. Designing a Successful Employee Incentive Program | Northstar Meetings Group

Designing a Successful Employee Incentive Program

Designing a successful employee program requires thought and consideration. Our free webcast on May 2 will feature expert insights on choosing the right program. 

May 2, 2019, 2:00 PM EDT

Northstar's "Choosing the Right Incentive Reward" webcast, sponsored by Bulova, will feature experts discussing the various types of rewards — merchandise, gift cards or branded currency, travel — as well as scenarios where each works best, whether as the sole award or in combination with others.

Crafting a successful employee incentive program involves some legwork, but if the rewards and recognitions aren't a good fit, all the careful planning will be doomed from the get-go. But how do you determine the right type of rewards program to offer? And how do you differentiate an incentive that encourages employee engagement from one that will crash and burn with little impact? 

The above ideas are the tip of what will be covered on Thursday, May 2, during Northstar Meetings Group's webcast, "Choosing the Right Incentive Reward." The event will feature insights on the various types of incentives for employees — monetary rewards, merchandise, gift cards, travel — and discuss when and where each works best. 

In the following, one of the experts on the panel, Allan Schweyer, chief academic advisor of the Incentive Research Foundation, shares some tips about choosing successful incentive programs for boosting employee morale and long-term satisfaction. 

Designing Your Ideal Incentive Program

Before launching an incentive program, designers and sales teams should ensure they and their stakeholders have a clear understanding of the objective(s) of the initiative in order to shape the program and the rewards presentation. 

For example, a program with the dual purpose of increasing employee performance and retaining top salespeople might fair well with an annual vacation incentive. Another program that encourages knowledge-sharing might award employees with points when they upload relevant information to the company platform. Accumulated points could be used for merchandise and gift cards.

The idea I'm conveying is that each incentive program is unique and deserves its own consideration. 

Something else to keep in mind: Before a program is launched, designers should also think through any potential consequences. For example, a travel program might encourage increased sales among top performers while discouraging and disengaging everyone else. If this or some other obstacle arises, it might be time to rejigger the reward into one that will better please the masses. 

When Incentive Programs Work

Although I nudge toward customization in all circumstances, spot merchandise -- gift cards and experiential rewards for a spa or a restaurants, for example -- work well for almost everyone as tokens of recognition. To increase effectiveness though, these incentives should be personalized, adorned with a note of appreciation specifying why the employee is receiving the reward. Doing so will assign deeper meaning to the prize, thus helping employees feel more recognized.

For bigger achievements, travel, luxury merchandise and experiences are always going to be popular, but as per the above, the aspects get a little trickier. For six-figure-earning salespeople who meet aggressive goals, a $10,000 trip could be appropriate. For a small-business employee earning less than $50,000, a $3,000 vacation, while exciting, might be resented. Why? Because that person might not be able to afford the extra expenses required of travel, or might rather receive a monetary bonus. 

The choice then, regarding which employee incentives work, falls to managers, who should know enough about their team members to choose an inducement that makes employees feel their employer A) knows them, and B) cares about them.

A $3,000 reward costs the firm the same whether it's cash, a trip or a new-generation big screen TV, etc. But how the reward is chosen and presented, and why, make all the difference.

Incentive Guidelines

There are no day-to-day guidelines to follow for determining whether a reward is appropriate for any given person. 

In general, firms should view rewards as gifts. You probably wouldn't gift your close friend or relative cash, for example, unless you knew they really needed it. And in that case, you would attach a note of appreciation (a card) or talk to them in person. You wouldn't just send a check.

An open gift card is much the same; you might gift it, but should only do so with explanation. For example, "I know you collect vintage vinyl, but I also know you love hunting at flea markets and second-hand shops for your finds, so rather than buy you some records, I'm giving you this Visa card (or cash) to go out this weekend and find yourself some amazing LPs. I can't wait to hear about it Monday!" Or, "I know you and your husband love trying new restaurants. You worked late on this deadline all week. I'm giving you this gift card so the two of you can go out and have a great meal on us." The personalization really takes an otherwise hollow incentive to the next level. 

In most cases, the appropriate gift corresponds to the achievement recognized, from a sincere thank you to big rewards for major milestones and accomplishments. 

The Cash Grab

Cash is rarely the right reward. In this case, I would opt to offer an open-loop gift card (e.g. Visa, Mastercard). Research shows that open cards -- even though essentially synonymous with paper cash -- have a much different psychological effect.

If you give an employee $150 and tell them it's to go out and buy vinyl records or have a nice meal with their spouse, they might use it that way, but they are just as likely to use it on groceries, which diminishes the intent and impact of the meaning behind the incentive.

An open gift card can pay a grocery or utility bill, too, but due to the psychology of mental accounting, most people will spend it on the records or the restaurant or something more meaningful and memorable than paying the bills. As an employer, that "special perk" reward is the type of outcome you want to see when it comes to your employee recognition programs.

Allan Schweyer has been engaged in human capital management consulting, research and training for more than 20 years. As chief academic advisor for the Incentive Research Foundation, he is responsible for conducting original research into questions of motivation and the effectiveness of incentives and rewards. He also produces the IRF Academic Quarterly Journal, is a member of the Compensation & Benefits Review Board, and maintains working relationships with more than 50 researchers in the field from around the world.

Schweyer speaks on topics ranging from the design of rewards and incentive programs to employee engagement and performance. He is the author of three books and hundreds of papers and articles.

Don't forget to join Northstar on May 2 for the interactive webcast, "Choosing the Right Incentive Reward," sponsored by Bulova watches and featuring Allan Schweyer and Mike Donnelly, president of Hinda Incentives. Register here today.