How much money are you losing due to employee attrition? Sure, turnover is expensive for any company. But in today's challenging market, the cost of losing your best employees is even higher. Hiring and training a replacement does not come cheap, and on the downside, you also lose the value that former employees produced for your company. How can you change that?
By recognizing employee efforts. You see, everyone wants to be appreciated at work — that is human nature. But how many companies take employee recognition seriously? Shockingly, only 33% of employees feel engaged and valued at their workplace.
In an AttaCoin study, 88% of respondents agreed that it was essential for employers to reward employees effectively. However, only 41% felt that their employers were incentivizing them properly.
Why are Employee Incentive Programs Important?
Having a structured and impartial employee incentive program at work motivates people to do their best and boosts productivity for the whole company. Here are four data-driven reasons why it makes sense for you to invest in an incentive program:
1. Huge boost in productivity
Workplaces that recognize and reward contributions make for happier employees, which improves their productivity. An SHRM study states that companies with an incentive program see 52% higher productivity in their employees.
2. Higher success rate in achieving business goals
High-performing companies can perform well because of their employees. By providing employees incentives at the workplace, they are sharing success with them. This helps employees feel a greater sense of ownership in their work and spurs them on to do even better — which translates into a 79% success rate in meeting business goals.
3. Better talent retention
Employee retention and hiring is an ongoing effort for companies of all sizes, including Fortune 500. The talent shortage is prevalent everywhere, and companies do not always feel confident that they can hold on to their best employees in the years to come.
The solution is simple — the top talent is ready to stay with their current organization as long as the proper recognition and rewards are offered. Such a kind of company culture helps increase revenues by 4X. A strong employee incentive program also improves hiring, as qualified applicants will be more interested in applying.
4. More sales
Greater employee satisfaction also translates into an improvement in your bottom line. An HBR study showed that having a happier sales team can boost sales by up to 37%.
The obvious place to start with developing a reliable incentive program is your employee salaries. Paying employees, a sum of money commensurate with their skills and experience is a prerequisite for them to feel valued.
However, merely handing out salary hikes every year may not be enough. Employees feel more special when given gift cards to spend as they like or experiences that they can share with their loved ones.
Here are some components you can consider including in your employee incentive program:
Monetary Incentives for Employees
Many employees seek recognition for specific achievements rather than overall performance. This is where commissions or target-based incentives play a significant role. In sales, spot incentives effectively appreciate the efforts of those salespeople who have exceeded their monthly targets or bagged a vast client. Companies like Deloitte organize such spot recognition programs for their HR departments.
2. Perks and benefits
Non-monetary benefits often matter even more than cash bonuses. For instance, a gift card or a discount coupon for a brand that the employee likes is a more personal touch. Companies can also secure team-wide digital rewards and benefits on eCommerce platforms, restaurants, or fitness centers using Xoxoday Plum.
When a company shares its profits with its employees, it reinforces that it appreciates all the employees' efforts. Huawei, the Chinese telecom equipment company, follows this model.
Its CEO, Ren Zhengfei himself, holds on 1.4% of the company's total share capital, while employees take the remaining share from what the company is earning.
Zhengfei believes that if employees own the company, they will be motivated to initiate more projects and work harder, which will boost the bottom line.
4. Annual performance-based
Regular rewards for meeting targets and being consistent continue to be a big part of incentive-building. Be sure to have a system in place that allows stronger performers to get bigger raises. Use a platform gamification such as Xoxoday Compass to design incentive and commission campaigns for different functions of your company.
These are incentives given out for meeting tight deadlines. They are well-communicated in advance and tend to involve senior management. Generous cash incentives are a big part of this, as well as public recognition.
Using Xoxoday, SPI Cinemas digitized their engagement program. This enabled their employees to gain instant access to the milestones they needed to achieve, after which the system automatically awarded them points redeemable at Xoxoday's Stores portal (catalog). The attrition reduced from 8% to 4.5% after implementing the Xoxoday platform, which led to cultivating a culture of recognition, free flow of information and a transparent rewards system.
By recognizing an employee's tenure with anniversary gifts, the company demonstrates that it appreciates longevity and is likely to retain its employees even longer. Gifts to mark festive occasions such as birthdays, marriages, and the birth of children are also thoughtful touches.
For a fitness chain spread across 700 locations and serving over 3 million people each day, Xoxoday was integrated with health wearables for activity data of members. Xoxoday worked with them to create an incentive program based on activities such as member anniversaries and birthdays, in-club referrals, walking 15,000 steps a day and so on.
Members who achieved their daily wins had numerous redemption options from Xoxoday Compass including free goodies, free personal training sessions and many others. That means incentive programs work great for employees as well as customers.
Non-monetary Incentive Ideas for Employees
Employee Incentives can go far beyond just gift cards or restaurant treats. Many employees might want more learning opportunities, for instance, or more public recognition. Get creative with the non-monetary incentive programs to appeal to different types of employee needs.
1. Career development course
Upskilling is fast becoming a requisite to keep up with the ever-changing times and should be encouraged by every company. Incentivize a motivated employee to learn and grow by paying for an online course or certificate pathway.
This can also be extended to non-work-related skills, such as music or graphic design. That way, the employee can feel like the company values his or her personal growth. SAS, Amazon, and AT&T have excellent L&D programs for their employees.
2. Social media shoutout
Apart from recognizing an employee on the company's internal platform, the company handle can share a social media post for the person. This allows the accomplishment to be viewed by the employee's personal circle, including friends and family.
Starbucks refers to employees as “Partners.” As mentioned in their social media guidelines, “We’re called partners because this isn’t simply a job, it is our passion.” This gives employees a sense of belonging and accountability. Here’s an example from the Starbucks India Twitter handle.
3. Peer-to-peer recognition
It does not just have to be the senior management that calls out accomplishments and contributions. Have a system that enables employees to recognize their peers for a job well done or for help. This highlights good deeds such as covering for a sick colleague or helping a new hire settle in. It also encourages more behavior like that from the rest of the team.
General Motors frequently practices employee recognition and has been able to achieve a 97% employee engagement rate. They recognize at least four employees every month.
Tips on Building the Ideal Employee Incentive Program
An employee incentive program should be designed around your workforce and what makes them tick. It should spur them on to achieve more and display a personal interest in their wellbeing and desires. Whether you are redesigning your existing incentive program or building one from scratch, here are some useful tips to keep in mind:
1. Understand what makes your employees happy
Everyone has different motivators, and what you might appreciate as an incentive may not appeal to your content team.
The first step to building a strong incentive program is conducting surveys to identify what kinds of incentives would motivate different departments to perform better.
This will help you find patterns that you can incorporate into your program. Plus, even after you roll out the program, remember to keep surveying your employees periodically to know you are on the right track.
2. Be thoughtful about your incentives
The ideal incentive program targets the employee's personal wellbeing, professional aspirations, and work-life balance. Have a menu of incentives in place and give your employee the flexibility to choose what they want most.
Extra paid time off, home office contributions, meal vouchers, gym passes, experiential gifts, and career development opportunities are substantial employee benefits that companies such as HubSpot have used with success in the past.
3. Make sure the program is sustainable
It is essential to understand your company's needs and budget so that the incentive program does not hamper the flow of work or lead to financial difficulties. Rather than bring incentives to a halt later because of faulty planning, it is recommended to start small and then build upwards based on feasibility.
How to Budget your Employee Incentive Program?
By now, you know the importance of an employee incentive program and how meaningful rewards can make or break the participation rate of your organization’s reward and recognition program.
The next question is, how much should you spend on your employee incentive and rewards program?
The answer varies, based on the number of employees and the company’s total recognition and rewards spend.
In a nutshell, as per World at Word, most recognition programs have a budget of 0.3% or less of the total payroll budget. On the other hand, SHRM suggests a successful reward program to have a budget of 1% or more of the total payroll. Along with the budget consideration, the incentive program should consider other factors that influence the final budget. They include:
Running a manual recognition program takes up a lot of time for the administrative and HR department. Ensuring that employees are properly rewarded recognized for their hard work is no easy task. You may want to consider rewards and recognition software such as Xoxoday Empuls to automate many time-consuming processes. Click to start a free trial.
Did you know, cash and prizes awarded to employees can be considered a taxable income? When you are running a manual rewards program, it can be a liability. Also, you have to rely on managers to track the expense receipt. To avoid losing your peace of mind over this, a recognition software keeps all the information in a central dashboard.
As per a report, high employee engagement correlates to employee recognition.
In simpler words, the ROI of increased employee engagement has a direct impact on your profitability. Companies with high employee engagement are more profitable, productive and experience reduced absenteeism as compared to their counterparts with disengaged employees.
The key benefit of an employee incentive program is increased employee engagement. This is a crucial thing to keep in mind while considering a rewards budget.
Summing it up
Creating an employee incentive program is the first step towards building a unique company culture where employees are happy, productive, and engaged.
Great brands constantly re-evaluate how they reward employees and ensure that their program meets the needs of both their people and the market.
Xoxoday Empuls is the All-In-One Solution for Employee Engagement. Improve employee productivity, performance & retention with an easy to use engagement application. Want to know more? Book a demo or start a free trial.
At Xoxoday, we deeply understand the intrinsic and extrinsic motivation and engagement drivers of people, be it an employee, supplier, contract staff, gig or consumer. We bring simplicity and continuity to a complex, everyday problem.