Productivity is an essential element that can determine the profitability of an organization. We know the happier and less stressed your employees are, the more motivated they are to work harder for your company.
With this in mind, employers now recognize the need for incentive packages that encourage outstanding performance and productivity amongst staff.
There’s a variety of options available for employees including gift cards, extra time off, free lunch, late starts, early finish, cash payments, etc.
This piece focuses on cash incentives. In it, we explore the benefits and challenges of this offering. We’ll also suggest alternatives that contribute to keeping your employees incentivized.
Advantages of Cash Incentives
- Influence behavior: It’s an easy and straightforward way to induce specific behavior from your staff. For example, if the aim is to increase the overall output of the organization, you may consider offering your sales staff for meeting specific targets set out by yourself and agreed upon by employees.
- Time-saving: It’s easier to implement and manage cash incentives than it would be to manage other reward programs. All you need to do is add the extra amount to their weekly or monthly payments.
- Short-term goals: It’s a great tool to help with achieving short-term business goals. For example, you can implement it as a means of changing behavior around the work environment or increasing customer retention over a specific period.
- Recruitment tool: It can also serve as an additional for attracting potential employees, which sets you apart from the competition. Recruitment has become highly competitive as many organizations fight to attract candidates by offering the best compensation and rewards.
- Employee engagement and work environment: It encourages employees to take control of their output. If they’d like to be eligible for the incentive, they’ll need to reach and exceed the targets set. It’ll also encourage communication and competition amongst employees.
Disadvantages of Cash Incentives
- Incentive or entitlement: When used consistently over a long period, employees may start to see it as an entitlement rather than an incentive for outstanding performance. You’ll also need to tread carefully when considering retracting financial incentives. For example, if included in the contract of employment it becomes a contractual term that they have the right to expect and receive. If removed without their agreement it could lead to a claim for constructive dismissal.
- Demotivating: It’s important to consider the effects it may have on other employees who barely miss their targets and aren’t eligible for that incentive. While it can motivate some employees, it can also be demotivating for others.
- Team relationships: When you tie incentives to team performances, you may see friction among team members. There might be a feeling that work isn’t split evenly or members of the team aren’t pulling their weight all of which can create frustration and resentment.
- Associated costs and effectiveness: Over time, monetary incentives may become ineffective. You’ll need to consider the costs of running this incentive scheme against the expected results. For example, if the aim is to improve overall output, you’ll need to compare the cost of running the incentive over a specific period to the value of the results achieved.
Alternatives For Cash Incentives
Contrary to popular belief, it’s not ‘all about the Benjamin’s baby’. While most people will appreciate additional cash in their salary, it’s important to remember that what’s perfect for one person might not be for another.
With a diverse workforce, it’s important to remember the priorities of your staff may differ so the incentives you offer should also be different. For example, while some employees may enjoy and even appreciate subsidized gym memberships as an incentive, other staff members with children may prefer childcare vouchers.
So with this in mind, the first step when considering reward packages is to ensure you’re offering them things they want. To achieve this, you can conduct an employee survey where answers will lead to an indication of what’s important to them.
Incentives you could consider include:
- Recognition: As well as being cost-effective, it also ideal for communicating your values and establishing a culture where employees are recognized for their achievements.
- Training: By providing training and development opportunities, you’re telling your staff you value their input and see a future for them in your organization. As well as boosting confidence, it can also help to improve their loyalty to your company.
- Paid time off: Speaking as an employee, there’s nothing like being paid to work. Offering extra paid leave, paid time off for bereavement, jury duty, etc can all work to motivate and energize your workers.
- Childcare vouchers: Childcare is an important issue for working parents and addressing it can affect the productivity of staff members with children.
To Wrap Up
So, while there is a wide variety of incentives you can offer, it’s important to provide them with what they want.
Remember, one of the biggest factors that affect productivity is employee satisfaction. To address this, you should be seen to be actively finding ways to improve the working conditions of your workers.