How to Incentivize Employees

Who would not be happy to receive a pat on the back for a job well done, most especially if that pat comes with some cash bonus or perhaps recognition in front of colleagues?

Businesses often face the dilemma of wanting to recognize employees for their good performance or extra efforts, but budget sometimes gets in the way. Good thing though, today’s reward programs are more varied and can be tailored to reflect an organization’s culture and creativity. From as simple as a gift certificate to as luxurious as an all-expense-paid trip to Hawaii, there are many reward options to choose from in order to motivate employees and drive them towards the right or desired behavior.

Lisa Bodell, CEO of innovation-training firm FutureThink, offered four innovative approaches to a rewards program. Let us use those approaches here to group together some of the best incentive suggestions offered by management consultants, HR experts, bosses and business coaches from a range of industries.

1. Compensation

Some people think that money cannot be used to motivate employees, but some studies show otherwise. Research found that almost everyone is motivated by money to some degree. A national survey in the U.S. that involves 1,200 randomly selected employees across different companies revealed that 54 percent of employees rate financial compensation as “very important” to motivation. A survey by the American Compensation Association and the American Productivity Center also revealed that financial compensation has a “very positive” impact on employee performance. Of course, monetary reward is only effective when properly designed, and it should not necessarily involve large amount of money. Here are some innovative and creative ways to give it.

Peer-to-peer rewards
This strategy has worked in, where employees award cash bonuses to colleagues who perform well.

Patented rewards
Allow employees to apply patent in behalf of the company and reward them financially for it. For example, if a firm might be charged a fee for air pollution emitted, patents maybe assigned to employees undertaking scientific discoveries to address the problem so that they too share the benefits.

These can be a great motivator too. Research shows that companies which reward their employees with shares are more productive since these give them a sense of ownership to the company.

2. Gifts

Gifting employees for a job well done does not have to break the bank. They can re-enforce exemplary behaviors in the short-term, and at the same tine foster long-term loyalty. For this strategy to work though, according to Bodell, gifts must carry ‘enough’ perceived value. Here are some creative gift ideas you can give to your employees.

Merchandise and travel incentives
Executives who participated in a study conducted by the incentive Federation consistently indicated that merchandise and travel rewards work better than cash. An Incentive Magazine survey in 2008 showed that these incentives are particularly effective when recognizing performance and when given as business gifts, sales incentives, and spot rewards, among others. One of the reasons they are effective is that they allow employees to treat themselves without feeling guilty.

Prestige rewards
A bottle of premium champagne or a luxurious fountain pen, perhaps? These are great alternative to trophies or plaques. Plus, these can be customized and personalized. They can be given to exemplary employees to mark their career’s milestone.

3. Recognition

We all need affirmation sometimes, and there is nothing quite like being recognized in front of our colleagues to boost our self-esteem and self-confidence. Recognition allows employers to showcase team members who demonstrate the behavior and performance they want to cultivate.

Certificate of recognition
Hosting a monthly recognition for the employee of the month, best team player of the month and the like can be effective in motivating employees to try to do better next time. If they slack during the previous month, for example, they have a chance to start over again, improve their performance, and get recognized for a good performance. This approach could just actually bring out competitiveness among each employee.

VIP wall
How about featuring portraits and stories of top employees on posters displayed prominently across the office? This strategy seemed to work well with Honeywell who launched its own “Great Performers” program.

4. Perk

Attract top talents and retain valuable employees — these are just some of the things perks can do. Here are some of the top perks employees crave for:

Training opportunities
Many employees today, particularly millennials, are not driven by salary. Training opportunities are one of those things they are looking for before accepting a job offer. A survey by Kenan-Flagler Business School at UNC found that 65% of millennials pointed out personal development as the most influential factor they stay in their current jobs. They are highly likely to stay in a company that nurtures their development through either funded classes, seminars and conferences, rotational programs and training sessions.

Fun at work and outside
All work and no play can make a person dull and unhappy, and thankfully, many employees nowadays are recognizing this. Companies are innovating their office design and landscape, turning physical spaces into something colorful, playful and at the same time productive. A few examples of these companies are instance Pixar, Google and Coca-Cola. Of course, “fun” does not have to be limited in the physical environment.

A culture of fun can be cultivated in the workplace too. For example, offering catered lunch for employees and gathering all team members to sit and eat together. Who can say no to free food? Fun can also be taken outside of the workplace, such as organizing a quarterly team-outing and annual company outing.


When employees are doing well and going beyond than what is required of them at work, it may be impossible not to compensate them for their hard work. The good news though is that you have options other than monetary compensations to recognize their efforts. Gifts, perks, and recognitions are effective alternative to making staff more productive without shaving one millimeter more off company’s budget.