviors start brewing in the workplace and threatens the culture of the organization.

How to Incentivize Employees – Getting Employees Incentives Right 

Despite the negative effects of providing incentives to employees, the advantages are still overwhelming.

Additionally, the good thing is that some of the possible dangers of this management endeavor are avoidable.

When you create a proper structure for this and implement it the right way, you can only record success.

Let us show you the right strategies you can deploy in incentivizing employees with good results:

Hear from the Employees Motivates Them 

This is the first line of action in providing incentives for employees.

It would be wrong for you just to assume that a particular kind of incentive would work for your team.

You might think motivating and encouraging your employees might have little or no impact on them.

Along this line, it is also important to note that employees are unique and have distinct likes and dislikes.

As such, what motivates employee A might be a turn-off for employee B.

Hence the reason why it is important to ask them first what is their source of motivation.

You might get this feedback via a face-to-face round table discussion or use survey forms.

The responses you get will give you a heads-up on where to begin from.

Align Incentives with Business Growth 

When working to incentivize employees, an intelligent business owner should be looking to “kill two birds with one stone.”

This means that you should not be working hard to motivate employees in areas where they are already doing well.

Neither should your focus be on areas that have less impact on your business growth.

The goal of incentives remains to motivate and encourage your employees to do better and give their best.

Therefore, it would be wise to attach this to your business areas that really need improvements and contribute to business growth.

Make your Objectives Clear When Offering Incentives 

It is equally important that you clearly state the objectives you have for your employees when giving them incentives.

You do not want to leave your employees confused about what they really need to do to benefit from your offered rewards or incentives.

If the objectives are not clear, it would be difficult to get the results you want with your incentive program.

However, with clear objectives, your employees know what is expected of them, and they set out to do it.

Thus, they can better position themselves to benefit from whatever rewards are on offer.

Offer Cash or Monetary Rewards

Being practical, one form of incentive which you can give to your employees is cash or monetary rewards.

This works because you offer a certain amount of money to your employees as a reward for achieving set targets.

Some of the monetary rewards that you can give to your employees are:

  • Bonuses: Bonus refers to a particular sum of money that you can add to the income or salary of your employee as a reward for good performance.

That means if the employee or the team as a whole meets up with set targets and objectives, they get something on top of their monthly or yearly payment.

You can even implement an “idea bounty” in your organization, where employees who come up with viable business ideas get a bonus for it.

This would encourage more contributions and engagement of employees.

  • Commissions: This is usually associated with employees that are tasked with completing sales or winning over customers.

It is a common incentive used to motivate salespeople.

Usually, this is a percentage of the income generated from the patronage of those they can bring into the business.

The employer and other management staff decide the rate of commissions, though.

  • Pay Rise: Another type of monetary incentive that you can offer your employees is a pay rise.

This is rewarding employees who have showed exceptional performance levels and met set targets with a raise in their salary.

It has been proven to be very effective in motivating employees.

  • Shared Profits: Some organizations also give their employees a share in the company.

Whatever profits are made at the end of a fiscal year is shared with the employees.

This is also an effective incentive as it can make employees work harder and perform better.

Appreciate your Employees 

One noteworthy thing about employees incentives is that it goes beyond money.

Some business owners make the mistake of thinking that money is the only thing you can use to motivate employees.

This is very wrong.

Sometimes, appreciating your employees is what they need to be at the top of their game and want to give their best.

Appreciation might involve saying a simple “thank you” when an employee performs excellently and exceeds expectations.

You can also express these words of appreciation privately and also publicly in the presence of other employees.

This shows the employees that you value their contributions and can be an incentive to do more.

Offer Promotions and New Job Titles

Your employees are not satisfied with being stuck in a position in your organization forever.

Many times, career growth and development is the main factor in motivating employees and getting the best out of them.

Therefore, you can also use promotions as an incentive for your employees.

Sometimes, you do not necessarily have to move employees to a very lofty position in your organization to motivate them.

It comes down to the little things such as changing their job titles to indicate an elevated position from where they used to be.

For example, an efficient employee can get a “Team Lead” role without necessarily becoming a “Manager.”

These changes though little can go a very long way in motivating your employees.

Give Employee Recognition as Awards 

Regular awards to exemplary employees are a sign of recognition and can also work as an incentive.

There are various awards you can give to your employees covering different aspects of job performance.

You can award punctuality, teamwork, an employee of the month, honesty e.t.c.

These awards might be in the form of a certificate or other forms of awards that will carry the employee’s name and achievement.

This is a source of great pride for employees and can act as an incentive for better performance.

Offer Employees Time Off Work

Unless you have robots working for you in your office, your employees definitely need rest.

Even the most industrious of employees sometimes get tired and would need time for relaxation.

You can also show you value your employees and incentivize them by offering them paid time off from work.

This might be a day when you can let hardworking employees know that they are allowed to stay away from work.

The positive effect of this on your employees’ morale and commitment cannot be overemphasized.

Provide the Best Working conditions in Technology and Equipment 

Employees incentives might also include provisions of the right working conditions for your employees.

In line with this, you will want to provide the best equipment, infrastructure, and technology that makes work easier and faster.

This would also make your employees satisfied with their jobs and motivated to put in their best.

Give Opportunities for Professional Development 

Many employees, especially the best of the lot, are always looking at growth and development professionally.

They are interested in learning new skills and also advancing their careers.

You can incentivize them by giving them the opportunities to pursue this.

If they want to take courses to aid their development, you can give them annual leave as an avenue for this.

When appropriate, you can also support them by either paying for these courses or offsetting some of the expenses.

It shows your employees that they are important to you, and it’s a source of motivation.

Plan Social Gatherings and Leisure Activities 

A good work-life balance is another way in which you can incentivize your employees.

And this you can do by making sure everything is not centered around work alone, but there is also provision for parties and social gatherings.

These gatherings can help to improve team bonding and as well as motivate and incentivize your employees.

Be Consistent and Sincere with Incentives 

One point of caution for you as an employer when implementing employees’ incentives is to strive for consistency.

Offering incentives now and not keeping up with them in the long term can be counterproductive.

Also, if you make promises of rewards to your employees for reaching set targets or objectives, be sure to keep those promises.

When you do this, you are sure to get the best result from your employee incentives program.

Final Thoughts on How to Incentivize Employees

Incentives are significant and integral to driving employees’ engagement and improving performance, no doubt.

They are also proven to be very effective in motivating employees as that is the main idea of providing them.

When done the right way, it can help you retain employees and grow your business.

Do you have a system and strategy in place for employees incentives yet?

If not, the best time to do it is now.