The short answer to the question: “Do incentives improve performance in the workplace?” is “Yes.” Rewarding excellent work with money, perks, healthcare benefits, and more all improve employee performance and often boost company profitability.
The idea that employee incentives will increase profitability often has business owners scratching their heads. Some believe that a larger payroll will equal lower profits, no matter how strategically the money is dispersed. However, companies like Signature Bank, Costco, Nucor Steel, and Trader Joe’s all provide employees with better pay and benefits than their competitors, and these companies have consistently grown.
Incentives Encourage Excellence
Incentives in the workplace are often presented as if they are new. However, employers have been using benefits to motivate employees for centuries. A unique example of a performance incentive from history was that provided to passenger ship captains in the 19th century.
When the industry that now gives cruises around the world was first developing, it was merely a way to go from A to B, and anyone traveling was crammed into a ship’s hold along with all of the cargo being transported. Passengers were not provided with any regular schedule – the ship left when it was full, and it arrived when it arrived. In order to break out of this cargo ship mentality and create the passenger ship industry, companies provided financial incentives to their ship’s captains to stick to a schedule. They also gave those captains a bonus that became a status symbol – for every trip that left and arrived on time, the captain was provided with a new coat, and his wife received a new dress.
Ships started departing and arriving on schedule, paving the way for the luxury cruises we enjoy today.
Modern companies with limited budgets are taking advantage of fun incentives like the captain’s coat today by offering perks such as in-house yoga classes, money for dry cleaning, a Friday pancake breakfast, and more.
Google is the classic example of large scale company incentives – but they also have a smaller program that encourages team participation – they ask employees at regular intervals to recognize their peers by awarding a colleague a $175 bonus for a job well done.
Incentives Employees Want
Providing great incentives can make the hiring process more straightforward, with more qualified candidates looking for great jobs – and more employees hoping to stay on at your company. Here are many of the incentives employees are asking for in 2019:
I recently saw an article written by a business magazine about free incentives businesses could provide. While there are free or low-cost incentives – and we will talk about them below – just about everyone commenting on this article stated that employees want a job that will pay them a living wage.
Additionally, it’s important to consider what type of employees you need to hire as well as determine how long you want them to stay with your company. If you are reading this article, we assume you’d like to increase your employee retention. Providing a competitive salary is a great way to attract and retain skilled and unskilled employees.
Established raise and bonus protocols
Many companies have a regular review process but are a little lax when it comes to information about getting a raise or qualifying for a bonus. This can lead to awkward conversations and disgruntled employees.
We recommend that you write down your review, raise, and bonus protocols and include it in the onboarding information. Sharing this information up front means the employee has a clear goal to strive toward – and can focus on his or her work rather than worry about personal finances.
The opportunity to grow within the company
Skilled and unskilled employees should have the opportunity to move up within a company. Businesses approach this issue in different ways – from allowing apprenticeships to focusing on intercompany hiring/promotions before seeking a new hire from outside the company. Providing opportunities for growth can improve employee retention, cutting down on training time and learning curves and giving opportunities to those who have proven themselves dedicated to expanding your business.
Awards and recognition
It is always nice to get credit for a job well done, but not every company has a system set up to recognize excellent work. The team at Business Success Consulting Group recommends considering ways your employees can be officially recognized for great work. This doesn’t have to be a paid perk, but can still inspire excellence even if it’s a “well done” letter from the CEO.
We have seen companies recently saying they provide “unlimited time off.” This sounds great, but statistics show that when unlimited PTO is provided, employees take less time off, get more burnt out, and feel frustrated by this unstructured offering.
Structured paid time off is a much better benefit. It sets out clear limits and expectations, giving employees more satisfaction out of the vacation time they end up taking.
Benefits like healthcare, 401K matching, parking passes, and more
Providing thoughtful benefits that improve an employee’s overall wellness and comfort shows that your company really cares about them. Offering benefits like an FSA that can be used to pay for daycare or getting discounted parking passes may not cost your business much, but they add a lot of value to working for your company.
Support and training
Most employees want to do a great job. That’s why it’s crucial to provide workplace policies and systems that assist staff as they accomplish their tasks. Thinking through workflow and setting up a dynamic office environment can improve employee morale as they can be more effective.
Additionally, providing training and continuing education can help employees of all skill levels work toward excellence, move up in the company, and impress customers.
Employers who listen
If you aren’t sure about any of the above incentives, begin by listening to your employees. They are likely already telling you what they need and want to do their job better, with fewer distractions, and more joy.
The Business Success Consulting Group team is here to help you expand your business. Contact us today to find out how we can boost staff morale and production, rapidly.