Is It Worth the Cost to Start an Employee Incentive Program in the Workplace?

Author: Meredith Wood | April 16, 2014

The employee recognition market is worth $46 billion. Forbes conducted research in 2012 and learned that companies spend between 1-2% of their payroll dollars on things like gold watches, pins, thank you awards, and plaques. Although there are conflicted views as to whether or not a simple memento has the power to make someone stay at a job, there are some best-practices that are said to be common and worth the money and effort spent on them.

What Increases Employee Satisfaction?
So, what constitutes a good employee recognition program? How can you justify the cost if you’re a start-up or just getting a foothold in the ladder of success? How do you make your employees feel valued? Do your efforts have to be valiant to be effective?
Forbes states that the following increases employee satisfaction:

  1. Acknowledging people when they display desired behaviors and achieve specific results.
  2. When peers are the ones to give a “pat on the back”.
  3. Share stories of achievement companywide.
  4. Make recognition a part of day-to-day operations.
  5. Find a way to tie recognition to company goals and values.

Companies like Google and Facebook offer enviable employee perks like free meals, massages, car washes, computer accessories, and company gym. An impressive benefits package is enough to keep anyone around but what if you’re a small business and can’t afford to go all out for years? Can you make an impact with an employee recognition program or will your efforts be wasted?

Anonymous Surveys Can Pinpoint Specific Incentives Worth Working For
One of the best ways to reward employee success is to find out what types of rewards they would respond best to. Asking men and women to fill out an anonymous survey regarding their preferences is one of the most effective ways of knowing which incentives are the most enticing. This will give you the opportunity to think about the recognition program and the costs involved with implementing it to see whether it will deliver the impact that you are hoping for.

Positive Results Occur When Praise Increases
Forbes notes that “When your company embraces a modern recognition program and people start thanking each other, trust and engagement go up-improving employee morale, quality, and customer service.” That does not mean that management needs to be lax, however. Feedback, accountability, and goal-setting are all important for growth.
83% of the organizations studied were recognition-deprived and it showed in their performance. Companies that had some type of employee recognition program have an edge over the competition. When employee satisfaction increases, productivity increases. There are fewer incidences of absences and turnover, something employers spend a lot of money trying to avoid.

Peer Recognition is the Most Effective
Top-down recognition which is primarily peer-based is better received because employees see themselves as equals with the people they work alongside. When they receive praise from a co-worker, it has a big impact on their performance. It’s due in part to knowing that the feedback has been earned. Upper management doesn’t always catch an employee “in the act” the way that his or her peer does.

So now that you know what an employee recognition program will cost, it’s up to you to determine its worth in your workplace. In addition to boosting productivity, an incentive program boosts morale. If you want to be known as “the employer to work for,” you’ll want to look into some including rewards as perks as part of your employee benefits package.

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