How to Create Effective Employee Incentive Programs

The success of any company depends 90% on its employees. So, how to keep them happy and satisfied? A handsome paycheck is essential, but you need something more. Starting employee incentive programs can be a solution to many issues in the daily business routine. In this article, you will:

✅ Get tops tips on initiating employee incentive programs;
✅ Learn from the best examples of employee incentive programs;
✅ Discover the latest ideas behind the most effective employee incentive programs (including the use of the best time tracking software to track the program’s fulfillment).

Step-by-Step Guide to Developing Employee Incentive Programs

Many businesses treat employee incentive programs lightly and often overlook this critical opportunity. However, incentive programs for employees improve the working environment, boost workers’ productivity, keep their retention level high, and help with employer branding. As a result, employee incentive programs increase business revenue while turning workflow into a seamless and pleasant process for your staff. 

Once you decide that you want to start an incentive program for your employees, you need to understand how it will work. For this, you need to develop an employee incentive plan. Below is the step-by-step guide on doing just that!

1️⃣ Establish your goals and objectives

First of all, you should understand why you need an employee incentive plan. That’s why you have to start with your goals and objectives. Here are some examples of employee incentive plan objectives: 

• Improve attendance
• Reduce the number of requested sick days
• Increase sales
• Improve customer service
• Reduce time for completion of specific tasks, etc.

Your goals and objectives should follow a SMART structure. It means they should be specific, measurable, actionable, relevant, and time-bound. Learn more about SMART objectives in this timeless article on time management techniques.

NB: Choosing 1-3 SMART goals and objectives is best. Otherwise, you can get overwhelmed trying to accomplish them all.

2️⃣ Understand your employees

The next step is to consider who is eligible for your employee incentive plans. It means that you need to identify individual employees or teams to develop your strategy for. It’s easier to use your objectives and some more criteria such as:

• Department or job classification. This can be Sales and Marketing or Production, Accounting and Finance, etc.
• Duration of service. The more time an employee is with your company, the larger an incentive could be.
• Budget. How much money you’re ready to invest in incentives packages, and if your incentive payout includes bonuses or cash.

3️⃣ Communicate with employees

When gathering data on your incentives packages, let your eligible employees speak out.

Essentially, what do THE EMPLOYEES want?

Ask them about possible rewards, which rules to include, and other program-related issues. You can start with a survey that includes some options for possible incentives and ask your employees to add their own if none fit. It’ll help you make your plan effective as your employees know better what they need.

4️⃣ Make a sample of your incentive plan

So, you have all the needed data. Now, it’s time to elaborate on your employee incentive program. 

Decide if your plan has a closed end or you want to incorporate it into the company’s workflow with an open date. Open-ended programs require continual budgeting. They are more motivational for the employees and can work for a broader audience. At the same time, short-term plans can be more focused on achieving specific goals and require less fundings.

Determine your communication strategy. Think about how program participants are going to communicate, what means of communication you should use to update the employees on the program stages.

Decide if you need to train your employees and how you’re going to do it. Sometimes to establish particular behavior in your company, you need to set up some training for your employees. You could develop progress rewards for your staff to encourage them to complete the whole course. 

5️⃣ Administer the incentive plan fulfillment

As you have created your incentive plan, it’s time to track how well your employees shall perform. For this, determine the most essential elements of your program that should be evaluated and establish the milestones. 

An effective way to track your employees’ progress is to use digital apps. You can monitor their results and check that they don’t exceed the budget and meet all the program deadlines.

6️⃣ Evaluate the outcomes and celebrate the success

Once your employees have fulfilled all the planned tasks and activities, it’s time to evaluate the results. You need to answer several questions at this step:

👉 Have the participants modified their behavior?
👉 Do your employees need more training?
👉 Should you alter your employee incentive program?
👉 What else could you do to improve your employees’ behavior?
👉 Were there any external factors that influenced the program outcomes?

If you’re satisfied with the employee incentive program results, then you need to show them! This could be a party or a presentation with the achieved goals to celebrate success.

Examples of Successful Employee Incentive Programs

Here are some examples of how employers can effectively put employee incentive programs into practice. 

Employee attendance incentive programs example

After conducting thorough research on employees’ productivity in the company, HR realized that employees call in sick 15 days per year on average. Workers tended to use their sick days 5 days in a row before the end of December as they didn’t accrue for the next year. HR decided to improve the situation and reduce the number of days to 7. For this, the company:

• Established a SMART goal: to motivate employees to minimize their sick days to 7 per year or even less
• Defined a group of people that will participate in the incentive program
• Found out a meaningful incentive for the group and put it to group discussion
• Came up with the plan that included a catalog of items each employee could pick up as a present for great attendance results
• Approved the budget and deadlines with management
• Every three months, HR gathered his target group and rewarded them for their outstanding attendance records.
• I decided to run this program with another group the next year. 

Performance incentive programs example

After a while, our HR has realized that they need to improve the employees’ performance. The simplest way would be to start a competition among the staff individuals, but they wanted to support a collaborative environment in the company. For this, the company:

• Established a goal for the performance incentive program: to increase sales in the company while keeping a positive environment in teams
• Formed two teams for the program
• Defined the meaningful incentive for the teams: a weekend of team-building games and company-sponsored lunch 
• Established a goal for each team: to provide a high-quality service for customers so that they will evaluate customer service with 5 starts in a company’s app.
• Arranged additional training on customer service for the teams 
• Approved the budget and deadlines and established training milestones
• Gathered the teams after training and provided feedback on the outcomes
• Evaluated the program’s success and improved it for the following year.

Creative Employee Incentive Ideas for 2025

There is a wide variety of incentive plan examples and ideas you can find online. However, most companies prefer to rely on more traditional incentive pay programs. Pay programs seem to be a safe way that is easy to deploy and monitor. 

Though this traditional approach can have a detrimental effect on employees. As those workers that don’t consider money as the primary value in their work won’t be driven by it. Here is a range of employee performance program ideas that you could try:

🎉 Social events and gatherings

A company should recognize and praise the hard work of its employees. After an especially stressful week, managers could allocate a budget for a local party on work premises or outside activities with the team. 

Social activities bring team members together and boost collaboration in the company. It improves interpersonal relationships among workers and can result in greater productivity in the long term. 

The off-site events can take the form of visiting exhibitions, having lunches, or even playing laser tag. You could establish these events on a regular basis, once a month or once in two, to praise your team for completing a large piece of work.

💪 Opportunities for employee personal growth

Investing in employees’ professional development is a wise move for a company. The more knowledgeable and skilled the staff, the more effective are the working processes. Learning opportunities can be one of the reasons for many workers to stay longer in the company, especially if they can pick up the courses they really want to study.

Don’t worry if your employees choose something entirely different for their course from the work they are doing. A comprehensive outlook can add to working processes one way or another. It may have no direct impact on an employee’s effectiveness, though can add to establishing good relationships between colleagues.

📅 Flexible working schedules

Allow your employees to choose their working days. This way, they can plan their work better and do it more effectively. Making your employees form their working schedule means that they can manage their work-life balance better. As a result, they will become more concentrated on the work as personal chores are settled. 

Work still should be a priority for your employees in the company. You need to make sure that your employees change their working schedules for a reason. They should remain within the borders of 40 hours per week. Otherwise, your workers will start underworking.  

You can start a flexible working schedule gradually and train your workers to form their schedules responsibly. For this, you could try other working schedules, for example, 9/80 working hours in 2 weeks. 

♻️ Green commuting

Environmental issues have recently become a hot topic for the global community. If you want to encourage your employees to stay green, it’s a good idea to incentivize their green behavior. You can do this in the form of extra bonuses or transport cost reimbursements for carpooling, walking, using a bike, or taking public transport to work.

💆 Wellness and health benefits

Everyone likes a little bit of personal care now and then. To treat your employees and praise them for their work contribution, you could start a wellness and health benefits program in your company. Paying your employees to visit a gym or calling a massage service on the company’s premises can help your workers reduce their stress levels, get more focused, and generally improve their health. 

Wrap up on Employees Incentive Programs

Employees incentive programs are a sure way to keep your workers more satisfied with working conditions. Those employers who prioritize their employees’ happiness boost their productivity and keep their retention levels high. All of these combined result in increased revenues in the long term and cultivate a strong team of professionals that add to the business development in many ways.

We, at Everhour, hope that this article helped you understand why you need employee incentive programs in your company and provided valuable insights on where to start!

If you are managing a team of 5 or more and looking to boost efficiency, Everhour is the perfect tool to keep your team on track. With seamless time tracking, you can easily estimate task durations, set clear budgets, and generate detailed reports inside Asana, Trello, Jira, or any other pm tool.