How to Build a Successful Employee Incentives and Rewards Program

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Apr 15, 2011

For many companies, an incentive program tends to fall into some very narrow categories.

First, there are reward programs that recognize day-to-day accomplishments, such as finishing a project ahead of schedule or providing excellent customer service. Then, there are rewards for long-term achievements, such as years-of-service, milestone anniversaries, or perfect attendance.

The third, and most common type of incentive program, tends to exist only in the sales department where exciting rewards such as a trip to an exotic location or high-end merchandise are dangled in front of the account managers to motivate them to meet and exceed their sales goals.

That’s fine, of course. But, take a moment to monitor the places where you already have an incentives program in place. What behaviors are you trying to guide? Has there been an improvement? As the old saying goes, “what gets measured gets done and what gets rewarded gets done more.”

Using incentives to manage travel costs

Let’s take an example that I happen to be particularly familiar with.

One of the biggest expenses a company faces is corporate travel. Companies need to travel to visit clients, vendors, and business partners. Despite the technological advances of web-based applications, no amount of online meetings will ever make up for the benefits of face-to-face interactions or match the results they get.

Travel in itself is tough to manage. Employees are expected to deal with flight cancellations, delays, lost luggage, and bad weather.

Companies enact travel policies and procedures that they hope their employees will follow to mitigate these costs. They may ask that employees book their flights and hotels a certain number of days or weeks in advance. Or there might be preferred airline carriers, hotel chains or rental car companies that the business has contracted with to provide the best rate or services.

The task of getting employees to use those vendors to provide maximum savings to the company can be quite a chore, especially if the employee has also established some relationships with certain carriers. For example, an employee might be part of a certain airline’s frequent flyer program and want to book with that airline instead of one beneficial to the company.

This is where an incentive or reward program can come into play. One of the best analogies is to think about that airline frequent flyer program mentioned earlier. The more you book with that airline and follow the rules of your membership, the more rewards you reap. An incentive program that rewards employees for following the company travel policies can work much the same way.

How an incentive program might work

A typical incentive program would allow an employee to earn points each time he or she books a trip that adheres to company guidelines. Then, they can turn those points into rewards.

For example, an employee travels in coach five times, instead of business class, saving the company thousands of dollars, and they, in turn, accrue enough points to get a free vacation or a gift card to their favorite retail store.

Of course, this is just one instance where incentives can be used. You can tailor your company’s needs to whatever situation fits. Whenever the company can benefit from employees behaving a certain way, incentives can be used to guide that behavior.

Regardless of the type of incentive program, running it effectively is most important. Even the best reward program will be ignored if it is not aligned with the company core values or if senior management doesn’t support it.

There are initial investment expenses to plan and implement a successful incentive program, and it does take time and effort to track it, but there are people and tools out there that can help you. But if the program is strategically planned and carefully executed, the return on investment can far outweigh those initial costs. If you get employees following your particular policy, such as with the travel policy compliance concept, then the company can end up saving a lot of money instead of constantly hemorrhaging it via travel expenses.

Whatever you do, keep it simple

Whatever you do, don’t make it complicated. Keep it simple and easy to manage. Make sure the employees know all they need to know about the program in order to participate.

Keep them up to date on where they stand and how they stack up against the parameters of the program. Try to make a big deal out of the program so that employees are excited about the opportunity and make the rewards worthwhile. Remember that cash is not always the best motivator.

Keep the rewards varied and interesting. You can even make it competitive, providing scorecards and regular updates to employees so they know where they stand and how close they are to that sought-after reward.

Employees who feel rewarded respond the best to company policy and they tend to stick around longer. Studies show that employees are starting to look around for new jobs now that the economy is looking up.

Using a simple incentives program in a variety of ways and in unexpected areas can keep employees excited, interested and engaged. Ultimately, it benefits your company to find more ways to reward your employees.