Financial Data
Updated 26 Sep 2020

21 Ways to reward your employees

Incentives are essential in promoting loyalty and retaining talented staff in any business. It’s particularly useful when you aren’t able to offer your team bigger salaries. 

Nicole Crampton, 20 December 2016  Share  0 comments  Print

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Content in this guide

  • What are incentives?
  • Cash versus non-cash incentives
  • Developing an incentive system
  • Choosing the right incentive programme
  • 21 Types of incentives and rewards

Current statistics point to the fact that the talent pool in South Africa’s workforce can’t currently make up the numbers, and skillsets, required for the next stage of your company’s evolution. Baby-boomers are aging out of the workforce; many having already surpassed retirement age.

The next generation (Gen X) aren’t enough to make up the loss of your experienced talent, and the younger millennials don’t yet have the experience or haven’t built up the skillset needed to effectively fill leadership positions.

From this, you can see that your business will soon need to carry the difference. You’ll not have enough leaders to take your company into the future. So how do you move forward? Well, by implementing effective and well-designed incentive programmes, you can assist your business in retaining the talent you have on board already, instead of losing them to your competitors.

Related: Three ways to coach – not criticise – employees

What are incentives?

You could call it a bonus, reward or acknowledgement. An incentive programme will assist your business in avoiding a shortage of talented employees and leaders. There are three crucial factors to consider within your incentive or rewards programmes, namely:

  • Retaining talent
  • Developing skills
  • Developing leadership conventions or offering leadership travel incentives. 

The importance of retaining talent

Retaining -talent -in -business

Human capital is the life blood of any company, and is vital to the success of your business. Talented employees cultivate an atmosphere of innovation, efficiency, output, and identify opportunities when they arise. These are the individuals that are valued for their excellence and potential leadership qualities. In addition, these talented individuals are the workers whom you wouldn’t like to see poached by a competitor or another industry.

Offering competitive incentives will enable you to keep these top performers, and make them more resilient to being poached, as you’ve created loyalty between them and your business. Additionally, incentives also offer your team the opportunity to develop a good reputation with colleagues and managers, while earning rewards for their performance.

Remember, the cost of trying to replace a top performer is significant (time and money), which serves as additional support towards implementing incentives in your business that will assist in retaining your star employees.

Developing you team’s skills

Incentives are not just to reward job and sales performance. The true purpose of an incentive is to encourage specified behaviours that your business has identified as being important to organisational success. If your business finds skills development beneficial, you should create an incentive scheme that will reward those talented individuals that work toward improving their skills.

Those who are interested can earn points, or rewards, by furthering their education, learning about the business as a whole, or completing a learning programme developed by your company.

Upskilling is vital to develop future leaders within your business, and by incentivising the learnings of junior and mid-level employees, there can be benefits for your company in the future.

Leadership conventions or leadership travel incentives

Travel type incentives can fall into two categories:

  1. Firstly, a leisure oriented trip to an exciting destination, which you can offer to employees who have produced excellent results (sales or otherwise).
  2. Or second, a type of travel that is more aligned with career development, as the trip will centre around attending an industry-related conference. This offers an opportunity for your top performers to interact and exchange ideas with other likeminded professionals. 

With the second option, your top performers can attend events that focus on developing leadership skills and qualities, and top-level managers and executives have the opportunities to tutor and mentor up-and-coming team members upon returning, to assist with the possible shortage of future leadership.

Related: 6 Top tips on how to retain employees and keep them happy

Cash versus non-cash incentives

Cash -versus -non -cash -incentives

There is a marked psychological difference between cash and non-cash incentives. Namely non-cash incentives like island getaways or relaxing spa days create a tangible reward, whereas cash will, probably, immediately be used to pay debts. Paying off debts doesn’t feel like a reward, and so the employee doesn’t feel like they’ve achieved anything or that you’ve acknowledged their actual performance.

Tangible rewards are perceived by your team as being a return for going above and beyond normal expectations, instead of simply working for extra pay.

Another thing to consider is that when your team members are rewarded, the most important aspect is acknowledgement from peers and supervisors. This social reinforcement comes from others knowing about the good performance and the resulting reward.

Whereby the details of finances are often kept private and aren’t open to public discussions. A tangible reward can be discussed, but discussing a person’s financial situation can be considered a social taboo, which results in the employee not receiving any social reinforcement despite being rewarded.

While the cash versus reward debate continues within several sectors, research is strongly in favour of the benefits of tangible rewards such as travel, experiences, merchandise, and gift cards. These rewards are more motivational than impersonal cash payments.

Developing an incentive system

A well-designed incentive system can have a positive effect, but a poorly designed system can do more harm than good. When setting up your incentive system, you can follow these five helpful tips:

1. Make it user-friendly

In order for your incentive/compensation programme to be effective, it must be user-friendly. No matter how brilliant your programme is, if your staff can’t figure out how to maximise their reward, they are going to become frustrated. Sometimes simpler is better, especially when your employees understand how it works and can aim to improve their performance in order to achieve rewards.

Related: The science of successful incentives uptake

2. Your team should have control

You need to ensure that your employees’ performance will impact the amount of incentive they’ll earn. If your employees’ position has no impact on the amount of profit the company makes, paying them a bonus based on company profits isn’t going to motivate them to increase their performance.

Ensure that majority of an employee’s bonus is within their direct control; it should predominantly be based on their performance.

3. Align incentive programmes with company objectives

People will do what you’re paying them to do, so ensure that you incentivise the behaviour that you want. If you pay people for the number of sales they get, you’ll get a lot of sales. But, if volume is all you pay for, you could get numerous small sales, which might not be what you were after.

4. Bonuses must be worthwhile

Studies have revealed that if you want your incentive pay scheme to have a meaningful impact on your teams’ performance, it has to represent at least 10% of an employee’s compensation; otherwise it’s just too little to matter to them.

5. Frequency of incentives

Typically, a system that rewards employees on a regular basis is more effective compared with annual incentives. On the other hand, with senior executives or employees engaged in longer term work, it might not be viable to offer incentives frequently.

A well-designed incentive or compensation programme can assist in taking your business to the next level.

Related: Making incentive programmes work for everyone

Choosing the right incentive programme

How do you pick one incentive plan over another? Certain businesses offer programmes that give cash incentives, others use merchandise, and some don’t offer any at all, and claim to still do well. To get the most out of your incentive plan, here are some top tips:

  1. Let your team track their performance daily. The pay-out can be scheduled monthly, but the feedback should be daily.
  2. If your incentive is cash, you should separate incentives from regular pay. This will assist in the incentive feeling like more than just a salary bump.
  3. Consider non-cash incentives, as these won’t be confused with salaries or wages.
  4. Individual incentives are more effective than group incentives. You can add an incentive for group accomplishments, but remember to differentiate between individual contributions and accomplishments.
  5. Keep your day-to-day management positive. It won’t matter how much time or money went into an incentive if you use negative reinforcement as your management style.
  6. You should periodically evaluate the effectiveness of your incentive plan on actual performance, cost and employee satisfaction.

Now that you know what type of incentive programme might work best for both your business and your employees, here are some ideas on how to implement those incentives.

21 Types of incentives and rewards

Employee -incentives

Every business needs a strategic incentive programme that addresses four areas: compensation, benefits, recognition and appreciation. The difficulty with rewards programmes is many businesses only address two of the four key elements, which leaves employees feeling dissatisfied.

Here are 21 types of incentive and reward programmes for you to use, as examples, when creating your own:

Reward based incentives

These are rewards that aren’t cash based and are customisable per employee, per department.

1. Work from home options

In some businesses, you can offer this option to employees who don’t necessarily have to be in the office every single day. It’s a nice way for employees to skip the daily commute and spend some time around their families. But, you still need to ensure that their work gets done. This reward is easily set up by creating an off-site system that connects to your server or allow your employees to login to their work systems from home.

2. Family days

These allow you to give your employees a half day to spend with their families without having to use up vacation or sick days. But, also ensure that you also offer your single/‘children-less’ employees the same half day reward.

3. Yoga classes

Bringing a yoga instructor to the office twice a week to run an early morning or afternoon class is inexpensive, and is useful in relaxing your employees, helping them to improve their health and lower their stress levels.

4. Community service days

Your company can offer employees a few paid days a year to take part in community or charitable activities that they’re passionate about, but otherwise wouldn’t have time for. This is easy to organise as your employees will most likely have all the information already.

5. Pizza Fridays

This doesn’t have to be pizza, but the idea is to bring everyone lunch on Fridays. It doesn’t have to be every Friday it can be once a month, just so your staff know that you appreciate their hard work.

Related: 7 Realistic reasons why your best employees are leaving the company

6. Free car washes

This is an inexpensive perk that your team might not have time to get done themselves. You can even organise a bulk discount with a car wash organisation.

7. Staff discounts

This is one of the easiest and most common ways to reward your employees, by offering them a discount on your products or services. The average is around 20% to 30% off. To ensure your staff don’t abuse this incentive, you can establish that only a specific number of items per month are allowed to be bought on staff discount.

8. Barter days

This option is when you partner-up with a local coffeehouse or other businesses and you swap services or discounts on goods once or twice a month. This provides low-cost perks for both businesses, but just ensure you partner with a business your employees want to use.

9. Games

There are many businesses that have foosball and pool tables, ping pong or pinball machines in their break rooms. This allows your staff to blow-off some steam throughout the day as well as have some fun and go back to work filled with energy and fresh eyes.

10. Flexible working hours

This allows your staff to come in and work according to a flexible schedule, allowing them to work around their personal life or school pick-ups. Flexible hours also allow staff to optimise the hours they are most productive in.

11. Breakfast incentive

Serve your staff a nice breakfast one or twice a week. Croissants, muffins, coffee and tea can be a nice way to start the day. You could even partner with a local restaurant to offer you a better deal with your bulk orders.

12. Side projects

Some employees enjoy being involved in projects that don’t fall under their official job description, but could tap into a hobby or special interest of theirs. You can offer your staff a chance to spend some of their down time working on tasks in other departments.

Related: Happy employees equal happy customers

13. Job Swaps

If your business has multiple branches countrywide, allow your employees to swap positions with another worker at another location. This offers your employees the opportunity to spend time in another city having a working vacation.

14. Training

Training and development programmes can be a valuable incentive for your employees. You can offer high-performing employees the opportunity to attend industry or personal development events or courses each year.

15. Staff party

This allows your team the opportunity to unwind and let loose after a stressful day at work. You can host this event in the office or go to a nearby pub or restaurant.

16. Celebrate birthdays

Everyone likes to be remembered on their birthday. Celebrate staff members’ birthdays with cake, or take the team out for lunch. You can even collect cash from your other staff members and buy that person a gift or voucher for their birthday.

17. Close early or open late

Close the office unexpectedly early and give everyone the afternoon off, or open half a day later after a holiday or long weekend.

18. Performance hours

If you have an employee who consistently performs well, give them ‘performance hours’, which are tokens they can redeem to take a longer lunch, run errands or use for personal reasons.

Cash based incentives

These are rewards that are cash based, but still customisable per employee, per department.

19. Awards

You can offer your employees a prize of vacation days, cash or vouchers. This employee is voted for by the company and the vote happens during each quarter. This is strong perk because it comes from an employee’s peers, which shows that their hard work is being appreciated and noticed by more than just the ‘boss’.

20. Placement incentive

If a current employee recommends someone who gets hired, and that person stays for a specific amount of time, you can offer them an extra paid day off or a cash incentive.

21. Personal perks

For this incentive to work, you need to know your team well, and what they need to make them happy; whether it’s a spa voucher or a surprise treat for them. You can always get other employees to contribute to this every month, and every month someone different can be selected to receive a thoughtful gift or prize.

While incentives and rewards can help to boost morale, and create a loyal workforce, it’s essential that you match the perk to your particular team and type of business. Your company’s culture, as well as the needs and goals of the employees should all be factored into what type of incentives you introduce.

Another possible option is to combine two reward types based on employee activity-performance and behaviour that you want your employees to encompass.

Keep in mind that it’s not always about how much it costs, but about the thought you put into it that will have the greatest effect. Even if you just send them a thank you email, or pop a post-it note on their screen saying thank you, and what they did to receive your thanks. This can be enough to let your team know that you genuinely appreciate them, regardless of the amount of cash or prizes you’re able to dish out as incentives. 

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About the author

Nicole Crampton

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