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Just How Effective Are Employee Incentives?

Debate and discussion surrounding the effectiveness of employing incentives at work is naturally a hot topic for any business owner or team leader operating in the business world. Whilst the short term bursts of productivity might give off the impression of a successful victory, ensuring you have the right blend of reward to work output can make for a tricky balancing act.

Below are the views and insights of leading experts in the business world, all with first hand experience of the effect incentives can have on a team.

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#1 Long Term Effectiveness?

Workplace incentives certainly reward desired employee output, but they will not change behavior long-term. The accepted belief is that incentives encourage people to change their behaviors to help facilitate organizational transformation. However, in the long-term rewards and punishment won’t change someone’s intrinsic behaviors.

Contributor: Mark LaScola, CEO of organization design consulting firm, ON THE MARK.

#2 Motivation Tools

We run regular incentives to give our employees the chance to earn a place on once-in-a-lifetime holidays. Our latest incentive was an all-expenses paid, five-star trip to Cape Town which included cage diving with sharks.

These incentives have been a staple of our company for more than 10 years and we find that they're a great motivator for staff, a topic of conversation around the water cooler and, of course, we see great ROI from the trips as it encourages our sales team to go the extra mile to secure that vacation-winning deal.

Contributor: James Lloyd-Townshend, CEO at Anderson Frank International found at

#3 Collective, Long Term Benefits

A very flat organization and short power distances mean it’s easy to gather everybody at the same table to make important decisions (including determining who will make the next pot of coffee by a round of Texas Hold’em).

The result is a workplace where we have fun together both during the workday and after hours. Because everyone knows they are in one of the best firms on the island we take pride in our work. We aim to create an awesome product and gauge how our efforts benefit the company long-term; not just focus on getting tasks done.

Contributor: Lauri Ronkainen from

#4 Speaking For Itself

At the end of the day, if you're motivating the middle 60% of performers on your team, the incentive sometimes speaks for itself. Proper award selection, communications, and program guidelines are sometimes all that's needed to meet the bare minimum ROI (return on investment)  required to justify starting an incentive program in the first place.

Contributor: Michael Pisterzi from

#5 Team Atmosphere

Whether it's through competition or team-oriented events or scoring within a program, the drive of seeing a peer performing higher overall due to the incentive will generally increase performance from those around them. Having a team-wide goal or an award with real trophy value (not just cash payouts) facilitates a more spirited incentive program with higher participant rates.

Contributor: Michael Pisterzi from

#6 Fear Of Missing Out

Assuming your communications are handled well, the incentive program can create a fear of missing out on something that the whole team is participating in. Increasing output through raising the lowest common denominator on your team not only helps your bottom line, but also individual performance overall. While the lowest 20% of performers are generally not susceptible to the effects of incentive programs, you can still see your more average performers rising to the top if there's reason to go above and beyond their routine.

Contributor: Michael Pisterzi from

#7 Competitiveness Red Flag

One of the greatest motivators within the workplace are incentives. Paying people more for exceeding goals and expectations is common practice, but can it be detrimental to the overall productivity of the team at work? Incentives can create a hostile team. If you see a coworker surpassing his or her goals, that pushes you to do the same.

Working harder is great. But working harder doesn’t mean you are working smarter. If your main goal is to simply hit your goals every week, month, quarter, etc. how much are you really adding to the team at work? If you have successfully implemented a tactic that works, share that with the team! Competitiveness is great, but not contributing to the overall success of the team is a red flag. Incentives are great but monitor them to see if the incentives are working towards the overall success of the team.

Contributor: Tracy Julien from

#8 Good For Already Productive Teams

Workplace incentives, whether it's cash rewards or non-financial perks, are a great way to help drive productivity and morale within an already high-functioning team. We typically don't see as much of an effect when they're implemented into an organization where employees are disengaged and/or when there's a high-level of job dissatisfaction.

Providing half-Fridays to employees who are working hard and delivering results is a great way to reward performance, but that same incentive would not do much to the move the needle within a company whose employee base despises their job the other four days of the week.

Contributor: Keith Wolf from

#9 Balancing Act

Incentives are a powerful means of altering employee behavior and the way you design them can influence the morale and productivity levels that employees exhibit. While striking a healthy balance between work and incentives can motivate employees to go the extra mile; going overboard can have a reverse effect and impact the quality of work. The incentive structure should be used to fuel employee motivation and shouldn’t become a rat race to mint personal profits.

Business owners, therefore, must ensure that perks are a gentle push to achieve larger objectives and not an unnecessary pull. There has to be a certain cap to the incentives you provide to ensure there is always a healthy competition among peers and the workplace doesn’t grow toxic.

Contributor: Ketan Kapoor, CEO & Co-Founder Mettl from

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Written by James Metcalfe

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