Employee Incentive Programs: 14 Examples & Best Practices

Employee incentive programs

The discussion of employee incentive programs has never been more relevant!


Because we employee disengagement has never been more prominent. According to the DNA of Engagement research report:

Disengaged employees cost organizations around $450-550 billion each year.

Business Leadership Today

And that doesn’t even begin to scratch the surface of just how detrimental having disengaged employees can be to an organization.

Another study, this time by Gallup, states that companies with engaged employees are %21 percent more profitable.

So the question then becomes: How can we foster long-term employee engagement?

We’ve highlighted plenty of employee engagement activities in previous lists and while activities are great, they are short-term solutions.

When it comes to keeping employees engaged in the long run, nothing quite works like a well-mapped-out employee rewards program.

What is an employee incentive program?

Employee incentive programs also known as employee rewards programs are designed not only to retain and engage current talent but also to make the organization more attractive to the top talent in their industry.

What are the different types of incentive programs?

While it is very easy to divide rewards and incentive programs into various sub-categories such as;

  • Performance-based incentives.
  • Recognition programs.
  • Benefits enhancements

And more, a very broad and encompassing differentiation can be made between different types of employee incentive programs as follows

  • Monetary Incentives: Perhaps the most straightforward, these incentives include bonuses, raises, profit-sharing schemes, and stock options. They are effective at providing immediate gratification and a tangible acknowledgment of employees’ contributions.

  • Non-Monetary Incentives: These encompass a range of rewards that don’t involve direct financial compensation but are highly valued by employees. Examples include additional time off, flexible working hours, professional development opportunities, and recognition awards.

Monetary vs Nonmonetary incentive programs

Monetary and Non-monetary Employee Incentives

While they both hold different implications and meanings, neither monetary incentives nor nonmonetary incentives should be excluded from the party.

Monetary incentives offer tangible rewards and are easier to keep track of. Their intrinsic value can be quantified very easily.

They also provide their recipients with instant gratification, leading to higher employee satisfaction in the short term.

What are some examples of monetary rewards?

  • Bonuses
  • Raises
  • Profit Sharing
  • Stock Options

Non-monetary incentives, when compared to monetary employee rewards programs provide engagement in the long-term, taking the company culture in a more positive direction, rather than benefiting a single individual.

What are some examples of nonmonetary incentives?

  • Additional Time Off
  • Public Recognition
  • Flexible Working Arrangements
  • Career Development Opportunities.

The choice between monetary and nonmonetary incentives depends on various factors, including the company’s budget, its goals, and what motivates its employees.

Often, a balanced approach that includes both types of incentives is most effective, ensuring that both immediate and long-term needs are met, fostering a motivated, engaged, and satisfied workforce.

What are some common employee incentive programs?

Some of the most common employee rewards programs include but aren’t limited to the following:

  1. Performance Bonuses: Financial rewards given for meeting or exceeding specific performance targets.
  2. Profit Sharing: Distributing a portion of the company’s profits to employees.
  3. Stock Options: Offering employees the option to buy company stock at a discounted rate.
  4. Employee Recognition Programs: Formal acknowledgment of employees’ hard work and contributions, often with awards or certificates.
  5. Professional Development Opportunities: Funding or providing resources for further education, training, or conferences.
  6. Flexible Working Arrangements: Allowing flexible work hours or remote work options.
  7. Wellness Programs: Offering health and wellness initiatives, such as gym memberships or wellness challenges.
  8. Paid Time Off Bonuses: Offering additional paid time off as a reward for meeting goals or as part of a benefits package.
  9. Commission Plans: Providing sales personnel with a percentage of the sales they generate.
  10. Retirement Contribution Matching: Matching employees’ contributions to their retirement savings plan to a certain percentage.

Employee Incentive Program Examples:

1. Performance Bonuses

Let’s start this list off with one of the simplest ways to reward your employees for their high performance.

The best way to incentivize your employees to perform at a higher level at the job you’re paying them to do is to simply reward their performance with cold hard cash.

Performance bonuses motivate employees to achieve higher levels of productivity and success, serving as a tangible reward for their contributions.

They can be structured around individual, team, or company-wide achievements, ensuring that employees are recognized for their direct impact

2. Stock Options

In an era where employee loyalty is a thing of the past, stock options just might be the best way to make sure your employees are actually invested in the success of your organization.

Offering stock options isn’t just a monetary incentive. It also fosters a sense of ownership among employees, encouraging them to contribute to the company’s long-term success.

Stock options can be particularly motivating in startups and growth-oriented companies where stock value has the potential to increase significantly.

3. Profit Sharing Plans

As an employee incentive program, implementing a profit-sharing plan is another way to align employee interests with organizational goals.

In theory, if an employee makes a stagnant amount of money regardless of an organization’s success, then are they really incentivized to be invested in that organization’s success?

That is why profit sharing plans exist to distribute a portion of the company’s profits among employees, usually on an annual basis.

Profit sharing makes employees stakeholders in the company’s success, enhancing their commitment and loyalty in the long term.

4. Employee Recognition Programs

The first nonmonetary rewards program on our list, employee recognition can be just as effective at motivating your team as any other incentive program.

Regular and formal acknowledgment of an employee’s hard work and achievements creates a culture of recognition organization-wide, keeping spirits high.

Employee praise whether public or private is one of the simplest yet most effective methods to incentivize your employees and empower them.

To implement this particular employee incentive program, all a team really needs is a simple employee recognition tool and a group of employees who appreciate each other!

A Free Recognition Tool You Must Try: Teamflect

Customizable employee recognition badges

Teamflect is a complete performance management software designed specifically for Microsoft Teams and it has a very intuitive employee recognition platform.

Send customizable recognition badges inside ongoing meetings or through Teams chat!

Assign points to each recognition and create leaderboards and live feeds!

Have your team cash their points out for rewards of your choice!

Teamflect not only streamlines your rewards and recognition system inside Microsoft Teams but also makes your recognition a part of your meetings, performance reviews, and everyday workflow.

The best employee recognition software for Microsoft Teams!
No sign-up required.
Teamflect Image

5. Flexible Working Arrangement

Even with the number of organizations embracing hybrid work, flexible working arrangements still rank among the most coveted employee incentive programs among employees.

Offering employees control over their work schedules, locations, or hours, promotes a better work-life balance and is a great workplace initiative to undertake even without it being a part of an employee incentive program.

Rewarding employees with the freedom to dictate their own work schedule and setting is sure to result in reduced stress and higher productivity.

6. Referral Bonuses

If there ever was a win-win when it comes to employee rewards, bonuses, or employee incentive programs, this would be the one.

A referral bonus is an incentive an employee receives when someone they refer to the organization starts working there permanently.

If we quickly take stock of the end result:

The employee just received a bonus and now has another friend in the workplace.

The company just recruited a talent with existing credibility, without going through the motions of a traditional recruitment process.

Everybody wins.

7. Professional Development Opportunities

While there are many different criteria for the best employee rewards programs, one thing that always sticks out is that the incentive should benefit both the individual and the organization. At this specific order.

Professional development opportunities for your team fit this description perfectly. While they benefit your organization by helping your team develop new skills and perfect existing ones, they primarily help your employees build an arsenal of skills that will help advance their careers.

Professional development programs can include workshops, online course subscriptions, conferences, and more.

We’ve previously highlighted some of the best online courses your team can take through Viva Learning in this helpful list below:

8. Employee Wellness Initiatives

From mental to physical well-being, employee wellness initiatives are one of the best rewards and incentives you can provide your team with.

While some could argue that they are well past the point of being a must-have for all organizations, they can still be seen as one of the most viable employee rewards out there.

While wellness initiatives such as gym memberships or free healthy lunches can be the rewards offered at the end of employee incentive programs, they can also end up being the actual incentive programs themselves.

Setting wellness goals and checkpoints for employees and rewarding employees who hit those checkpoints will not only boost engagement in the long run but also result in a far healthier workforce.

9. Tuition Reimbursement Programs

In the world of employee incentive programs, this is essentially professional development opportunities on steroids.

Tuition reimbursement programs are employee incentives where the company partially or fully pays for an employee’s college tuition.

With just how crippling student loan payments are and how important getting or completing a higher education is, this is one of the best ways a company can invest in an employee’s future and inspire loyalty at the highest possible level.

10. Additional Vacation Days

Out of all the employee incentive options out there, additional vacation days just might be the most coveted of them.

While this still counts as a nonmonetary reward, it is key to keep in mind that this particular employee incentive pays your employees in free time, which some could argue is the only thing that can contend with straight-up cash.

Another benefit of this particular employee incentive is the fact once the recipient of this reward actually uses those additional vacation days, the company will have a more engaged, well-rested, and refreshed employee in their hands.

11. Gift cards

Gift cards are classic employee incentives that often get a bad rep. While nobody has a problem with gift cards as a reward, they are often used in comically unfitting situations.

“Someone on the marketing team just crushed all their monthly goals and set new records? Sure! Send them a 5$ Starbucks gift card! That seems fitting!”

This stigma around gift cards really knocks them down a peg as valuable employee incentives. When used creatively and appropriately, however, they can work like a charm.

Instead of a cookie-cutter and low-amount gift card for an established franchise, why not give your employees a gift card to a local establishment they’ve been meaning to visit for some time?

Gift cards are only underwhelming if they are used as employee incentives or rewards for achievements way above their pay grade.

12. Fun Gifts

While they might not be the most powerful employee incentives out there, giving your team small, fun, and creative gifts is a great way to create a positive atmosphere and boost engagement in the short term.

Building a positive company culture isn’t always accomplished through drastic long-term actions. Sometimes it takes consistent, small actions to make long term impact.

We’re not saying that the road to long-term employee engagement goes through happy sucks, funny mugs, or creative company swag.

Yet all those things can be used to pave that road and make the entire trip more enjoyable for everyone involved.

13. Commission Programs

Salespeople of the world unite! Even though we’ve essentially touched upon a similar vein with employee incentives such as profit sharing or stock options, commission programs are employee incentives that specifically target salespeople.

When your employees get a piece of the cake they helped make, you can rest assured that they will be far more invested in picking out the best ingredients, tempering their eggs, and layering the frosting evenly.

Metaphors aside commissions have been the driving force behind successful sales teams for a long time for good reason. They simply work.

14. Choice of Projects

While most employee rewards programs target what your employees receive after a project or their experience during a project, or simply a lack of projects, one of the best ways to incentivize and empower your employees is to give them a say in projects.

Giving high-performing employees the right to choose their own projects isn’t just an incentive for employees to perform at a higher level.

It is also a method to ensure the high-performing employee will continue performing at a higher level since their next big project is one that they chose to take on.

Beyond just an employee incentive this is also ranks among one of the top project management best practices out there.

5 Best Practices for Employee Rewards Programs

Employee Rewards Best Practices

1. Ensure Fairness and Transparency

Nothing can undermine an incentive program faster than a perception of unfairness.

Make sure the rules and criteria for earning incentives are clearly defined, transparent, and applied consistently.

Everyone should feel they have an equal opportunity to participate and be rewarded.

2. Align Incentives with Company Values

Your incentive program should reflect and reinforce your company’s values and culture.

This alignment ensures that the behaviors and achievements you’re rewarding contribute to the broader mission and ethos of your organization.

3. Offer a Variety of Rewards

Recognize that your employees are diverse, with different motivations and preferences.

Offering a variety of incentives, both monetary and non-monetary, ensures that there’s something appealing for everyone.

This approach can increase the program’s overall effectiveness by catering to the individual needs of your team members.

4. Make It Achievable

While incentives should motivate employees to stretch and achieve more, they also need to be realistically attainable.

Setting the bar too high can lead to frustration and disengagement, while making it too easy may not sufficiently challenge your team.

5. Personalize When Possible

Tailoring rewards and recognition to fit the individual can significantly enhance the impact of your incentive program.

Personal touches show that you value your employees not just for their work but as individuals.

Written by Emre Ok

Emre is a content writer at Teamflect who aims to share fun and unique insight into the world of performance management.

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