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Employee incentive programs are an important way to motivate your workforce and to enhance employee experience. When rewards are set up incorrectly, however, they serve to decrease employee satisfaction and to undermine productivity.

The underlying assumption of some incentive programs is that organizational efficiency is the same as employee satisfaction. Key performance indicators (KPIs) and agency strategic goals become directly connected to employee satisfaction to produce disastrous (and expensive) consequences.

Choosing the Right Indicators

Agency leadership may institute a full-blown incentive program without having a more in-depth understanding of the processes that are driving events like absenteeism and lack of participation in team events.

For example, it is easy to assume that lack of participation indicates dissatisfaction without considering other possible explanations. Discomfort in group settings, lack of information and time constraints are just a few of the circumstances that may keep team members from actively participating in events and discussions.

Likewise, employees who are satisfied with their job may, nevertheless, sense a lack of opportunity for long-term professional growth. Such individuals may (happily) work in their role until a more challenging position appears and will then (unhappily, perhaps) leave your agency to pursue a better opportunity.

Metrics like absenteeism, tardiness and staff retention may be more closely connected to departmental processes and organizational efficiency than to employee satisfaction. The success of your incentive program may well hinge on your understanding that every metric often tells only part of the story.

Agency Scorecard and Employee Experience

The relationship between departmental processes and job satisfaction is not direct and is mediated by some significant intervening factors. Agency practices that are inefficient often lead to employee dissatisfaction and disenfranchisement. Stalemates and bottlenecks that are created by inefficient and unnecessary processes can increase frustration and contribute to a feeling of inertia.

The absence of timely communication about policies and updates often leads to a disconnect between an employee and his or her team, resulting in a lack of motivation to achieve company agendas. Lack of support for accomplishing professional goals can lead an employee to look elsewhere for an environment that can offer intellectual stimulation.

You can maximize the effectiveness of your incentive program by engaging your team in discussions about current policies and proposed changes. Asking your team to provide information about agency practices that seem to be inefficient can be an important first step in establishing an incentive structure that really works. Such discussions can be instrumental in removing obstacles that impede employee satisfaction.

Connecting Incentives to Productivity

While it is important to relate department outcomes to team efforts, performance should also be rewarded at the individual level. An effective way to do this is to embed individual incentives within team goals to provide rewards at both levels.

This example, which is based on a mythical car dealership, illustrates the process of connecting KPIs to productivity-based incentives.

KPI: Number of vehicles sold each year
Measurable objective: This location will sell 100 vehicles in the month of April.
Team goal: Each team will sell 50 vehicles in the month of April.
Performance metric: Number of vehicles sold by each team in the month of April

A dual-reward system ensures that there is continued progress towards company goals and also recognizes high achievers at the individual level. Connecting the agency mission to employee incentives motivates the workforce while also maximizing profits.

Choosing the Right Incentives

Managers often assume that time off, more money and company picnics are good incentives. They are. The problem is that not everyone experiences reward in the same manner.

Time off may be a great idea for an employee who can afford to spend the extra week on the beach in the Bahamas. An employee who is financially strapped, however, may begrudge the idea of having an extra week to sit in front of the television or to do work around the house.

A word about individual differences

The most difficult part of setting up an effective employee incentive program is parting with the assumption that one size fits all. Choosing effective incentives often involves talking with your team about their activities, wishes and dislikes. A potential dialogue might include the following questions.

1. What do you like to do in your spare time?
2. Thinking back as far as you choose to, what is it that you have always wanted to do for a living?
3. If money and time were not an issue, what would be your ideal vacation?
4. If you did not have to worry about money, what would be your ideal job?
5. What activities really relax you? What makes you feel really healthy and on top of things?
6. Do you feel you are using your skills in your current job role?
7. What other skills would you like to be using more frequently?
8. If you could make one change in this company, what would it be? Why? How would you go about it?

Regular discussions may be incorporated into team meetings, company retreats or employee performance evaluations. In this manner, rewards can be skillfully integrated with each worker's professional development plan and merged with departmental processes.

Incentives that really motivate

Incentives tend to be most powerful when an employee chooses them. You can use information culled from discussions to develop a menu of incentives from which your team can choose.

Rewards may be tangible, non-tangible or a mix of both. The best selection of rewards might include a menu of different types of items. When an employee earns an incentive, he or she may select their reward from a choice of three or four options that fall within several categories.

Something to take home

The first category of incentives includes products and items that are mainly for the employee's offsite and personal use. Rewards include event tickets, gift certificates, gift boxes and electronic equipment. Services like club memberships and book subscriptions would also belong in this category if they are for individual use.

Group incentives in this reward class might include company merchandise like a branded sweatshirt and team events like pizza or ice cream parties. The team manager might be given temporary access to the company credit card, a budget set in stone, and an order to take his or her team to lunch at a restaurant of their choosing.

Incentives are nearly boundless and limited only by the reach of one's imagination.

Things that make work easier

Employees may experience frustration due to organizational inefficiency or to the lack of resources that are necessary for them to do their job. Still others have long distances to cover just to get to the office and may have to travel even more while at work if their position calls for it.

Incentives that make work easier include a computer or smart phone that is assigned to a specific employee for his or her exclusive use during work hours. It may sometimes be possible to let team members choose their work location to achieve a shorter commute. Team members might even choose to telecommute part-time to ease the load of work-related travel.

The thirty-minute nap can be a great incentive for employees who tend to feel burnt out during the day. Providing access to a special area for napping may be a very effective incentive for some of the workforce and will increase overall satisfaction and alertness to task.

Incentives can be implemented at the team level and are nearly limitless in scope. For example, a winning team might be given access to a more private meal break area for a week following their successful campaign. In some cases, team members might feel appreciated when given access to showers while at work, especially if their jobs involve contact with dirt or chemicals.

Rewards that improve work-life balance

Flexible work hours, choice of work schedule, extra time off and improved family leave programs can serve as powerful incentives for some individuals. However, it is important to note that not all lives are created equal.

Some employees may want more time to spend with family but others might feel intensely rewarded when given opportunities to ride a bicycle or to play video games during work hours. Still others would welcome the chance to leave work to catch a good sale at their local music store, only to return more satisfied after a couple of hours of shopping.

Financial incentives

Financial rewards are motivating for most people, possibly because they are tangible and immediate. Some of the incentives in this category include merit-based raises, performance-based bonuses, additional matching contributions to retirement funds and savings certificates.


Offering an array of incentives frees your work teams from being locked in and lets them choose different rewards at different times. Managers should routinely evaluate the effectiveness of their incentive program and be prepared to change its structure and incentives if the evaluation results indicate it.
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