The 21 Best Employee Incentive Programs [+ Real-Life Examples]
Some employers overlook the importance of boosting employee morale for business success. But in addition to improving work performance by up to 44%, employee incentive programs can attract quality candidates and reduce turnover by 65%.
An Incentive Research Foundation study revealed that employee incentive and reward programs increased business productivity rates by 22%, while SHRM reported that 79% of employees would work harder if they felt their employer consistently recognized their efforts.
In addition to increasing productivity and decreasing turnover rates, a well-structured employee incentive program can attract quality candidates to a company. It shows them that the employer appreciates and seeks to reward employees who exceed expectations, and it would likely motivate them to join the organization and perform well.
Contents
What is an employee incentive program?
The benefits of employee incentive programs
21 examples of employee incentive programs
– Wellness incentive programs
– Points-based incentive programs
– Sales incentive programs
– Gift card incentive programs
Developing an effective employee incentive program: Best practices
What is an employee incentive program?
An employee incentive program is a concrete way to recognize and reward employees for outstanding workplace performance that exceeds expectations. These could include exceeding sales targets, creating novel solutions, exceptional customer service, or going above and beyond to help fellow employees. Top performers may receive rewards in the form of financial bonuses, gift cards, extra days off, or professional development opportunities.
HR professionals can implement employee incentive programs regularly (monthly, quarterly, or annually) or on an ad hoc basis. They can also design these programs to cater to individual, team, and departmental achievements, with specific types of rewards for employees in these different categories.
For instance, individual awards celebrate outstanding performance by individual employees, while team rewards recognize team effort and promote collaboration. Departmental rewards, on the other hand, acknowledge excellent results from specific departments, fostering a sense of ownership and accountability within each one.
Generally, employee incentives come in monetary or non-monetary forms to suit diverse preferences.
- Monetary incentives, like bonuses or profit-sharing, offer employees concrete financial rewards
- Non-monetary incentives, such as public recognition or paid time off, can further motivate employees and make them feel valued.
The benefits of employee incentive programs
Apart from improved employee morale and motivation, employee incentive programs present a few other significant benefits:
- Greater productivity: Employees who feel valued usually also feel more motivated to be productive and perform to the best of their abilities.
- Cost reduction: While employee incentive programs require financial investment, they ultimately help companies save money by decreasing turnover and absenteeism, improving efficiency and work quality, and enhancing customer satisfaction.
- Talent retention: Companies with high employee satisfaction can avoid unnecessary hiring costs, as their turnover rates tend to be low. Employees who know they’re appreciated are more likely to stay with a company.
- Greater talent attraction: A robust employee incentive program signals to potential hires that your organization invests in its employees’ success, making it even more attractive to them.
- Improved company culture: Employee incentive programs can help create and reinforce a culture of motivation, self-management, ownership, belonging, and responsibility among employees.
- Strategic goal achievement: Employee incentive programs can target specific goals to support your organization’s strategic development
- More effective collaboration: A variety of incentive programs aimed at individuals, teams, and departments can encourage employees to collaborate cross-functionally and more effectively.
21 examples of employee incentive programs
Below are 21 employee incentive program examples to inspire you when developing similar programs for your organization. They fall into four broad categories:
- Wellness incentive programs
- Points-based incentive programs
- Sales incentive programs
- Gift card incentive programs.
Employee wellness incentive programs
Employee wellness incentive programs usually cover physical, emotional, and mental wellbeing initiatives. They revolve around the idea that when employees feel their best, they are much more likely to give their best at work.
1. Fitness incentives
Employees receive free or discounted gym memberships or subsidies for exercise classes like spin, yoga, or Pilates. Organizations also provide company-wide fitness challenges or sponsor local races, creating a sense of camaraderie and healthy competition among employees.
HR tip
When working on fitness incentives, highlight their benefits and communicate their availability to employees. Offer flexible hours for exercise schedules to increase participation rates.
2. Health incentives
Employers reward employees for adopting healthy habits and achieving health goals. Some examples include losing weight, normalizing blood pressure, lowering cholesterol levels, or quitting smoking. A RAND Corporation study found that employers who offered their employees health incentives reported a 22% higher average participation rate in wellbeing programs than employers who didn’t offer similar incentives.
3. Mental and emotional wellness
Companies can offer Employee Assistance Programs that provide confidential counseling to help employees manage work anxiety or personal challenges. It can also include conducting mindfulness workshops to teach mindfulness techniques and stress management strategies. Employees may also get paid mental health breaks or free access to meditation or mindfulness apps to support mental wellbeing.
Real-life example
International money transfer service Wise has an Employee Assistance Program that offers free, confidential services to its workforce. These services include mental health support, financial guidance, legal assistance, help with family issues, and advice on achieving work-life balance. They are available 24/7 over the phone, online, or face-to-face.
4. Financial wellness
Financial wellness incentives usually cover financial literacy, goal and debt management, and retirement planning. Companies may host budgeting, saving, and debt management workshops. They may also offer financial aid to assist employees in managing their student loan debts or provide emergency relief funds to support them through sudden financial loss.
5. Social and community wellness
Some companies grant employees paid time off to volunteer for causes they care about, fostering social connection and purpose. They may also host charity events requiring company-wide participation to promote philanthropy, social interaction, and team bonding.
Points-based employee incentive programs
Points-based incentive programs reward employees for goal achievement, project completion, or exceptional performance. Employees can earn points for their accomplishments (similar to how customers earn points with loyalty programs).
6. Milestone rewards
Employees receive rewards in the form of points when they hit major career milestones, such as work anniversaries or significant contributions to important projects. Employees can cash their accumulated points for monetary or non-monetary rewards like cash or gift/dining/shopping vouchers, etc.
7. Peer-to-peer appreciation
You can encourage your employees to appreciate and reward their peers with points for exceptional teamwork or cooperative behavior. These points can then be redeemed for a range of gifts or perks. This type of employee incentive program enhances collaboration and promotes company culture among employees.
8. Meeting customer satisfaction goals
Employees who consistently receive high customer satisfaction ratings earn points redeemable for experiences like spa days, weekend getaways, or buffet dinners. Some companies may also allow these employees to exchange their points for additional paid time off or exclusive company merchandise.
9. Employee referral program
Employees who successfully refer their friends and colleagues (former or current) to their employers for open positions can receive points they can use for cash gifts, additional paid time off, or company merchandise.
An employer may decide to reward points for referrals on a tiered basis, meaning an employee receives points when their referral:
- Completes and submits a job application
- Completes or passes an interview
- Is hired
- Completes their onboarding process.
10. Learning and development program
Employees get points for completing online courses or attending workshops. They can then redeem these points for subscriptions to industry publications, professional certifications, or coaching sessions.
Real-life example
White Castle created the ROCK (Royal Order of Crave Keepers) contest to foster team culture and motivate team members. The contest awards points to members based on qualities like accuracy, friendliness, customer satisfaction, and safety. Employees can redeem their points for a wide selection of rewards in their employee engagement platform. The contest boosted engagement and increased the fast food chain’s sales by 89% in 90 days.
Employee sales incentive programs
This type of incentive program rewards sales staff for performing at a higher-than-expected level and exceeding their monthly, quarterly, or yearly sales targets. Often part of a broader sales compensation plan, a sales incentive program may offer specific rewards for particular achievements (e.g., a 10% increase in conversion rates).
11. Role-specific incentives
Such initiatives reward sales reps based on their capabilities using a tiered monetary incentive scheme, which features a higher reward for every subsequent milestone reached. The purpose of this type of initiative is to motivate sales leaders to outperform themselves.
12. Omnichannel sales incentives
Omnichannel sales incentives reward sales representatives for their contributions at different stages of the buyer’s journey, including interactions through digital sales channels. The aim is to recognize and compensate the reps not only for closing sales but also for their roles as online consultants and advisors during the early stages of the purchasing process, even when they are not involved in the entire transaction.
13. Sales commissions
Sales commissions are rewards for sales staff based directly on their sales volume. Commission structures and amounts vary by industry and are typically calculated as a percentage of each sale amount (in addition to fixed monthly pay). You can also arrange tiered incentives for exceeding targets or achieving sales for specific products.
14. Sales spiffs
These entail short-term bonuses for achieving specific goals within a limited timeframe. An example of this is awarding cash bonuses to sales reps for selling a certain number of high-margin products in a single week.
HR tip
Implement a leaderboard that tracks individual sales performance to create competition and excitement in your incentive program. Top performers can win prizes, bragging rights, and early access to new products or sales territories. You can also gamify the process with points, badges, and virtual challenges.
15. Team sales goals
Some sales managers or leaders set collective sales targets for their whole team and reward them once they reach these targets, with possible additional rewards for exceeding them. This fosters collaboration and a sense of shared responsibility, ownership, and success across the entire sales team.
16. Team profit sharing
This involves implementing a profit-sharing model in which team members share a particular portion of the profits generated from team sales. This directly links their efforts to financial rewards and motivates sales reps to hit and even exceed their targets.
Real-life example
B2B platform Lusha’s sales incentive program celebrates individual and team achievements, fostering a sense of accomplishment. It uses non-monetary incentives like “floaters” (bonus days off) and monthly spiffs with exciting prizes (e.g., electric scooters or Dyson hairdryers) to motivate its sales team.
Lusha also leverages gamification platforms to make reaching sales goals fun and invests in ongoing training to help salespeople hone their skills. At the same time, its salespeople sound a gong after closing a deal to celebrate wins and create a positive, engaging atmosphere.
Employee incentive gift card programs
Many companies use employee incentive gift card programs, allowing staff to choose rewards. 69% of employees say they would appreciate gift cards from their employers.
Here are some examples:
17. Closed-loop gift cards
Closed-loop gift cards are exclusive to one specific store or brand. You can arrange their issuance and distribution via a partnership between the organization and other businesses (usually retail, F&B, tech, or grocery stores).
18. Open-loop gift cards
Typically branded with a credit card network like Visa or Mastercard, these gift cards can be redeemed across multiple brands (unless specifically restricted). Unlike closed-loop gift cards, employees have the flexibility to redeem these wherever the affiliated cards are accepted.
19. Employee of the Month gift cards
Gift cards are a popular choice of reward for employee of the month programs as they allow the recipients to choose rewards they personally appreciate. Some online retailers, such as Amazon and eBay, offer these types of gift cards.
20. Perfect attendance gift cards
Some companies use gift cards to reward employees who achieve perfect attendance, either for a whole quarter or a year. These gift cards are often for relaxation or entertainment purposes (e.g., spa days or cinema vouchers).
21. Spot bonuses
Some employers issue immediate digital gift cards or gift certificates to top-performing individual employees for on-the-spot recognition of their outstanding work. Known as a spot bonus or spot award, this is a quick and easy but effective way to boost employee motivation and morale, as it typically leads to greater productivity and job satisfaction.
Real-life example
Visa released a prepaid card permitting companies to distribute incentives to their workforce to recognize and express appreciation for their achievements. Employees can use this card everywhere Visa cards are accepted, including at Visa PLUS ATMs.
Developing an effective employee incentive program: Best practices
Determine your goals
The first step in creating the kind of incentive program your company needs to develop is to identify what you are trying to accomplish. Remember that the employee incentives you develop should support the business’s overall objectives. For instance, if your company strives for innovation, the program could reward employees who introduce new ideas.
Find out employees’ priorities
Employees have different needs and preferences, so a one-size-fits-all approach rarely works. Understanding what your staff values can help you craft an incentive program that resonates with them to get the most out of it.
Use employee engagement surveys to help you decide on the most effective incentives: cash bonuses, gift cards, or additional paid time off. Do your company’s employees value entertainment perks or flexible work schedules? And do they prefer public recognition programs or more private types of appreciation?
A flexible package may be the best option, as it would allow employees to choose the incentives they like most. Include a mix of financial incentives, time-off options, wellness perks, and professional development opportunities. Communicate how the incentives work and how they can choose the rewards.
Evaluate your options based on gathered data
Understanding employees’ priorities helps you make informed decisions about your incentive program. It’s essential to identify which incentives fit their needs while ensuring they align with your organization’s goals. For example, if the main objective is to boost company sales, prioritize incentives that motivate employees to close more deals.
Other things to consider when designing your incentive programs include:
- How much are you willing to spend to get the most value?
- How easy is it to implement your incentive program?
- Can it be adjusted to accommodate changing business needs or a growing workforce?
Get feedback on your shortlisted ideas
Once you’ve narrowed down your options, get employee feedback on your program ideas to decide which one to develop and implement.
Be sure to get employees’ opinions on each aspect of your different program ideas so you can get a well-rounded, comprehensive picture of what they want (you can use conjoint analysis for this). Once you’ve evaluated your options, consider pilot testing them first to identify any issues early, then introduce them in stages so you can adjust them based on continued employee feedback.
Ensure fairness throughout the process
Ensure rewards and incentives are distributed fairly to avoid demotivating employees, which would reduce your incentives’ effectiveness. Establish clear and transparent criteria for earning rewards to ensure fairness in your program.
For instance, if the goal is to improve sales, rewards could be based on exceeding sales targets. Communicate the program rules, criteria, and reward distribution process openly to all employees and apply them consistently.
Maintain and update the program regularly
Request feedback regularly so you can modify or update the program according to your employees’ changing needs. Track which incentives are the most effective so you can continue using them, and eradicate those you find to be the least effective.
If possible, automate feedback collection to make submission more efficient and convenient. One way to achieve this is to distribute surveys at regular intervals.
To sum up
A well-designed employee incentive program isn’t just about handing out rewards. It’s about understanding your workforce, aligning incentives with company goals, and fostering a culture of recognition and appreciation.
By prioritizing employee needs and preferences, ensuring fairness, and measuring program effectiveness, you can create a powerful employee incentive program to motivate your team, boost morale, and drive business success.
Weekly update
Stay up-to-date with the latest news, trends, and resources in HR
Learn more
Related articles
Are you ready for the future of HR?
Learn modern and relevant HR skills, online
