Incentive programs refer to special privileges or rewards designed to motivate employees to meet important business goals. Offering recognition and rewards to employees for meeting specified goals or objectives can have a range of benefits, such as improved morale, greater productivity and measurable performance. Company incentives may include profit-sharing opportunities, cash bonuses, additional paid time off (PTO) or tangible prizes such as corporate merchandise, gift cards or gift certificates.
In the past, nonprofits did not fully utilize incentive programs at the same frequency as their for-profit counterparts. There are several reasons why some nonprofit organizations choose not to offer incentives. Some nonprofits claim they do not want to compromise their mission or do not have the resources to track and administer these plans, while others simply avoid change. Some nonprofits do not offer incentive programs because their peers do not offer these programs.
Why Should Nonprofits Offer Incentive Programs?
Many nonprofits can find great value in offering incentive programs in the workplace. Here are some of the top reasons why nonprofits need to offer incentive programs.
1. Increase Employee Motivation
Offering an incentive program can increase employee motivation. Incentives motivate workers to maintain a positive attitude and work hard towards achieving pre-established goals and objectives. When employees actually earn the promised incentives, they tend to become motivated to get even more rewards.
2. Reward Top Talent
Some employees go above and beyond to prove their commitment to an organization. These employees should be shown recognition and incentive programs can help give them the attention they deserve. Monetary rewards for significant contributions show the workforce as a whole that their work is appreciated and celebrated.
3. Encourage Friendly Competition
The same work routine day-in and day-out can quickly become mundane. Offering an opportunity to participate in a little bit of friendly competition is a great way to keep things in the workplace fun and exciting. Employees will likely start to compare their performance to one another and strive to do better next time.
4. Support the Organization’s Vision
Establishing a successful incentive program can help reinforce employee performance to the organization’s vision and purpose. A structured incentive plan can help make this strategy more clear. For example, a business may include spreading awareness in their mission statement or primary objectives. When incentives are given for performing this task at an exceptional level, employees can enjoy rewards for their positive actions.
5. Show Appreciation
According to research published by SocialCast, 69 percent of employees reported that they would work harder if they felt that their efforts were better appreciated. Offering an incentive program is an effective way to show employees that they are appreciated for all that they do. In return, employees feel heard, seen and valued.
6. Improve Profitability
Although it may seem counterproductive to begin an incentive program when trying to cut costs or increase revenue, when done correctly, incentive programs can actually improve profitability. Increased profitability can be achieved through higher profits, a return on investment (ROI) and a boost in return on equity (ROE).
7. Promote Teamwork
Organizations are always looking for new ways to encourage teamwork and collaboration between coworkers. When businesses use standard bonuses alone as a reward strategy, employees tend to focus only on themselves; however, incentive programs that require some degree of teamwork can unify employees.
8. Boost Employee Retention
Competition is fierce in the nonprofit sector and organizations must go the extra mile to retain employees. A successful incentive program can make a nonprofit stand out from the competition and positively impact employee retention. Employees prefer to work for organizations that are willing to reward them for their loyalty.
9. Increase Morale
Another reason for nonprofits to offer incentive programs is to increase morale. There are several things that employees look for in a job, such as a good work environment, proper work and life balance, a sense of contribution to both the company and community and the ability to engage in meaningful work. An incentive plan can help employees feel more empowered and can foster a productive work environment.
10. Attract New Job Seekers
Finding talented job candidates can be challenging, but offering incentive programs can help. Job candidates are likely to be drawn to the appeal of an incentive program, especially when paired with a competitive salary and comprehensive employee benefits package.
Nonprofit Incentive Program Best Practices
Rolling out a new or updated incentive program can be exciting, but it is important to ensure that the program meets certain goals and expectations. When developing an incentive program, keep the following best practices in mind:
- Recognize employees based on their unique achievements.
Instead of providing a reward for “employee of the month,” provide rewards for specific actions, such as outstanding customer service.
- Make recognition a frequent occurrence.
Employees should be shown appreciation on a regular basis based on their performance. Morale can plummet when only a select few employees are rewarded once a year. Make the incentive program a key component in measuring employee performance and productivity.
- Tie recognition to business goals or values.
Many organizations are starting to develop incentive programs that focus on the business’s key goals and mission. Rewards earned by employees can be tied to the business’s strategy, such as better customer service, cost-cutting initiatives or exceptional teamwork.
- Encourage peer-to-peer recognition.
Although receiving recognition from management can feel great, employees can also enjoy a boost in morale and motivation when they are appreciated by their peers. Encourage employees to appreciate one another, even if it is just a simple “thank you for all that you do!”
- Share stories of recognition organization-wide.
Employees often gain confidence in their own abilities and performance when they hear about others who have been recognized for similar accomplishments. Consider sharing stories of recognition in the company blog, newsletter or similar publication.
Speak with a Business Benefits Consultant
If your nonprofit is interested in learning more about the benefits of offering incentive programs, or requires assistance developing an incentive program for your workforce, contact the experienced business benefits consultants at BBG today.