Employee incentive programs are a crucial tool for managers to boost employee engagement and motivation.

At the heart of every employee incentive program is the same simple premise: If people do X, they will get a reward and/or recognition.

Why then are some employee incentive programs so much more effective than others at motivating people to work harder and/or more efficiently?

What makes employee incentive programs effective?

1. The Right Focus

Great incentive programs are focused on outcomes not rewards. The purpose of your employee incentive program is to change behavior in a way that impacts your bottom line. It’s not to hand out stuff.

The best incentive programs start with a blank page approach in designing and revamping their incentive systems. Repeating the same programs every year can result in apathy. Impactful incentive programs are focused on solving urgent business problems.

2. Strategic Goals with Long Term Incentives

The most effective employee incentive programs reward employees who are achieving long-term measurable strategic objectives such as achieving no-lost-work-hours, sales goals, or customer satisfaction levels.

These programs are long-term, running 6 months to a year, and are a constant presence in employee lives. They feature larger rewards and recognition than more tactical programs.

3. Building and the Right Habits with Peaks and Valleys

In addition to the long-term strategic goals, the best employee incentive programs roll out short tactical programs to build or reinforce the employee habits that are needed to achieve these larger organizational goals. Examples of tactical objectives are filling out every field in the CRM correctly, practicing good security hygiene, or walking 3 miles or more every day.

These tactical programs should be shorter in duration, ranging from a day to 3 months, with rest-periods in between launching new programs. The focus of these incentive programs should be on the excitement they create, not expensive rewards. New programs should be launched as needed to focus on specific behaviors that need to be changed or reinforced.

4. Timeliness

For the psychology of incentive programs to be effective, feedback should be as near real-time as possible. The effectiveness of immediate feedback is rooted in classical conditioning (often called Pavlovian conditioning). Timely recognition builds good habits.

When people talk about the effectiveness of gamification on employee incentive programs, a lot of that impact comes directly from the real-time nature of the point scoring, competition, and leaderboards of typical gamification schemes.

5. Consistency/Fairness

It’s incredibly demotivating for an employee to think that they have achieved the conditions for recognition but to not receive the promised reward. Note that the accuracy of this perception is not relevant… what’s important is that employees see the incentive process as fair and transparent.  Any perception of arbitrariness will negatively impact your program’s effectiveness.

6. The Right Rewards

There is no one “perfect” reward or recognition. It all depends on what is important to your employees. Don’t settle for a single type of reward, experiment with gift cards, vacations, and custom prizes such as company swag or non-tangible recognition like a five minute meeting with your CEO.

Need some inspiration on the right rewards or recognition for your employees?
Check out our list of over 400 Employee Incentive Program Ideas.