Building an Incentive Program: Design Tips and Tricks

The business justification for employee incentive programs is clear. In fact, a SHRM survey revealed that 81% of companies used one to tackle the two biggest challenges of HR: retention and engagement. However, in a rush to get these programs up and running as soon as possible, many businesses often ignore key elements of incentive program design and end up regretting it later. The fact of the matter is that these programs need a sustainable infrastructure so that they’re set up for long-term success. In this article, we’ll run through the steps that every business should follow to build an effective incentive program, and how to improve yours with some tips and tricks.

Key Steps for Building an Incentive Program

It’s easy to overlook the key components of an incentive program because the most efficient ones often look seamless. But it’s important to understand that businesses didn’t get there overnight; they followed these steps to the letter:

1. Get funding 

Enterprise incentive programs will require a budget, so it’s critical to gain leadership buy-in to ensure funding. Pitching the incentive idea as a solution to a problem—whether it’s retention, engagement, productivity, or improving workplace culture—will provide a clearer business case to decision makers. And by communicating the project’s value and aligning corporate interests, you’ll empower stakeholders with the knowledge they need to make an informed business decision.

2. Establish a framework

A proper framework addresses the who, what, where, when, and why of the incentive program.

  • Who: Who is authorized to give rewards, and who will receive them?
  • What: What type of rewards will be offered?
  • Where: How will the rewards be delivered?
  • When: In instances where the program isn’t digital, how will the enterprise set up a schedule for distributing awards and managing the logistics?
  • Why: Why will workers receive rewards? What benchmarks are required for receiving them?

3. Develop reporting protocols

It’s absolutely necessary to keep track of employee incentive programs for future use. Reporting templates should be created in advance so the right information can be captured at the right time. This information should mirror the information established in your framework.

4. Communicate openly & constantly

Incentive program communication is a must. Give employees a comprehensive overview of the program so that they know exactly what’s expected from them. Enterprises should also communicate about the incentives regularly to ensure everyone knows what they need to do to participate.

5. Monitor everything

An important aspect of any employee incentive program is determining if it’s actually working as intended. While it’s important to trust your workforce, an unchecked program is an open invitation to disaster. Even well-meaning employees can hand out rewards incorrectly and without proper justification. Accordingly, incentive programs should be monitored, but over-monitoring can delay recognition processes. The simplest solution is to adopt an exception-based approach. Managers should follow specific steps to issue rewards. If they don’t complete one of those steps, an alert should be triggered to indicate that further review is needed.

By following these five steps, businesses can see higher returns from their incentive programs. However, there are other ways to further boost results. 

Improving Incentive Program Design With Options

The biggest motivating factor in any incentive program is the reward, or what employees will receive for their hard work. There are a few different choices that companies can offer, but the underlying theme here is that options matter:

Branded clothing: Company-branded clothing is one way to reward workers, and it’s also free advertising. However, prices can quickly spiral out of control (especially after factoring in shipping costs and taxes).

Cash: The goal of a rewards program, especially incentive pay, is to have a long-term effect on employee engagement and happiness. When someone receives something specific from their employer, it’s a constant reminder that their work is very much appreciated—that actual effort was put into the reward. Cash, unfortunately, doesn’t work quite the same way. Research from the Incentive Research Foundation shows that employees typically spend cash on daily necessities, negating its impactfulness.

Merchandise: Merchandise is a great option for workers because it allows them to choose among various options and pick one that’s right for them. However, its success hinges on the quality of the offerings. Moreover, the same cost concerns associated with branded clothing also apply to merchandise.

Gift cards: Gift cards are often the top choice for employers because they’re easy to distribute, although traditional ones are a bit risky. That’s because a physical card may not be from a brand that the employee likes. Opting for a digitally-enabled gift card solution can provide a better ROI than more traditional, physical rewards.

Building an Incentive Program the Right Way

A solid incentive program design sets the foundation for the entire initiative. And if an enterprise doesn’t stay on top of either, the program is doomed to fail.

But with a digital rewards solution in place, organizations can build an incentive program that hits the mark and addresses common pain points. After all, every employee deserves to have his or her hard work acknowledged, and every business deserves to have an easy way to reward it. Customized templates, for example, can ensure every reward email reflects the brand’s corporate messaging. And giving staff the freedom of choice when it comes to their rewards can contribute to a much happier workforce.

If you’re ready to take your incentive program design to the next level, connect with us at Or request a demo to see our most popular product, Reward Link®, in action.

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