How Organizations Motivate Employees with Incentives

Gift cards can be used for employee incentives.
Gift cards can be used for employee incentives. (Image: Jupiterimages/Comstock/Getty Images)

Motivating employees can help increase productivity and quality. Incentives can be used by organizations to spur creativity, achieve goals or break records. When employees are energized and encouraged to perform at a higher level, the rewards are apparent in customer satisfaction, quality ratings and profits. Individuals have different response levels to incentives, so organizations that use a variety of incentive methods are more likely to stimulate employee engagement.


Incentives often include a financial reward. Pay for performance incentives can help target quality and productivity and is generally awarded on an individual basis. Other financial rewards can include bonuses for meeting goals, meeting specified requirements like on-time arrivals or completing projects. Financial incentives can also be awarded to groups to encourage teamwork and group performance. Cash incentives may have a short-term impact, or may be viewed as compensation rather than a reward, so some organizations look for other cash alternatives such as gift cards, travel vouchers or physical gifts such as electronics to use as in-kind financial incentives.


Retaining valued employees may be accomplished through benefit-related incentives. Discounted or free gym memberships, lower-cost health insurance premiums, on-site day care, dry-cleaning services and even massage options can differentiate a company from competing firms. Employees who enjoy a high level of benefits may have incentive to stay with the organization rather than looking for alternative employment. Organizations can detail the value of benefits through a yearly “reward” statement that lists the monetary reward of benefits employees receive above their base pay.


Formal and informal recognition tie into an employee's need for esteem and respect. Manager compliments on quality work assignments, formal recognition of high achievers and the informal compliments from peers serve as incentives for employees and help create a positive work environment. Organizations may formally recognize employees with awards, certificates, in meeting announcements or through highlights in company distributions.


Providing opportunities for professional growth, education and guidance are used as incentives by organizations. Mentoring, leadership training programs, tuition reimbursement, job rotation and employee development programs can enhance an employee’s perception of his value to the company. Employees who feel valued are more engaged and motivated to improve their skills and present higher-quality work.

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