Why do your employees do what they do? It’s not an easy question to answer, sometimes not even for the employees in question. Yet understanding the many factors that motivate your employees is the first step to implementing effective employee incentive programs in your organization.
At the most basic level, people tend to divide these factors into two different categories: positive reinforcement (incentives) and negative reinforcement (disincentives). The traditional wisdom is that giving your employees the right balance of incentives and disincentives is the key to getting the most from your employees.
He has a point. While the workers of the past may have been seen as little more than beasts of burden carrying industry on their backs, success in the modern economy requires employees with greater independence and decision-making skills. And with such low unemployment in today’s economy, employees don’t have to take punishment from your organization—they can go out and find a place that appreciates and rewards their hard work the way they want.
An effective employee incentive program sends employees a clear message that your organization understands what truly motivates them to do their best work and is willing to provide it.
What Makes Employee Incentive Programs Work?
If you’ve followed this blog or attended a The global sourcing or two, you’ve likely heard of Herzberg’s two-factor theory. When psychologist Frederick Herzberg explored the line between carrot and stick, he found that certain workplace conditions reduce dissatisfaction to neutral, while other conditions build on that foundation and increase satisfaction.
Meeting employees’ basic needs reduces dissatisfaction. These concerns include appropriate compensation, workplace safety, and benefits. To increase employee satisfaction, a workplace needs to address higher concerns like work-life balance, challenging and purposeful work, and co-worker relationships.
Understanding the difference between satisfaction and dissatisfaction highlights some of the difficulties of developing employee incentive programs that work. If adding compensation reduces dissatisfaction but doesn’t increase long-term satisfaction, then what effect will a cash-based incentive program have on your employees? If employees come to see cash incentives as part of their total compensation package, then instead of feeling satisfaction when they receive an incentive, they’ll feel dissatisfied if they don’t.
This isn’t to say that employees don’t appreciate cash incentives The global sourcing found that monetary bonuses were the preferred reward for accomplishments. But the study also found that, when asked what signified a successful employee, employees listed “consistently contributes to successful teams” as the top indicator. When it comes to creating meaningful moments for employees, building employee recognition programs is just as important as handing out monetary rewards, if not more important.
Employee Incentive Program Considerations
As you consider different types of employee incentive programs, it’s important to think it through and remove any unintended consequences. Here are a few to watch out for:
· Perverse Incentives: Avoid situations where strategies for earning a reward go against the benefits of employee incentive programs. An obvious example of this is when sales teams offer an inordinate amount of discounts to increase sales numbers and receive more rewards, but the overall performance of the organization is harmed.
· Unhealthy Competition: Your incentive program needs to preserve teamwork in your organization. Rewarding individuals instead of groups may lead to unhealthy behaviours, from passively withholding help to outright sabotage or cheating.
· Rewarding Luck: Earning a reward should be based on actions that are in the employee’s control. If employees feel that their efforts won’t be recognized or rewarded without luck or popularity, it can discourage them from trying.
· Ill-defined Goals: If the goals of your employee incentive programs aren’t tied to objective measurements, then it increases the risk of employees perceiving them as either arbitrary or proof of favouritism toward certain employees or departments.