Types of Financial Rewards & Incentives
Financial rewards and incentives are motivators for employees to go above and beyond in their job performance. Programs may be group or individual based, depending on your business size and budget. All incentive programs should be attainable, or you may lose the interest and focus of your staffers.
Financial rewards are cash prizes used to encourage staffers to meet specific goals within a business or organization. For example, a cash reward might be given monthly for the highest-producing sales person, or the individual who generated the most new leads. Financial rewards can be a fixed amount or a percentage of closed sales. They also might be in the form of profit-sharing or company-wide bonus programs. Additionally, incentives like spot bonuses can be given on-the-spot to recognize innovation or personal achievement; stock options may be a viable financial reward for start-ups to issue.
Financial incentives can be used to reward actions besides job performance or earnings, such as above-and-beyond efforts, customer service excellence, innovation, regular attendance or teamwork.
Incentive programs can be non-cash based, instead offering something else of value to an employee. Examples include paid time off, flexible work hours, career enhancement opportunities, preferred parking, use of a company car or sporting or event tickets. Incentives could also include lunch with the boss or the opportunity to take on choice projects.
Make sure the objectives of financial and incentive programs are clearly defined and measurable.
With team initiatives, groups within your organization must meet stated performance standards to qualify for the reward. This can encourage teamwork and collaboration -- or result in an inequitable workload distribution if slackers fail to pitch in and participate. Individual reward programs allow staffers to succeed or fail on their own merit. This can encourage healthy competition within an organization and drive top performers to go the extra mile. Alternatively, left unchecked, individual programs run the risk of creating an unhealthy dynamic in which it's every man for himself, potentially resulting in backstabbing and low morale.
Consider a hybrid approach to incentive and reward programs so everyone can participate. One way to do this is to have various benchmark levels that allow more staffers to qualify. For instance, zero missed work days in a 3-month period might result in a top-tier bonus while one missed day would earn a lower-tier reward.