When workers are happy, employers are happy. That’s because employers know that is when their employees are more likely to produce quality work. Retaining a positive and encouraging work environment is beneficial, not only for employees but the company as a whole, and one of the best ways to do it is to offer employees the appropriate incentives to show your appreciation and recognition for their contribution.
Introducing incentive programs is a strategy many employers are starting to implement no matter how big or small their companies are. HR managers have started to identify this need in workers and as such are trying to create a better environment for them to work in. Either way every business needs to take care of their employees not just to make sure they are engaged in their work but also to ensure they are pleased and satisfied with the efforts of the management team.
Give your employees the motivation to do their best and they will produce better results. Rewards such as gift cards, paid vacation, extra time off and flexible work hours could work help to improve performance. But how effective are they when they are put to the test?
The Impact Incentives Have on Employee Performance
A recent study by Genesis Associates, a UK-based recruiting firm, attempted to test the impact incentives have on employee performance. The study looked at the impact on the company’s overall revenue and how these incentives can affect their motivation. Essentially, they wanted to find out:
- if incentive periods helped the business make more profits compared to un-incentivized periods
- if large incentives were more effective than small incentives
- how effective are individual incentives in contrast to team rewards
- whether financial reward is the most powerful incentive that motivates employees
In order to do that, the company introduced small, medium, large and negative incentives for a year to check how this affected their performance.
The results showed that there was an obvious correlation between incentives and work performance because it made employees happier and more eager to work. In fact, 73 percent of the workers said the atmosphere in the office during an incentive period was either ‘good’ or ‘very good’ and as such worked harder. While employees said they were most motivated by big incentives, the period when the medium incentive was offered was the most profitable, resulting in company profits of 25,000 GBP a week.
Also, the shorter incentives encouraged every employee to be wary of their personal day to day performance, and since they were not being offered a long term reward this increased their motivation and overall company profits. Even though longer incentives were effective, they didn’t perform in the same way small and shorter-term incentives did, which helped to keep the constant excitement around the office.
In terms of profits, the benefits of giving employees rewards were much more obvious. The study showed that the company was able to make an average of 83,000 GBP a week when long-term incentives were offered, as opposed to 84,000 GBP on short-term incentives and about 108,000 GBP on medium incentives.
Apparently the negative incentive which was essentially a punishment for not achieving didn’t give any indication of whether employees worked harder or not after receiving the penalty. This shows that incentives are more effective when they are being treated as rewards instead of punishments.
Interestingly, individual incentives weren’t as popular as team rewards either. A staggering 71 percent of employees felt more motivated by team incentives than individual prizes and awards. Now for a company who wants to boost productivity and team morale this is great news. Team incentives encourage teamwork as they give employees a reason to motivate one another to achieve a common goal. As opposed to individual rewards, this also means that employees aren’t as disappointed as they would have been when underperforming on their own.
What Makes Employees Happy?
Overall, this is what employees have voted for as the incentives that provided them with the biggest motivation to work:
- Money – 40 percent,
- Free holidays – 29 percent,
- Time off – 23 percent,
- Drinks – 2 percent
- Other – 6 percent.
The fact that most employees preferred financial rewards over other incentives does not really come as a surprise. Even though money may not be the best motivator to employee productivity – in terms of business costs, it surely seems to be the prevailing motivator amongst the workers. This confirms that people feel they are more need of money instead of getting their picture up on the ‘employee of the month board’. So perhaps employees are more interested in getting rewards they can share and enjoy with their family or receiving money they can invest in something they regard as valuable outside-of-work.
However, as an employer, you need to be careful to avoid giving your employees too much. Giving them a raise might help you out, but how long will it still be profitable for the company? On that note, the aim of an incentive strategy isn’t to spoil employees leading to degrading their work performance but to give them the motivation to work while keeping them content with what they do. It’s all about giving them a reason to stay at your company but at the same time not letting them get too comfortable with it.
This study showed that money comes first in the list of incentives employees prefer to receive. But in order to boost employee productivity you need to invest in the long-term happiness of your workers. Offering them a raise would work but it will only satisfy their short-term needs and if you want to keep them engaged and efficient throughout you might want to try offering them a variety of small, big, short or long term rewards.
So, how effective is your incentive strategy? Have you tried implementing these rewards into your own management plan? Let me know if and how these have helped your business develop, in the comments section below…