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Free Download - 10 Employee Incentive Essentials

Exploring
Employee Incentives

Useful facts, figures, and inspiration for rewards & recognition


Definition, Success & Popularity of Incentives

Desk Illustration

What is an incentive? Rewards or recognition offered in exchange for work performance.

What makes incentives do well? To be successful they must:
Promote or encourage specific actions
By a specific audience
To produce measurable outcomes
Through integrated motivational strategies
During a defined time period.
Source

How popular are they?

  • More than half of America's companies use them. Source
  • U.S. organizations spend over $100 billion
    annually on them. Source
  • Incentives (other than cash) are a $46 billion industry. The industry has more than doubled in the last 10 years. Source

Incentive Vocabulary

Several of these terms are used interchangeably, which can be mystifying in conversation. These definitions will help: so read them, know them, live them.

  • Award: Can be in the form of money, prizes, plaques, travel and public commendations. The payouts of sales contests are usually called "awards".
  • Employee Engagement: An individual sense of purpose and focused energy, evident to others in their display of personal initiative, effort and persistence directed toward organizational goals. Many organizations create their own definition for this term, but everyone agrees on this: higher employee engagement means higher work performance and company loyalty.
Book Illustration
  • Incentive: Any form of variable payment tied to employee performance. The payment can be tangible or intangible, and may or may not have cash value. Incentives are generally non-discretionary and can be paid at any time of the year. Includes awards, rewards and recognition.
  • Reward: An item given to an individual or team for meeting a pre-determined goal.
  • Recognition: After-the-fact display of appreciation for individual or team efforts. Can be tangible or intangible, and range from a thank-you email to travel.
  • Recognition Program: A policy of acknowledging employee contributions after the fact, possibly without predetermined, expected goals or performance levels. Examples include giving employees clocks on milestone anniversaries, granting an extra personal day for perfect attendance, or paying a one-time cash bonus for making a cost-saving suggestion.
  • Spot Award: A type of informal recognition that is delivered spontaneously or "on the spot."
  • Total Rewards: The monetary and non-monetary returns employees receive for their time, talents, efforts and results. Deliberately includes all five key elements determined to enhance employee engagement: compensation, benefits, work-life balance, performance and recognition, and development opportunities.
    Source Source

Incentive Benefits

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:

Higher
Profits
Higher
Sales
Higher
Customer Loyalty
Above
Average Productivity
Higher
Stock Returns*


Source
*This number is huge enough to inspire skepticism, so here's a bit more detail: For 1998 ? 2006, the average cumulative stock return for the S & P 500 was 45.6%. For Fortune's ?100 Best Companies to Work for, it was 200.6%.

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. Source

Company Assets are Intangible

This is knowledge, reputation and human talent.

The Turnover Rate is High

This is mid-recession, not including 8 million lost jobs. Source

Job Satisfaction is Declining

That's more than half who are unhappy at work. Source


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 a plan.

  • Retirement Peak: The close of a career commands respect and acknowledgement from 42% of companies.
  • Service Anniversary Ridge: The most widespread type of incentive is linked to loyalty and used by 90% of organizations.
  • Idea Generation Gorge: 27% of companies use incentives to mine employees for innovative ideas.
  • Employee-of-the-Island Whether of-the-year or of-the-month, 29% use this personal callout to inspire individuals.
  • Peer-to-Peer Tributary: To keep the idea of great performance circulating, 43% have peer-to-peer programs.
  • Family Event Rapids: Life has lots of ups and downs. 25% of companies support their people with incentives around major events.
  • Performance Recognition Lake: Strong performance has a ripple effect. That's why 79% recognize it.
  • Safety Harbor: Cars and machinery and chemicals can create problems. That's why 22% of employers enhance safety programs with incentives.
  • Sales Performance Spire: Sales can crumble without goals, so 40% of employers attach them to incentives.
  • Woodlands of Wellness and Other Specific Behaviors: Employee wellness is the fastest-growing of this incentive type, which is found in 34% of organizations.
  • Attendance Marsh: Life's complications can erode away at attendance. 12% of organizations use incentives to keep it more stable.
    Source
Wellness Incentives

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%.
Source

Safety Incentives

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.
Source

Peer Recognition

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.
Source

Go Long
to Send a Strong Signal

The longer the duration of an employee reward or recognition program, the greater the chance that employees get your message and make positive changes.
Source

Send a Strong Signal with Employee Incentives

Is an Incentive the Answer?

Make sure the answer to all these questions is YES before you launch an employee reward or recognition program. Otherwise, this may not be the right response to the situation. Source

  • 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

Human Drivers

There are 4 basic human drivers, and incentives are able to tap into all of them.

Illustration - Inventives & the Mind
  • The Collector: It's human nature to gather things and status. Plaques with years of service appeal to the desire for status. Other types of incentive programs tap into this drive as well, motivating people through their desire to acquire more possessions. You'll see this most often in incentives.
  • The Killer: People are biologically motivated to defend what is theirs. The winner of last year's "Top in Sales" title isn't going to let it go without a fight. And employees engaged by strong recognition programs will work hard to protect their company against competitive threats.
  • The Socializer: Like it or not, we're wired to bond, and most of us experience the workplace first as a social setting. This is what makes recognition so powerful: celebrating stories about accomplishments with co-workers and managers makes people feel more appreciated.
  • The Explorer: People have an innate desire to contribute to something bigger in creative ways. Frequent acknowledgment of daily contributions connects us all to work in a more meaningful way, encouraging a higher level of commitment and more innovative thinking.
    Source

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.

Researchers have shown it's physically more likely for the brain to access a real image from the right brain.

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. Source

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 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. Source


Tangible Items as Incentives

What do all these 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 incentive, and a whopping 62% of companies offer them to employees. They may seem the same as cash, but they're actually quite different.


Why Companies Like Gift Cards
  • Ease of Administration
  • Broad Audience Appeal
  • Redemption & Flexibility
  • Perceived Value
  • Cost of Effectiveness
  • Lasting Appeal
  • Backend ROI Tracking
Source

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.

Interesting Work: At least part of your work should be of great interest. Even people with inherently boring jobs become more productive when given at least one stimulating task or project.

Information: Employees crave knowledge about how they are doing and how the company is doing. Start telling them, and soon they'll be turning out the lights when they leave a room.

Involvement: The people who are closest to a situation have the best insight on how to improve it, yet are rarely asked for it. Their involvement enhances commitment and eases implementation of changes.

Independence: All employees appreciate flexibility in their job, and it contributes to more desirable performance. Provide assignments in a way that tells what needs to be done without dictating exactly how to do it.
Source

Increased Visibility: For some workers, getting company visibility is highly rewarding. Copy a letter of praise, acknowledge their work at a meeting, or hang photos on a "wall of fame" to motivate them.

Types of Structure for Incentive 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 employee programs. Why the increase?

Online and Mobile Incentives
Company Reasons
Online Incentives are faster and smarter.

Online incentive programs save money and time while allowing organizations to have much greater control. Source

Mobile devices help planners keep up.

1 in 10 incentive planners uses mobile device apps to enhance onsite experience or show program results. Source

Employee Reasons
At home and away, online is a part of life.

There are 4.6 billion mobile users globally, and 1.7 billion Internet users. Source

We embrace technology and grow with it.

Nearly 50% of all U.S. online consumers are now advanced users of smartphones, social networks, and other emerging tools. Source


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.

Incentives with Gamification

Player Types

The Collector

Gains resources and status

The Killer

Keeps what's important safe

The Socializer

Builds relationships

The Explorer

Creates and seeks purpose

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. Source

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.
Source

Points: Do something, get a point. Or the opposite: Don't do something, lose a point. This is one of the major foundations of gamification systems, and most other elements start here.

Achievements: These are similar to points, but they're specific, super-sized and given for performing tasks or reaching goals outside of the straightforward point system.

Broadcasting: Nothing motivates like an audience or a competition, right? Adding a social element to an activity is a great motivator, whether you're challenging others or celebrating accomplishments.

Bragging Rights: This is what you get when you put all the other elements together. Badges, stickers, medals, and leader boards are used to classify points and achievements, and check your standing against others. Source


Real World Incentive Stories

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. Source

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. Source

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. Source


Inspired to rethink your approach to employee incentives? That's natural. You've just filled your head full of great ideas.

Call 888.234.7725 to sort them out and pack your program with what's best.

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