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How To Make Employee Incentive Plans Work

employee incentive plans

According to Gallup, disengaged employees cost the world economy $7.8 trillion in lost productivity in 2022. Incentive programs are typically implemented to motivate employees to complete specific objectives, increase work productivity, and recognize outstanding job performance, all of which can bolster sales and client satisfaction. Incentives can come in the form of cash bonuses, profit-sharing, vacation days, professional development and non-monetary gifted items. 


Creating successful employee incentive programs involves careful planning, clear communication, and a deep understanding of your organization's goals and culture. This blog outlines steps to make employee incentive programs work effectively.

Set Clear and Achievable Goals

Define specific, measurable, achievable, relevant, and time-bound (SMART) employee goals. These goals should align with your organization's overall, long-term objectives. When employees understand what they're working toward, they are more likely to be motivated to achieve those goals. 


Incentives can take various forms, such as monetary rewards, recognition, extra time off, professional development opportunities, and more. The key is to choose incentives that hold value for your employees. A combination of financial and non-financial incentives can effectively cater to different preferences.

Tailor Incentives to Individual Roles

Different roles may require different types of incentives; a one-size-fits-all approach might not be practical. Customize incentive programs to match the responsibilities and expectations of each position. For instance, sales teams respond well to commission-based incentives, while creative teams might be motivated by recognition and creative freedom.


Employees should perceive the incentive programs as fair and transparent. Communicate the criteria for earning incentives and how they will be measured. If employees believe the system is biased or unjust, it can lead to resentment and decreased motivation—and disengaged employees cost can cost an organization thousands of dollars.

Frequent and Constructive Feedback

Provide regular feedback on employees' progress toward their goals. Properly executed feedback corrects problems, improves productivity, and strengthens relationships between employees and managers. Positive reinforcement for good performance can boost morale and dedication.


Incentive programs should not be static. Regularly assess the effectiveness of the strategy and gather feedback from employees. If specific incentives are not producing the desired results, be willing to adapt and make necessary changes. 

Promote Team Collaboration

Create an environment where employees feel motivated to excel in a supportive manner. While individual incentives are important, fostering teamwork is crucial for organizational success. You can design incentives, such as profit-sharing and gainsharing, to motivate your team to work collectively, encouraging collaboration and shared accomplishments. Collaborative incentives can drive productivity and engagement far beyond your incentive program. 

Celebrate Achievements

Celebrate when employees achieve their goals or milestones. Publicly recognizing their efforts can boost morale and motivate other team members to strive for similar achievements. Fulfill rewards obligations in a timely manner by purchasing gift cards in advance and including extra vacation time or monetary rewards on their next paycheck. 

Implement Your Company’s Incentive Programs!

There is no one-size-fits-all approach to employee incentives. The effectiveness of your programs will depend on your company's culture, industry, and the unique preferences of your employees. Regular communication, flexibility, and genuine concern for employee well-being are keys to success.


New program design and implementation can be daunting; Cura is the modern HR solution to help you! We offer outsourced leadership, oversight, and support at the level you need. Whether you are a small business with significant growth plans or a large company tackling a new incentive program, we want to hear from you.

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