Types of Employee Incentives You Should Know About

Workplace incentive is crucial to express appreciation for work well done by employees. It is imperative, however, that employee incentive programs are strategically designed and implemented. If your employees are happy with the incentives, they will stay motivated, their productivity levels will be consistent, and the workplace will transform into a desirable place to work. Such happy vibes within a commercial establishment are good for the overall wellness of the employees as well as to help boost business profitability. The big question is, “what is the best incentive plan for employees?” Cash or non-monetary incentives? While this question has a subjective answer, overall, it has been seen that incentives of four types drive the best results. These are recognition, cash rewards, gifts, and experiences. Examples of gifts, in this case, are electronic items, gift cards, discount vouchers, etc. Experiences are things like tickets to sporting events, concerts, offsites, etc. Continue reading to know about the different types of employee incentive plans.

Types of Incentives for Your Employees

Broadly, these are the four main types of employee incentives:

1. Compensation Incentives

These are also called monetary or financial rewards. There’s no doubt that for employees, financial compensation occupies the highest place in their motivational ambit. These are some of the common examples of incentive programs of this type:

Salary incentives: Offering higher remuneration to employees that are more productive and bring better results. This is one of the commonest types of employee incentives. Annual increments are a common feature in most companies across the world. Employees that achieve or over-achieve their targets are given handsome pay rise showcasing to others that hard work pays.
Profit-sharing: If you want to retain your best talent, consider sharing your profits not just with your shareholders but also with your top productive employees. This is an excellent individual incentive plan example.
Shares: Many top companies in the world offer their best-performing employees shares of the organization. This is also popularly known as ESOP or Employee Stock Options Plans. HDFC Bank in India is a leading example - it recently announced offering about 4,173,730 equity shares to its employees this year. This is an effective management incentive plan example and is used quite widely to motivate managers.
Bonuses: Another common form of individual incentive are the annual bonuses given to employees with the best performances. Some companies offer monthly or quarterly bonuses too. There are festivity-related bonuses also like in India, Diwali bonus is a very common feature.
Commissions: Commissions are given as a certain percentage of the sales value to employees who have generated maximum sales within a given timeframe.
Retirement incentives: In India, the most common retirement incentives include provident funds and pension schemes.
Dearness allowance: In most cases, dearness allowances are given by government offices to their staff members to combat inflation. This is an additional amount over and above their salaries.
Fringe benefits: Some companies offer fringe benefits to their best-performing employees like paying the education fees of kids, medical benefits for employees, etc. In this context, companies like Microsoft and Google are companies with the best incentive programs.

2. Recognition Incentives

As the name implies, ‘recognition’ is taking cognizance of employees who have worked hard to achieve or over-achieve their targets/KRAs. In a survey conducted by Michael C. Fina Recognition, amongst about 300 HR professionals, it was revealed that workplace recognition is a big thing for employees though it costs barely anything to the company. Your recognition programs do not have to be lavish - small and simple things can make a huge difference. Here are some types of employee incentive schemes that recognize employees for their work:

Delegation: Making your employees responsible for their tasks makes them feel valued.
Authority: Do you wish to make your top-performing employees feel empowered and motivated? Give them authority - let them be a part of the decision-making committee for the next project. Ask them for their ideas and suggestions during meetings.
Thanking Employees: ‘Thank You’ has a big effect on employees who prioritize work and deliver to expectations. Patting the back of an employee who has done it makes a lot of difference to the person at an individual level. Such expressions of gratitude should be a common feature in organizations and should be multi-directional. Managers saying thank you, peers and colleagues saying well done, etc. are all examples of this.
Certificates: Offering certificates is another way of acknowledging good work by your employees. Things like ‘Employee of the Month’, and 5-year or 10-year completion certificates matter a lot and are great individual incentive plan examples.
Promotions: Promoting employees who are consistently performing in the top few not just motivate those individuals but also sets examples for others.

3. Reward Incentives

Some organizations offer tangible rewards instead of monetary incentives. Some good choices of reward incentives include:

Paid Vacations: Another common type of employee incentive plan is sending the employee and his/her family on a paid vacation to acknowledge their hard work.
Gift Cards: Companies offer gift vouchers and cards to their employees to reward them for their dedicated work. These can be festivity-related or otherwise.
Gifts: A bouquet of flowers, chocolates, cakes, etc., are other ways to show that you care for your employees who give their 100% to work.

4. Activity Incentives

This type of incentive is meant for teams where the organization conducts events or activities to express its gratitude for teamwork, collaboration, and achievements. Some common examples of different incentives for employees in this context are:

Celebrations: Many organizations throw parties or short trips to celebrate certain milestones. It helps your employees feel important and rewarded boosting their morale.
Birthdays: Celebrating the birthday of employees is a great way to make them feel valued and cared for. It gives a lot of boost to the employee.
Paid Lunches: Once-a-month lunches on Fridays are another way of encouraging teamwork and also letting your employees know that the company cares for them.

Conclusion

No matter which employee incentive program you choose, you must take the extra effort to ensure that these programs excite your employees. Another key bottom line for ensuring the success of the incentive program is to ensure that the rewards are given only for meeting employee targets. It is never advisable to dilute the essence of such programs by utilizing them for non-performance-related occasions like birthdays, etc. My Incentives is a one-stop platform that integrates end-to-end all tasks related to employee and channel sales incentives. Call us for a demo to know more about the features of this new-age online software and keep your employees motivated in a hassle-free manner.