19 Ways To Incentivize Employees

By Indeed Editorial Team

April 1, 2021

Incentivizing employees can help a company meet its goals by increasing productivity and product output. It's important to provide incentives to employees to show how valuable they are to the organization. Companies that have developed incentive plans can expect increased employee loyalty and job satisfaction.

In this article, we explore why employee incentives are important, the incentives you can consider and some ideas to keep employees motivated.

Read more: Incentive Theory of Motivation: Definition and How To Use It in the Workplace

What is an employee incentive?

An employee incentive is a way for managers to reward team members for exceeding expectations. Employee incentives can come in the form of recognition and praise, additional compensation or any reward that helps an employee to continue their productivity. Depending on your reason for incentivizing employees, you could implement a long-term program or offer a one-time reward for achieving a specific milestone. Both team and individual incentives are common in the workplace.

Why are employee incentives important?

Here are some positive outcomes related to a developed employee incentive program:

  • Increase in motivation

  • Boost in office morale

  • Lower absenteeism

  • Better teamwork

Increase in motivation

Employees feel motivated when they know they are working toward a particular incentive. Employees have different motivating factors, so a certain incentive may motivate one employee over another. It's important to have a few incentives in place to make sure that employees remain motivated, no matter what drives them in their work.

Boost in office morale

When you introduce incentives into the workplace, employees are more likely to feel valued and that they're a productive part of the team. They want to succeed either individually or with their team to earn a group incentive.

Lower absenteeism

You can expect employees to come to work and excel in their daily tasks when you employ incentives. With an increase in job satisfaction, employees are happier to spend their days at work with their team and usually have fewer attendance issues.

Better teamwork

Create incentives for entire groups to encourage collaboration and teamwork. Having group incentives should motivate employees to meet team goals, collaborate on important projects and develop positive working relationships.

Read more: 6 Tips for Effective Teamwork

How to develop an incentive plan

To develop an incentive plan that works, follow these steps:

  1. Ask your team what motivates them.

  2. Identify any areas for improvement.

  3. Develop a budget.

  4. Determine eligibility.

1. Ask your team what motivates them

When developing incentive plans, ask your team members what motivates them to create a more focused approach. Have a meeting with your employees to discuss what drives them, or send them a survey so they feel comfortable responding with honest answers.

2. Identify any areas for improvement

While it's important to consider what motivates an employee's work, incentive plans also need to focus on improving the company. When you're developing your incentive plan, ask yourself the following questions:

  • Are there any skill gaps in the office?

  • Are there communication barriers that we can improve?

  • How can we improve efficiency?

3. Develop a budget

Creating a long-term budget ensures you offer consistent incentives. You can offer low-cost incentives, like preferred parking or a gift card, that works with most budgets while keeping employees happy.

4. Determine eligibility

Determine how employees or teams will receive any incentives and develop goals to help employees earn their incentives. The goals should be specific and measure performance. Use KPIs or quotas to accurately measure progress. Form an overarching objective and incremental goals that the team needs to reach in order to earn incentives. Employees should have a path to follow, and you should be clear about your priorities and expectations.

Types of incentives for employees

Here are some types of incentives you can use:

  • Monetary

  • Recognition

  • Rewards

  • Experiences

  • Professional development


Monetary incentives are a common reward that most employees appreciate:

  • Bonuses: You can pay ad hoc bonuses, which is an unexpected bonus for completing a project, or to thank a team for their work. Offer performance bonuses when individuals or teams meet specific goals.

  • Profit shares: Profit shares translate to part ownership in the company. This incentive motivates employees to be more active in a company that they partially own. The amount of the shares depends on how profitable the company is.

  • Commission payouts: Commission payouts are an incentive for sales-based positions. If an employee reaches a certain sales threshold, they can receive a commission bonus. These payouts are typically a percentage of the sales they were directly responsible for generating.

  • Raises: This incentive recognizes an employee's hard work over a long period. Annual raises are common when a team member shows initiative to learn new skills and accept more duties.


Recognition is a no-cost incentive that you can implement immediately. Employees appreciate being recognized for their work because it makes them feel valued. It may also introduce friendly competition in the office, which helps increase productivity.


Rewards can include non-cash gifts, like a gift card or preferred parking. Rewards can be a little more personalized for individual employees by considering their hobbies and interests.


Experiences can work well for teams that achieve a shared goal. Experiences can include team outings, group lunches or team-building activities that all employees participate in. This both builds camaraderie among coworkers and helps the team remain motivated.

Read more: 12 Team-Building Games Your Employees Will Enjoy

Professional development

Many employees want to learn new skills to advance in their careers. Consider offering professional development opportunities, such as seminars or memberships to take advantage of online courses. Give team members the opportunity to practice their new skills in the workplace by giving them different responsibilities.

Employee incentive ideas

Here are some employee incentive ideas to implement at work:

  • "Employee of the Month" award: This incentive has several options you can choose from. You can implement an "Employee of the Month" award that includes a small bonus, free lunch or a gift card.

  • Free team lunch: When a group or team reaches a collective goal, offer to take them out to lunch or have lunch catered in. This is a simple incentive that you can use as often as you'd like.

  • Time off work: Additional paid time off is an incentive that most employees enjoy. You can add an extra vacation day that a team member can use whenever they want or allow them to leave early on a certain day.

  • Work from home day: Consider naming one day a week as a designated work from home day and only allow employees to take advantage if they continually meet their quotas.

  • Meeting with the CEO: Some employees have a lot of ideas they would like to share with upper management. Give them the opportunity to meet with the CEO of the company to talk one-on-one about business growth and what their own work goals are.

  • Office party: When you want to reward the entire workplace, have an office party. These events also provide colleagues an opportunity to get to know one another.

  • Handwritten note: Handwritten notes are still highly regarded, especially if that note contains a heartfelt thank you. Deliver a card directly to the employee with a note inside that explains what you're thankful for and how much you value the hard work they're doing.

  • Awards party: An awards party can provide a platform for the leadership team to recognize employees who have showcased exemplary work. Rewarding employees for their work encourages their teammates to follow their example and celebrate their coworker's achievements.

  • Company merchandise: Employees loyal to the company may be interested in wearing and using merchandise with company branding. Employees may appreciate items like coffee mugs, shirts or umbrellas.

  • Guest speakers: Have guest speakers come in to inspire employees and teach them about a particular topic. You could even have employees from different departments speak to your team members to build collaboration between different areas of the organization.

  • Professional memberships: Professional memberships are a way for employees to grow their skills in the workplace by attending regular meetings and getting to know others with varying experiences. For example, employees in the marketing department may want to join a local organization that supports marketers.

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