Incentive programs are another way of rewarding employees who perform well. The added benefit for you as an employer is that this expense is only incurred if the company has seen additional benefits, either in the quality of service or in direct extra profits from production. Many employees appreciate incentives more than the base pay!
Most incentive programs have a cash-cost to them, but that is not always the case. The following are descriptions of some of the common types of incentive programs employers offer:
Employees share in the profits of the company, thus directly benefiting from their company’s success. The better a company does, the more benefits individual employees will gain so there is a real incentive for employees to perform well and to encourage co-workers to perform well too, Profit sharing, sometimes referred to as gain sharing, results in win-win situations for a business and its employees.
One form of spot bonus is referred to as “intrapreneuring.” In these cases, employees are provided with a special incentive for coming up with new ideas that save the company money or increase its revenues. Other forms of spot bonuses may be provided for taking special safety precautions, providing outstanding customer service, or performing other acts that are important to the company. This type of bonus could be cash, gift certificates, passes, or access to special training programs of the employee’s choice, etc.
These types of programs are usually geared to boosting the morale of employees. Some examples are “Employee of the Month” or “Hardest Worker.” Sometimes employers also provide a day off, a special parking space for a period of time, or the right to have the performance mascot in their work area.
This bonus is for new employees who sign a contract with the company. This is meant to establish goodwill and buy out any remaining compensation the employee might have had with another company.
Milestone bonuses are used to recognize an achievement such as completing a huge project or length of service. Some examples are:
- taking a project team to a movie or dinner;
- gift certificates for an employee and his/her family after a special assignment;
- 5-year service plaques
When employers are having trouble finding workers, one of the best sources of referral is from present employees. Providing a bonus to employees who refer successful candidates for hiring is a very inexpensive approach to recruiting. Current employees are unlikely to refer people who are not willing or able to do the work, as it will mean more work for them.
Holiday bonuses usually come around the Christmas holiday season or the end of the year. They can range from small gifts to one month’s salary.
Commission occurs when an employee sells something. The reward is a certain percentage of the total volume. It can range from 0-50% of the sale.