Ways to Incentivize Employees Beyond Compensation

Jennifer L'Estrange
March 25, 2021

We tend to focus on base salary when we talk about employee incentives and retention, but all too often we overlook what really keeps employees engaged, motivated, and productive in their jobs.

In this article, we’ll look at a  few different ways you can recognize and reward your top performing employees – with approaches that have impact and are still budget friendly.

Employee incentives can be both extrinsic and intrinsic. Extrinsic rewards are cash based rewards that, if designed correctly, are tied to performance. Intrinsic rewards are non-cash programs that build engagement. They are designed to motivate behavior that is aligned with company values and reinforce the cultural norms that explain how and why work gets done in a particular way in your business.

Sincere and Specific Praise

Recognizing employees with specific positive feedback is one of the easiest – and cost effective ways to reward and incentivize employees to repeat desired behaviors. You can give feedback in a performance development review, but you don’t need to wait for an annual or semiannual process to do so. A personalized note recognizing someone’s good work and contribution to the business is a great way to bolster employee feeling and engagement. The key to successful feedback and reinforcing positive behavior is being sincere and as specific as possible when praise is given.

Improve Your Personal Relationship

There’s an old adage in sales training that says, ‘people do business with people that they know, like and trust’. The same is true for employee engagement. If you are trying to incentivize your employees, start with building a personal relationship with them. Every strong productive relationship is based on trust. Traditional divisions of work and personal life are more or less a thing of the past in a post-COVID world; with a little over a year of our kids, pets and partners zoom bombing our conference calls, our work and personal lives have blended in ways that we never could have imagined. Personally, I feel this is a good thing. It has given us permission to share our lives – the good and the bad – with a group of people that we spend a significant amount of time with. It deepens the relationship, fosters genuine trust and allows us all to be a little more vulnerable. 

Perks and Privileges 

This is where things get interesting, especially for small businesses. Consider the following options for your organization to both incentivize your employees in ways that are aligned with your business goals as well as build overall engagement.

  • Paid time off: While there is no US federal requirement to offer paid time off. Some states, including NJ where we are based, do require that ALL employers offer paid sick leave (with certain guidelines), but aside from that, you have free reign to do what you want here. 
  • Healthcare: Group health is required for companies with 50 or more employees, but is an in-demand benefit for all employee types and something to consider regardless of your size in order to attract and retain talent in today’s market.
  • Use of Company Assets: This can range from cars to phones and laptops and, so long as directly linked to the job role, are tax effective to the business. 
  • Memberships: These perks are typically linked to an overall goal of say, employee wellness, for fitness memberships or are linked to job responsibilities in cases of club memberships for executives or sales people. Make sure to tie it to a business goal when defining the investment and the eligibility.
  • Reimbursed or paid expenses: This can include paid expenses as small as lunch and as large as tuition reimbursement. Design your programs here to align to the behaviors that you want to reinforce. For example, if continuous learning is part of your company values, then tuition might be a good option.
  • Swag: There are tons of fun opportunities for branded material that employees love to use at work and outside. Think about apparel, desk accessories, etc. Anything that you can stick a logo on and use in your daily life!
  • Flexible work practices: Flexible work schedules have become more prevalent in a post-COVID world and will continue to become more mainstream as employers become more familiar with performance management in a remote workplace.

By way of an example, I worked with a tech startup a number of years ago that was one of the earliest adopters of unlimited vacation time. There was both a strategic and an operational objective behind the policy. From a practical operational perspective, they were working so hard on product development and sales that no one had the time or the inclination to track vacation time. By unleashing vacation time, they took tracking off the table. Strategically, this company was all about delivering value to their customers and scaling the business.  In a sense, unlimited vacation communicated both trust and accountability to their employees. So long as the job was done, and done correctly, then, by all means, take three weeks and go ski.

Ask for Employee Suggestions

When in doubt, ask. Employees will often suggest creative, innovative incentive programs that are budget friendly simply because of the higher likelihood that they will be effective. Examples of employee incentives we have seen implemented include: changes to dress code, access to meal service or free lunch, car service reimbursement when working late, game or relaxation rooms in the office, exercise facilities and classes, and even subscriptions to periodicals. It is important to solicit the input from all or at least a core sample of employees, so use a survey tool to collect data and triage appropriately. Also, remember that if you ask the question, be ready for the answer. If you ask employees to name changes that they would like to see implemented in the workplace and, if those suggestions aren’t implemented for whatever reason, then there is an obligation of sorts to explain why. Without the explanation, more people will leave.

Employee Learning

Creating learning experiences for employees is another great way to incentivize your workforce. For some organizations, this is a more formalized learning path and for others, it is less structured and employees focus on self-learning opportunities. If you are looking at creating a learning opportunity as part of your employee experience, keep in mind that:

  • The learning should be linked to job and organizational goals.
  • Make sure that employees are clear on what learning is considered part of their work time and what should be done on their own.
  • On-the-job learning is generally more effective than off-the-job, so try to tie formal learning opportunities to practical applications in the workplace to reinforce the learning outcomes.

How Red Clover Can Help

We discuss employee incentives and variable pay programs in more detail in our white paper, “Understanding Compensation and Pay for Performance”.

Red Clover works with clients to define creative employee incentives that reinforce company values, achieve organizational goals and meet budget constraints. Contact us to speak with one of our team members to learn more about how we can help.

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