HR · 13 May 2022

How to Design Effective Employee Incentive Schemes

employee incentive schemes

Employee incentive schemes are becoming an increasingly popular way to reward staff for a job well done. They can be used to motivate employees, improve teamwork, and increase productivity. But with so many different types of incentive schemes available, it can be difficult to know which one is right for your business.

In this article, we will discuss the different factors you need to consider when designing an employee incentive scheme, including what your staff want, how to track employee performance and the different types of incentives you can offer.

What are Employee Incentive Schemes?

An employee incentive scheme is a system where employees are given rewards for achieving certain goals or reaching certain targets. These schemes can be used to encourage staff to work harder, improve their skills or simply show loyalty to the company.

Why Use Employee Incentive Schemes?

There are many benefits of using employee incentive schemes, including:

  • Improved employee productivity
  • Increased staff morale
  • Improved teamwork
  • Greater loyalty from employees
All of these will not only keep your employees happy, but they will also benefit your business as a whole because a happy workforce is a productive one.

employee performance


What to Consider When Designing an Employee Incentive Scheme

When designing an employee incentive scheme, there are a few key factors you need to consider:

1. Identifying What your Staff Want

The first step is to find out what your employees would actually value as an incentive. Do they value monetary bonuses? Extra holiday days? Or are they more interested in social events and gifts? Asking your employees directly is the best way to find out, but you can also do anonymous surveys so that they are not shy about telling you.

2. Total Budget

The next thing to consider is how much you are willing to spend on the scheme. Incentives don’t have to be expensive, but if you want to offer something significant, you need to make sure you have the budget to do so. It is important that you get the balance right between what you can afford and what your employees would actually value and that you don’t offer something so extravagant that they become too focused on the prize.

3. The Aims of the Scheme

Before you start designing the scheme, you need to sit down and think about what exactly you want to achieve with it. Do you want to improve employee productivity? Encourage teamwork? Recognize loyalty? Once you have identified the aims of the scheme, it will make it easier to design something that meets those goals.

4. How Success is Defined

In order for an employee incentive scheme to be successful, you need to have a way of measuring it. This could be through sales targets, performance reviews or simply how many people take part in the scheme. By setting clear goals from the start, you will be able to track the effectiveness of the scheme and make changes if necessary.

5. How to Track Employee Performance

If you want to offer incentives that are based on employee performance, you need to have a system in place for tracking it. This could be something as simple as a points system or a leaderboard or through performance tracking software such as Salesforce.

By tracking employee performance, you will be able to see who is meeting their targets and who isn’t, which will help you to decide who should receive the incentives.

6. How to Prevent Resentment

One of the dangers of employee incentive schemes is that they can create resentment among employees who feel like they are not being recognized for their efforts. To prevent this, you need to make sure that the scheme is fair and that everyone has an equal chance of achieving the incentives.

You also need to communicate with your employees so that they understand how the scheme works and why they may not have been successful in achieving the incentives this time around.

Which Qualities or Performance Aspects Should You Reward?

There are a number of different qualities and performance aspects that you can choose to reward with an employee incentive scheme, including:

Good Teamwork and Selflessness

One of the most important qualities in any employee is the ability to work well as part of a team. By rewarding employees who are team players, you will encourage others to work together for the good of the company. You can also choose to reward employees who show a selfless attitude, such as those who regularly go above and beyond for their colleagues or customers or who take on extra responsibility.

Loyalty to the Company

Another quality that is worth rewarding is loyalty to the company. This could be employees who have been with the company for a long time or those who regularly go above and beyond to help out. Rewarding loyalty will also encourage others to stay with the company for longer which will enable you to build a strong and stable workforce.

Progression in Job Role

If you have employees who are constantly striving to improve their skills and progress in their job role, then it is important to show them that you recognise and value their efforts. One way to do this is by offering incentives for those who complete training courses or achieve certain milestones in their career. This will not only show your appreciation for their hard work but will also motivate them to continue developing their skills.

Project Completion

Another way to measure employee performance is through project completion. If you have employees who are regularly meeting deadlines and completing projects to a high standard, then it is important to show your appreciation for their hard work. You can do this by offering bonuses or other incentives for those who complete projects on time and to a high standard. This can be particularly important for employees who are working on long-term projects who may feel like their efforts are not being recognised. You can also break the project up into milestones and reward employees for each stage that they complete.

Sales or Performance Targets

If you have employees who are responsible for bringing in new business or hitting sales targets, then it is important to show your appreciation for their efforts. You can do this by offering bonuses or other incentives for those who meet or exceed their targets. This will show them how much you appreciate their hard work and will also motivate them to continue achieving high levels of sales or performance.

employee motivation

Types of Incentives



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