The Do’s And Don’ts of Effective Employee Incentive Programs

Effective Employee Recognition

The Do’s And Don’ts of Effective Employee Incentive Programs

Recent studies by Bersin & Associates have shown that employee recognition programs and employee incentives are highly effective, but only when done properly.  A solid reward program can boost performance, improve morale, and reduce employee turnover by 31% or more.  An ineffective or inconsistent program is barely better than nothing at all.  So what are the right and the wrong ways to motivate employees?

The Wrong Way To Reward Your Employees:

1. Programs Nobody Knows About

Most large companies have some form of recognition program, but 58% of employees surveyed by Bersin & Associates had no idea the programs existed.  If your employees aren’t aware of your program and it’s not part of their daily operations, then you’re basically throwing your money away

2. Programs Rewarding The Wrong Things

87% of current reward programs are designed to recognize “years of service” or tenure.  Rewarding tenure is a waste of time.  Employees aren’t going to stay with your company for five, ten, or fifteen years purely so they can earn a watch or a vacation.  Rewards need to be given regularly and for more specific behaviors than simply hanging around for a really long time.  Rewarding tenure sends a negative message: we only care about the people who have been here longest, regardless of their actual performance.

3. Programs Rewarding The Wrong People

Many employee rewards are bestowed at the manager’s discretion (“Employee of the Month” is a frequent offender).  This leads to confusion over exactly what is being rewarded (what are the parameters of “best” employee?) and also bitterness from those who are overlooked.  Discretionary awards are generally inconsistent and reward brown-nosing over quantifiable, measurable performance.

The Right Way To Reward Your Employees:

1. Programs That Are Regular and Specific

The research shows that the most important aspects of recognition programs are specific feedback and regular, fair recognition.  Rewarding your employees once a year isn’t enough – recognition should happen on a daily, weekly, and monthly basis.  Your reward program should be a huge part of your corporate culture and your daily operations.  Your employees should know exactly which positive behaviors will be rewarded in the workplace.  (A points program is helpful in this regard – you can tell your employees they will receive points for positive behaviors like recruiting, hitting sales goals, earning praise from customers, and minimizing sick days.)  When you see an employee behaving in a positive manner, take the opportunity to recognize them with specific feedback: at the morning meeting, you can say, “Hey guys, today I want to recognize Jenny for overcoming a difficult obstacle with a client.  She managed to…”

2. Programs That Are Quantifiable and Goal-Oriented

In an ideal incentive program, you will have both rewards for “doing the right thing”, and rewards for hitting quantifiable goals.  Make sure that at least some of your rewards are tied to specific numerical sales goals, cost cuts, and revenue increases.

3. Programs That Utilize Peer Input

Managers shouldn’t be the only ones in charge of recognition.  Involve your employees in the process as much as possible.  They see things you don’t see and know things you don’t know.  You may not be aware that Jeff from accounting is fantastic at saving the company money, or that Lynn can always turn things around with a disgruntled customer.  Give your employees a vote or the ability to bestow points or credit on their peers.  Your reward program will be much more fair, and you’ll be amazed what you learn.

Leah Darrow
stevensonnenberg@me.com

Leah Darrow is our weekly blog contributor for Awardco.com.

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