The Basics of Incentives

Incentives are quite possibly the most popular and effective way of stimulating, motivating, and encouraging someone to do something. On the most basic level, an incentive is a reward given in exchange for the successful completion of a task. They work extremely well at promoting certain outcomes, targeting a specific audience, and producing measurable outcomes. They are easy to set up, work for a broad audience and are very cost effective. Gift cards are the #1 used incentive; over 60% of companies use gift cards as incentives.

To date, organizations in the US spend over $100 billion on incentives each year. More than half of America's companies use them, probably because they are so effective. In fact, the use of incentives at work has doubled over the past 10 years. There are many different types of incentives that we will get into. In addition to this, we will discuss how incentive programs are structured and which one is right for you.

Part 1: Should you use incentives?

Incentives are more important now than ever before. As job satisfaction is declining (61% said they were satisfied with their jobs in 1987 while 45% said they were satisfied in 2010), employee incentive programs are popping up to keep employees engaged and loyal. Companies with higher than average employee engagement experience higher profits, sales, and above average productivity. Why does any of this matter? Because burned out employees that are ready to jump can cost companies a lot of money, but offering incentives along the way makes them much less likely to dive. So... is an incentive program right for you? Consider these questions. Are current performance goals too low? Are the required goals challenging, yet achievable? Can you measure optimal performance? Does the problem lie in motivation, not a lack of skill or training? If you answer "yes" to some of the following questions, then we think it is.

Part 2: What kind of incentives are there?

There are many different types of incentives out there, but everything falls into two main categories: tangible incentives and intangible incentives. Tangible incentives are rewards that you can physically touch, see, or do. Theses include extra vacation time, certificates or plaques, work perks such as causal dress days, merchandise, gift cards, cash and so on. Tangible goods are associated with the right brain because they evoke a certain image or feeling when thought about.

Intangible incentives are more focused on recognition and stimulation, and since they are more abstract they are stored in the left side of the brain. Intangible incentives cannot be seen our touched, but are still incredibly powerful. Giving employees praise for their hard work, independence, recognition, information and feedback about how they are doing, and interesting work to do are all good examples of intangible incentives.

Part 3: How are incentive programs structured?

In the long run, the goal of an incentive program is to keep employees engaged and on board. Since they are used to promote years of wellness, productivity, sales, happiness and encouragement, they can be structured in a variety of ways. One approach is to encourage peer recognition. This means fellow co-workers should be congratulating and acknowledging when another fellow co-worker does something great. Another approach is to offer rewards to employees on the spot, or as a surprise, when they demonstrate an outstanding effort. Points systems are another popular method of incentivizing people (sales teams especially) over time. Contests between salespeople is a great way to foster friendly competition while encouraging them to reach their goals.


  1. Discover 5 incredibly useful spy apps for Android phones.

  2. Moreover, employers can look into fostering a culture of work-life balance in the company to help alleviate some of the stress people tend to deal with while on annual leave. For instance, colleagues should encourage each other not to work while they are on leave. Team delegates should also ensure that they are able to solve problems and deliver work on their own without asking their colleagues who are on leave for help. For those working in smaller offices or who do not have a team, limit the number of work hours when on leave to the minimum. Read more: non-monetary incentives to attract talent and retain employees.


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