How to Create a Employee Incentive Program

Employee incentive plans have the potential to increase job satisfaction and employee morale levels. Incentivizing employees can also backfire if your human resources staff is unable to determine what employees prefer in the way of recognition and rewards. Generally speaking, employee "recognition" programs provide non-cash awards while "rewards" are usually cash awards. Employee incentive programs generally involve awards that have some monetary value, such as a cash bonus or an all-paid family trip to Hawaii.

• 1

  Create a brief survey to distribute to employees about incentive ideas. You may receive a variety of responses that indicate a preference for tangible or intangible rewards; however, at this stage, your questions should simply ask about recognition and rewards -- do not make the distinction between non-monetary and monetary rewards.

• 2

  Provide employees with clear choices in your survey in order to get clear answers. Ask questions like "Would you prefer a cash reward or a personalized plaque for being employee of the month?" Employee surveys should also list a variety of monetary and non-monetary awards and ask employees to list their preferences from 1 to 10. Do not include questions that focus specifically on financial incentives or monetary rewards, or you may receive responses that comment on your compensation structure instead of employee incentives.

• 3

  Review results from your exit interviews of employees leaving the company. The reason some employees give for resigning from their positions is a perception that the employer undervalues their contribution to the organization. Nevertheless, there are other reasons employees leave that have to do with the company's compensation and incentive practices. Analyze these results to determine if compensation is, indeed, a primary reason why employees leave.

• 4

  Obtain information from competitors concerning wages, salaries, bonuses, stock purchase plans or other employee incentives. You can accomplish this through networking with other human resources professionals and maintaining professional relationships with experts who can be a source for compensation in your industry. Online resources, trade journals, magazines and books are also good sources for information about incentivizing employees.

• 5

  Review current incentive methods, if any. If your current incentives seem underappreciated, investigate whether your human resources budget can afford greater incentives or awarding incentives to a larger percentage of the work force. If a core group of employees seem to always receive the best incentives, consider revising the criteria so more employees become eligible for new incentives.

• 6

  Publish changes to the employee incentive program in your company newsletter. It's important to keep employees informed of changes. In addition, buy-in from upper management is extremely important as employees very often find it difficult to embrace changes that lack support from upper management. Announce the new incentives in a fanfare event that creates excitement about employee rewards.

• 7

  Measure employee satisfaction in your new or improved incentive plan by implementing steps similar to those you used to obtain ideas for the program, that is develop a survey and review exit interview information. In addition, analyze turnover rates before and after implementing the employee incentive program to measure the effectiveness of your rewards system.