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The UPS Store Small Business Blog
  • 02 May 2022
  • Tiffany Carey

Three Ways to Initiate Employee Incentive Programs

Employee incentive programs recognize and reward employees for work that has helped the company achieve its goals. They are also one of the best ways to make and keep your staff happy and motivated. Program rewards can be financial, such as cash bonuses or gift cards. They can be experiential, like a trip or restaurant outing. The purpose is to inspire employees to do their best work and encourage engagement. Research has proven that small business owners with well-run employee incentive programs have the best chance of getting the most talented candidates, less turnover, and stronger employee loyalty.

woman employee wins incentive

Remember that employee incentive programs are separate from other benefits or perks that your company may offer, such as health insurance, vacation/sick days, gym memberships, etc. You can revolve incentive programs around different aspects of your business like sales, customer service, and operations. And generally, incentives are as good for the employees as they are for your business. So let’s take a look at a few examples of the ways to initiate good employee incentive programs. 

1. Performance incentives

Using performance-based incentives can be effective in motivating your employees and increasing employee retention. Incentives like this are typically built around a revenue goal and are sales-related. However, improving customer service can also be the core objective of an incentive. To initiate a successful performance incentive for your business, be sure to predetermine how goals are met and then clearly communicate them to your team. Your incentive program should have a well-defined objective with progress that everyone can see, access, and understand. If you spend a little time working through the finer details before you kick it off, you’ll save yourself from future heartache. 

2. Referral programs

Referral programs use employee word-of-mouth for marketing your company. Employees essentially become advocates for your business, which can be highly effective. Just as with any incentive program, the program's parameters should be crystal-clear to your employees. What is considered a referral? Do they receive the incentive once the prospective employee has the interview or only after they accept the job? Some referral programs require the referred employee to work a certain amount of time before the employee receives the benefit. You can choose to use a tiered system in which the employee’s incentive increases as the referral reaches specified benchmarks.

3. Tuition reimbursement plans

Employees are looking for more than just a job. Offering a tuition reimbursement or assistance program is attractive to prospective employees. You can offer to assist with courses or degree programs that are relevant to your business, which creates a win-win situation for you and your employee. These types of programs work so well because they tend to keep involved employees on staff longer, and they also bring in employees who will stay on top of market trends which can help your business grow. Another perk to note is that tuition reimbursement plans can help you save money on your taxes.

There are many types of programs to offer but what’s most vital in creating and executing a successful employee incentive program is that it should always strike a balance between what’s good for the employee and what’s good for the company. It should be clearly defined to ensure flawless execution, and it should create momentum for everyone involved.

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