HRM/U4 Topic 3 Employee incentive Schemes
Employee incentive schemes are a great way to motivate and reward staff for their hard work, whilst also boosting productivity and raising morale.
Employee incentives can be defined as a system by which the employees get rewarded for their success and hard work in the workplace. The incentives include various prizes and the recognition among others.
Incentive schemes for employees can vary from business to business and can include both monetary and non-monetary rewards. They are usually implemented within a specific time frame and encourage staff to work towards specific targets.
The following are various employee incentives
The compensation incentives may include bonuses, signing bonus, sharing profit and many other stock options. The compensation incentive as the name itself says is about compensating in terms of anything like extra money, rise in the salary and also sharing the profits of company in the proportion decided by the company in its plan or the schedule.
When the employees are recognized in front of whole staff, it is basically the recognition incentive. It includes the actions like thanking, presenting or praising employees by an achievement certificate. Not just this, the company’s manager may even announce the accomplishment of an employee in one of the important meetings.
The reward incentives
The reward incentives would specifically include the awards to be given to the employees. The awards could be in any form like gifts, special certificates, and monetary rewards and so on. Not just this but some companies make use of the employee referral awards which are used to refer the jobs to some employees. The reward incentives encourage the employees and also keep them away from the boredom.
When the employees get appreciated for delivering good results or for achieving the goal, it is referred to as appreciation incentives. But now days the definition of appreciation incentives has changed to larger extent and it means joining the company parties, the birthday, anniversary celebrations, paid group lunches, sporting events, ice cream socials and so on.
Offering employee’s equity
Although this is entirely a new concept but many CEO’s have found a way out on how to spin the wheel while proving these incentives to the employees.
Set up an Employee Incentive Scheme
Setting up your own employee reward scheme will allow you to be as creative as possible with your employee benefits, as well as specifically tailoring them to the needs of your business. In order to create a successful incentive scheme for employees, there are a few things you need to consider:
(I) Set objectives
First, decide what it is that you want to gain from the scheme. Whether you want to improve staff skills, increase your margins or lower your employee turnover, be sure to know what it is you want to gain from the incentive scheme. By knowing this at the beginning, you will be in a better position to measure its success.
(ii) Set targets
You need to set targets that will be specific to each team and/or individual. It’s important that everyone feels involved but make sure that you create different schemes tailored to different people or teams. This will ensure no one is left feeling alienated, and that everyone can get the most out of their scheme. A poorly tailored employee reward scheme could lead to employees feeling cheated and dissatisfied, thus not solving the issue.
When you set targets, be sure to communicate them clearly to all employees so they know what they can get from the scheme. Also be aware of the difference between ambitious and achievable targets.
(iii) Set a time frame
Creating a clear time frame not only keeps everyone in the loop but also allows individuals to assess the amount of work that needs to be done. This also means that you can resist the urge to micromanage employees and split long-term goals into shorter ones. By providing short-term goals in this manner, you will be able to better manage the progress towards your long-term goals, without your employees losing focus.
(iv) Define rewards
When it comes to showing your appreciation, be creative with your rewards. Monetary rewards are an easy incentive, but it’s still important to ask your employees what they would want. Perhaps give them a few options and let them choose which incentive they would prefer. By selecting an incentive they actually want, they’ll be much more motivated to work towards their targets.
Non-monetary rewards are sometimes a better option as they can promote a better work ethic. Examples include;
- Giving praise
- Increasing the number of paid holiday days
- Giving more autonomy in their current role
(v) Measure success
In order to know how well your reward scheme is working, you need to measure its success. You need to make sure that your method of measuring is specifically tailored to your business and your schemes in order to accurately establish whether or not it was worth it.