There are many ways to design employee incentive programs for small business. For an employee incentive program to be effective, it must:
There are a multitude of employee incentive programs, most of which have been proven effective. But the program you ultimately choose will depend on your goals, your employees (what motivates them?), and what’s feasible for your business. Here are some ideas:
Compensation-based incentives, such as bonus structures for small companies, use monetary or compensation-related awards to motivate and inspire.
Also known as a “stay bonus,” annual incentives involve giving money to employees who stay on board for a certain length of time. The length of time required should be outlined ahead of time, often as part of an initial sign-on contract, and reviewed in a timely manner once that milestone is crossed.
Sometimes, annual incentives are tiered, with employees getting gradually larger bonuses at the one-, two-, five-, and 10-year marks.
It’s often said that the best employees come as the result of referrals from current employees. That’s likely because few people are willing to recommend a candidate who would reflect poorly on their judgement.
Offering a referral bonus could help bring in more qualified applicants, and you may even find that the team is stronger as a result of existing bonds.
One of the most straightforward incentives on this list, sales commission involves paying employees based on how much they sell.
Commissions may be:
Some people choose to combine the two commission options, offering a flat-rate payout up to a certain amount, then adding a possible percentage-based commission for sales over a predetermined threshold.
Though hiring bonuses and referral bonuses are often used interchangeably, they’re actually two different concepts. Whereas referral bonuses are typically open to all employees who recommend a future hired person, hiring bonuses are usually reserved for hiring managers or those in an equivalent position.
Hiring bonuses are only compensated after an actual hire, and the payout is usually awarded after the new employee stays onboard for a certain amount of time. For instance, he or she may have to stay in the position for six months to a year before the hiring manager is eligible for the bonus.
This idea is based on the concept that the team that plays together, wins together. People tend to feel more invested in the success of their company when that success translates into a win beyond the normal biweekly paycheck. Profit-sharing plans spread the wealth, so that eligible employees take home a portion of the profits they helped generate.
These plans may be tiered, rewarding more “points” and therefore a larger portion of the profits are based on seniority, position, or other criteria.
Ever given out a $50 check to employees right around Christmas? That’s a holiday bonus, and it’s a great way to thank employees when the money may be needed most. It’s like a gift and a reward all in one.
Holiday bonuses may be universal, wherein every employee gets the same amount, or they can be percentage-based, with employees receiving a bonus based on their existing salary.
Business-wide incentives use rewards beyond cash to help motivate and engage employees. Incentives may be tangible or experience-based.
This incentive gives employees the ability to earn paid time off (PTO) in exchange for meeting certain standards or goals, such as:
Keep in mind that “time off” doesn’t have to mean an entire week or an entire day. You can give out time off in hour increments, to be used at the employee’s discretion, offer extra-long lunches, or provide a Friday or Monday off for a long weekend.
Studies show that healthy employees are more productive, call out sick less often, and tend to have better mental outlooks. All of these benefits work for both the team members and your company, so offering a health/fitness incentive program can be a win-win.
Your program could use outside vendors, perhaps giving a discounted gym membership and then rewarding employees based on their check-ins, or you could give points based on other criteria:
Rewarding employees for their hard work draws a clear line between effort and outcome, but it can be difficult to compare output across different positions and departments.
Some ways to make this reward fair are:
Rewards can be in the form of money, a gift card, company swag, etc.
Experts say loyalty programs increase purchases by 20%, so finding a way to increase loyalty sign-ups can translate into quite a large jump in revenue. Get your employees in on the act by encouraging them to push loyalty programs and rewarding them for every sign up.
You’ll need a way to track this. Look for a POS system that can capture info, including who put in a sign-up and when that sign-up happened. Then create and share contest info so employees know where they stand.
This is also a great exercise in improving customer service and selling the best aspects of the business. Employees know they won’t get a loyalty sign-up from an unhappy customer, so there are extra reasons to deliver a stellar experience and talk up upcoming events, discuss how great the new chef is, and so on.
Why take the time and money to create an employee incentive program in the first place? There are quite a few reasons, all with one common thread: what benefits your employees can also benefit you.
Employee incentive ideas for small businesses can help breathe new life into your business. It could take some trial and error to find out which program works for you, but involving your employees in that discussion could make the process much simpler — and much more rewarding overall.
Interested in learning about employee management tools that can help you streamline and improve your business? Reach out to a Clover Business Consultant to find out how we can help.CONTACT SALES
This information is provided for informational purposes only and should not be construed as legal, financial, or tax advice. Readers should contact their attorneys, financial advisors, or tax professionals to obtain advice with respect to any particular matter.
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