How To Give an Incentive to an Employee (With 25 Incentives)

Updated February 3, 2023

Many senior team members seek ways to increase productivity and employee satisfaction in the workplace. Incentives can help managers and team leaders build trust with employees and improve engagement. Understanding how to create incentives for employees may help you meet your organizational goals and improve your work environment.

In this article, we define employee incentives, share why they're beneficial, outline how to give an incentive to an employee or team, discuss types of incentives and list 25 ideas for incentives to try with your team.

What is an incentive for an employee?

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

Related: Rewarding Employees for Performance

Benefits of employee incentives

Here are some positive outcomes related to employee incentives:

Increase motivation

People often feel motivated when they know they're working toward a reward. People typically have different motivating factors, so a certain incentive may motivate one team member over another. It's important to have a few incentives in place to make sure that everyone stayed engaged. For example, you could offer a bonus or an extra day off for people who exceed their sales goal, and everyone who qualifies can choose their preferred reward.

Related: Bonus Structures: Definition and Examples

Boost morale

Many supervisors seek opportunities to better the work environment and improve team morale. Incentives can show team members that the organization values their contributions and acknowledges their successes. Offering tangible rewards may help employees feel more confident about their performance and develop a sense of connection to the team.

Read more: How To Boost Employee Morale

Lower absenteeism

Incentives may motivate team members to come to work regularly and commit themselves to their daily tasks. This may lead to more consistent attendance and stronger output. You could also incentivize attendance if you want to decrease absenteeism among your team. For example, if a team member has perfect attendance for a quarter, they might get an award to recognize them for their reliability.

Related: What Is Absenteeism at Work? 8 Ways To Fix Attendance Issues

Better teamwork

Creating incentives for entire groups can encourage collaboration and teamwork. Having group incentives could motivate employees to meet team goals, trust one another and develop positive working relationships. When a shared award requires participation from all team members, it may encourage your team to practice accountability and distribute workloads fairly.

Read more: 6 Top Tips for Better Teamwork

How to give an incentive to an employee or team

To develop an incentive plan that works for your team, consider following these steps:

1. Ask your team what motivates them

When developing incentive plans, ask your team members what motivates them to create a more focused approach. You could have a group meeting where everyone can openly discuss what drives them to work hard, or you might send them an anonymous survey so they feel comfortable responding honestly. This can help you select effective incentives that are meaningful to your colleagues.

2. Identify any areas of improvement

An ideal incentive plan might also focus on improving the company's standing and addressing areas of concern. Incentivizing team members to improve metrics that matter most may help you develop a plan that's mutually beneficial. 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?
How can we remain competitive?

Related: 20 Areas of Improvement for Employees

3. Develop a budget

Many rewards cost money, so creating a long-term budget for incentives may help you create a sustainable plan. You can offer low-cost incentives, like preferred parking or a gift card. These simple rewards might help keep team members happy while still meeting budgetary constraints.

Related: 10 Tips for Managing a Budget at Work

4. Determine eligibility

Determine how employees or teams can receive any incentives. It's important to have a clear set of rules and expectations for eligibility so team members know how to focus their offers. You can also work with employees you supervise to develop goals to earn their incentives. It might be beneficial to use KPIs or quotas to measure progress towards an incentive.

For example, you might promise a company-paid team outing if your group increases its productivity rate by 10% by the end of next month. For long-term goals, you might form an overarching objective and include incremental goals that the team can reach, offering smaller incentives for each benchmark to keep them motivated when pursuing the ultimate goal.

Related: Employee Reward vs. Recognition: What's the Difference?

Types of incentives for employees

Here are some types of incentives you can use:

Monetary

Monetary incentives are a common reward that most employees appreciate. Some organizations have a routine schedule for bonuses, like holiday bonuses or quarterly bonuses based on performance. You might also implement other monetary rewards to incentive growth. Monetary incentives can include:

Bonuses: You can pay ad hoc bonuses, which are unexpected bonuses for completing a project or working effectively. Offer performance bonuses when individuals or teams meet specific goals.
Profit shares: A profit share is partial ownership of the company, and the amount of shares employees receive typically depends on how profitable the company is. This incentive motivates employees to be more active in a company that they partially own.
Commission payouts: Commission payouts are an incentive for sales-based positions. 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.

Related: Incentive Theory of Motivation: Definition and Examples

Recognition

Recognition is a no-cost incentive that you can implement immediately. You can recognize a colleague for their work privately with a note or email or publicly by sharing it at a meeting or in a newsletter. Public recognition may also introduce friendly competition in the office, which helps increase productivity.

Read more: 11 Ways To Recognize Your Employees

Rewards

Rewards can include non-cash gifts like a water bottle with the company logo on it or preferred parking. You could personalize rewards for individual employees by considering their hobbies and interests. This may show a team member that you know them well and care about giving them something they might enjoy.

Related: Top 40 Top Ideas To Show Appreciation for Your Employees

Experiences

Experiences can work well for teams that achieve a shared goal. Experiences can include team outings, group lunches or fun team-building activities in which all employees participate. These activities can build camaraderie among coworkers and help the team remain motivated.

Related: 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, workshops or memberships to online learning programs. You could also give team members the opportunity to practice new skills in the workplace by giving them different responsibilities. This incentive may be especially beneficial for junior team members who want to advance to more senior roles.

Related: How Do Professional Development Programs Work? (Plus Types)

25 employee incentive ideas

Here are some employee incentive ideas to implement at work:

"Employee of the Month" award: 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.
Time off of work: You can add an extra vacation day that a team member can use whenever they want or allow them to leave early.
Work-from-home day: Consider naming one day a week as a designated remote day and only allow employees to take advantage if they continually meet their quotas.
Meeting with the CEO: You could give more junior team members the opportunity to meet with the CEO of the company to talk one-on-one about business growth and what their own professional goals are.
Office party: To reward the entire workplace, have an office party to provide colleagues an opportunity to get to know one another.
Handwritten note: 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.
Company merchandise: Employees loyal to the company may be interested in merchandise like coffee mugs, shirts or umbrellas with company branding.
Guest speakers: Have guest speakers come in to inspire employees and teach them about a particular topic.
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.
Newsletter highlight: If you have a company-wide newsletter, you could highlight an employee each month who achieved a goal or impressed leadership.
Casual dress day: Workplaces with strict dress codes can reward employees by offering a casual day or relaxing rules for a week to thank team members.
Fitness class: You could invite a professional fitness instructor to lead a group workout like a yoga session or a dance lesson to promote exercise and help the team relax.
Tickets to an event: Some employees may appreciate receiving tickets to a sporting event, concert or movie.
New equipment: You might reward a team for excellent work by upgrading their computers, tools or office supplies, which might increase productivity and give you a competitive advantage.
Office amenities: Adding something that makes the office more enjoyable like a video game system, an exercise room or an espresso machine might be an appropriate reward for the entire team.
Freedom to choose projects and tasks: If you notice a team member excelling in their responsibilities, you could allow them to select the next project to work on or task to manage.
Host employees' family members: You could invite team members to bring a family member or pet to work on a special day to celebrate their achievements.
Volunteer day: Your team could take a day away from work to donate your time to a local cause or organization in need, which may promote company values and contribute a sense of purpose.
Snacks: Catering a meeting or bringing light snacks and drinks may encourage your team to come prepared and complete your agenda items so they can relax.
New clubs: You could incentivize workplace engagement by creating clubs that employees can join to connect with one another based on their interests, like a book club or a cooking club.
Canceled meetings: If your team is ahead of schedule on a project, you can thank them for their productivity by canceling an unneeded meeting and allowing them to spend that time however they'd like.
Movie day: Screen a movie in the office in a shared location like the cafeteria, break room or lounge so team members can sit down and watch during downtime.
Stipends: You might offer a company-paid stipend for items like gym memberships or continuing education to encourage employees to pursue self-improvement.

Explore more articles