You know what makes you tick. Having your own business is all the motivation you need every day to get up and get the job done. But what motivates your employees so that they'll share your enthusiasm for the company? If you're a small-business owner, you've likely wondered—more than once—what kind of employee incentive programs work?
Incentives for Employees Come in All Sizes
"The most common mistake is thinking that rewards or employee incentive programs must be complex or costly," says Heath Suddleson, speaker and author at Executive Achievement.
"Employee incentive programs that work should be simple enough to explain in three sentences or less, and inexpensive enough that they can be done continuously,” Suddleson adds.
According to Suddleson, the employee incentive programs that work best are the ones when the prize is distributed across the board. "Reward all who accomplish and not just who does the most," he says.
—Kerry Elam, managing director of HR and operations, Actualize Consulting
That's the way the commissions work at Absolute Automation, a company that sells automated home safety products. Every employee receives a percentage of the company's gross revenue.
"We found this worked better than having the commissions based on each individual salesperson's sales as some people may resent their working hours, which are spent doing other tasks such as working on the website or packing orders," says Nathan McBride, who as a web strategist for the company. "With this system, everyone wins as long as the company is performing well, which is, of course, the result of many ongoing jobs, not simply taking sales calls."
That same kind of employee incentive program is in place at Van Iwaarden Associates, an actuarial firm that designs retirement plans for companies.
"We contribute a large fixed-percentage of each year's profits to a bonus and sharing pool," says Jim van Iwaarden, consulting actuary for the firm. "Our whole team has a strong incentive to be efficient, productive and successful."
Van Iwaarden says with that incentive model, every employee is paid by the hour and is afforded a completely flexible schedule.
"As long as you can meet our client's needs you may work when you like, where you like and as much as you like," van Iwaarden says.
Employee Incentive Programs That Recognize Contributions to the Team
Employee incentive programs that work don't always have to be tied to commissions or bonuses. Sometimes simple gestures, small items and plates of food are all you need.
What if note cards on cubicle walls were an effective tool to boost employee morale and increase productivity? Jody Schrandt, strategy consultant and executive coach with Veriquest Partners, recommends pulling the team together to talk about company language, culture and values and then zero in on a few behaviors that lead to positive business results and high morale. Give those good behaviors a name and turn them into special awards.
“Give each employee a stack of card stock for each type of award that they can give to fellow employees whom they see demonstrating that behavior,” Schrandt says. “They can also include a short personal note. The way we employed it, the giver would post it in the cubicle of the recipient, so that over time, the cubicle walls would be plastered in these award plaques.”
Schrandt says begin by printing the award cards, distribute them to employees and ask them to share at least one a week. Soon he says the cards will be appearing everywhere. It's an employee incentive program that only costs as much as the cardstock used to print the awards.
Kerry Elam, managing director of HR and operations at Actualize Consulting, agrees that some of the best employee incentives just come from recognizing hard work.
“We have found that people truly want to be appreciated,” Elam says. She suggests letting employees across the firm nominate a Star Player and then management will share information about that person in an email blast and in the company newsletter. The star player may receive a very small gift as well. Elam also encourages team members to share random acts of kindness with each other, and nothing monetary can be involved.
“Each year, I will personally send handwritten messages of gratitude to each employee and that goes a long way,” Elam says.
Lisa Chun, owner of BlacknBianco, a retailer of fashionable clothing for children, also believes in the power of the handwritten note as an incentive for employees.
“As a small business my employees are like family to me and their morale is closely linked to their contribution and performance,” says Chun. “During the holiday season I like to give handwritten letters to every employee, acknowledging their contribution. Recognizing they are the reason my business is successful builds a stronger relationship and bond. When my employees are emotionally invested in my business not only are they more productive, but they are happy. Along with the letter I would include a gift card to give them an extra little bonus.”
And Chun says don't underestimate using tasty treats as an employee incentive.
“A monthly gathering with delicious food brings my employees together and improves the office energy,” Chun says. “Small businesses like mine have an advantage when it comes to boosting employee morale. We have the ability to create a family-friendly work environment where everyone is genuinely rooting for our success.”
Deborah Sweeney, CEO of MyCorporation.com, says you can't go wrong offering food as incentives for employees.
Food is always the way to someone's heart,” Sweeney says. “Having a meeting first thing in the morning? Take everyone's Starbucks order and bring in coffee for the team. Last-minute meeting request at 4 p.m.? Bring along some snacks for the team—and make sure you mention in your emails that snacks will be provided. Treats, especially unexpected ones, are always a welcome incentive for everyone and gets the team excited to attend. We also encourage to offer perks like Bagel Fridays. This gets employees looking forward to Friday mornings and helps to build morale.”
Shelley Grieshop with Totally Promotional says company swag items make for inexpensive employee incentives that double as advertising.
“A really smart business move is to periodically award your staff with customized items such as can coolers, USB chargers or flying discs,” Grieshop says. “High-quality items such as these cost very little when purchased in bulk and can be a long-term marketing tool for the company. A customized pen, lanyard, lip balm or other promotional item will receive broad exposure for a very long time. It's a great marketing strategy and a win-win for everybody.”
Employee Incentive Programs that Go Beyond Bonuses and Commissions
Taro Fukuyama created Fond, formerly AnyPerk, a platform that allows businesses of any size to offer employees perks that aren't straight-up bonuses or commissions. Fond partners with its vendors to allow members access to employee incentive program discounts.
"We provide a solution for small-business owners to motivate, engage and reward their employees," Fukuyama says. "We provide high-quality perks such as discounts on cell phones, movie tickets and fitness to small companies, the discounts usually only larger corporations can provide, by aggregating all the small- and medium-sized companies."
Fond customizes employee incentive programs to the budget of the business owner. Fukuyama says it's a low-cost option for smaller businesses looking to offer a competitive employee incentive program.
"Small companies recruit good talent from big companies and the employees are used to the high-quality perks of the large corporations," Fukuyama says. "We have many successful stories of small companies that have successfully recruited and retained good talent by having high-quality perks just like the large companies do."
Employee incentive programs that work will vary from business to business. Make sure you consider your business's financial situation and your employees' lifestyle and habits before deciding on an incentive program. No small business every succeeded just because it offered great incentives for employees. Employee incentives are just one piece of the puzzle involved in building a company with a great corporate culture and a happy and motivated work force.
A version of this article was originally published on August 7, 2013.
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