Do Employee Incentives or Rewards Really Work?

Do Employee Incentives or Rewards Really Work?

The simple answer? Yes.

If you were to Google this phrase, “do employee incentives work?” the first results that come up will tell you, flatly, that incentives either don’t work or that they don’t make people do better work.

The truth is, incentives do work, but they have to be part of an overall incentive plan that addresses all issues related to performance and human motivation.

An Incentive Research Foundation whitepaper, “Incentives, Motivation, and Workplace Performance: Research and Best Practices,” found that a comprehensive incentive program can increase employee performance anywhere from 22 to 44 percent.

Not only that but incentive programs do the following, too:

  1. When incentives are first offered for completing a task, a 15% increase in performance occurs
  2. When asked to complete a goal, people increase performance by 27 percent when motivated by an incentive
  3. They help organizations attract and retain the best talent
  4. Both executives and employees find value in incentive programs
  5. Programs that reward performance for meeting or exceeding goals have the best results

At Xcel Energy in Eau Claire, Wisc., Barbara Milz, a senior field associate, has found great success in using incentives as part of a safety program for 40 unionized employees.

“Because we are so big on safety, there are certain things employees have to do every single day,” Milz said. “They have to check their vehicles, hold meetings, and go through safety checklists they have to do. On a quarterly basis they submit a form saying they did all of this. The incentive is a Visa prepaid gift card, and they really like it. It’s convenient for them.”

Milz said she’s always had 100-percent participation in the program, and the company’s safety record has remained strong. She said she also regularly hears from employees who say they enjoy the program, and that some will save the quarterly gift cards to make bigger purchases at the end of the year.

Linda Militello, human resource manager with Schaefer Plumbing Supply in Buffalo, New York, has found similar success with using prepaid Visa gift cards for her company’s sales incentive program.

“They sell 20 of these new hot water tanks to get a $50 gift card,” she said. “They are out there pushing them. I do believe it has impacted them. This is actually the first time we’ve done this.”

She added, “At the beginning of the promotion, it didn’t take effect for associates until the second or third month, and since then they’ve really stepped up to selling more. The promotion is now being extended into the third quarter. They want to sell the products to earn the gift cards themselves.”

What makes a successful incentive program? According to the Incentive Research Foundation, a program has to be goal-oriented and those goals have to be challenging, but achievable.

Would Militello recommend other companies consider using incentives to motivate their employees? “It’s definitely something I would encourage other companies to do. It’s a motivator. I think the employees are very grateful for it and it’s showing in their hard work.”

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