Implement staff incentive schemes
Benefits of offering incentives, rewards, and perks to staff and the different ways employers can do this.
Introducing a range of incentives, rewards, and perks in the workplace can help employers get the best from their staff. Staff incentives help encourage and motivate employees to strive towards a high level of productivity and performance. A business that rewards its employees for a job well done will be more effective at attracting new talent and retaining valuable staff.
This guide will help businesses and employers understand the advantages of staff incentive schemes. You will also explore the options for both staff incentive schemes and staff perks.
In addition, this guide will outline how to set up a staff incentive scheme and how to ensure the staff incentive scheme is successful. We also feature the Outsource Solutions case study, showing how they use staff benefits to motivate and retain staff.
Advantages of staff perks and incentives
Benefits of offering effective staff incentive schemes and perks for employers and employees.
Employers can use perks and incentives to motivate their staff and encourage positive behaviours from workers that contribute to the success of their business.
There are various types of incentives, perks, and rewards that businesses can introduce to the workplace. You could introduce recognition incentives that thank staff for doing a great job, eg, employee of the month or achievement certificates. You could also offer reward incentives, which usually present staff with an item of value that demonstrates your acknowledgement of the job they are doing and is often rewarded once certain targets or goals have been achieved or exceeded.
Staff perks: business benefits
An effective system of staff incentives and perks brought together in an attractive employment package could help your business:
- attract new staff to join your business
- retain existing staff
- increase staff motivation, morale, and loyalty
- boost productivity
- demonstrate your gratitude for a job well done
- link individual and business performance
- focus employees on achieving targets and goals
- encourage and build effective teamwork - see how to build and manage an effective team
Introducing perks or staff incentives to your workplace does not have to cost a lot of money. Some very effective perks cost very little, eg, a staff discount on products or services your business sells or flexible working options for staff.
Some incentives and perks may benefit your business indirectly, eg, free health assessments may reduce staff absence and sickness.
Staff incentive schemes: the options
Weigh up your options for introducing staff incentive schemes in your workplace.
There is a wide range of staff incentive schemes, each with different costs and appeal. They include financial and non-financial schemes, individual and group benefits, and short-term and long-term schemes.
Options for staff incentive schemes
Financial incentives in the workplace can help your business meet targets, motivate staff, and improve performance and productivity.
Financial incentives
Examples of financial incentives include:
- bonuses
- commission
- employee stock options
- paid time off
Non-financial incentives
Non-financial and non-pay incentives reward staff performance through perks and opportunities. Non-financial incentives include:
- flexible working hours
- formal recognition/awards
- vouchers
- extra unpaid leave
- gifts
- company cars
- training opportunities
- further education opportunities
An incentive scheme can offer employees extra pay as long as they reach individual or group performance targets. See .
Advantages and disadvantages of incentive schemes
| Type | Advantages | Disadvantages |
|---|---|---|
| Financial incentive | Can focus employees on hitting a target.
Places a value on achievement. |
Rewards are sometimes small.
Can demoralise if not earned. |
| Non-financial incentive | Can recognise employee priorities and lifestyles.
Can encourage attachment to business. |
Can be taken for granted.
May be inappropriate. |
| Individual incentive | Can focus the individual on achievement.
Links extra pay with extra output. |
Can be divisive.
Individual earnings can fluctuate. |
| Group incentive | Can encourage teamwork.
Can correct individual under-performance. |
Can undervalue individual skills.
May encourage bullying of under-performers. |
Some businesses allow staff to select their own benefits from a pre-defined list, eg, staff might be able to choose between health insurance and a gym membership.
Promotion and training opportunities are not strictly incentives as they are ways of fulfilling business needs. However offering employees the opportunity to access training or further education courses that aren't directly related to the person's job role with some or all of the costs met by the organisation, can work as a staff incentive.
Ensure your business avoids using negative incentives, eg, threat of dismissal. These may work in the short term, but may create a toxic workplace culture and can decrease morale and loyalty.
Tax considerations for staff incentives
There are tax and National Insurance implications for most financial incentives and for non-financial benefits with an equivalent cash value - see .
Other considerations
When offering any incentives in your workplace, ensure equality and avoid discrimination by enabling all staff the opportunity to access all available incentive schemes.
In addition, you are required to treat married employees and those in civil partnerships in the same way. For example, if you have a benefits package that is available to an employee's spouse, it should also be available to an employee's civil partner.
Staff perks: the options
How staff perks enhance the quality of working life and encourage employee loyalty.
Staff perks are generally a good method of attracting new talent and retaining employees as they are not related to productivity. Perks can encourage staff affiliation and loyalty to the organisation.
Staff perks options
There is a wide range of perks that employers can introduce to the workplace, including:
- occupational pensions
- more holidays than the statutory minimum - see know how much holiday to give your staff
- gifts, eg, on birthdays or at Christmas
- health benefits, eg, health insurance/assessments
- flexible working - see flexible working: the law and best practice
- subsidised staff canteens, tea/coffee-making facilities, or goods/services
- loans, eg, season tickets
- social events, eg, Christmas parties and work outings
- membership of social clubs or gyms
- extra training, which goes beyond the skills needed for the job
Perks: some considerations
You may want to consider the following points when providing staff perks:
- they must be perceived as worthwhile
- they must not cost the employer more to provide than the employee could get them for
- they must be worth more to the employee than any tax they will pay on them
Make sure that the perks you choose are relevant to both your business and staff.
Be careful when removing or changing any of the perks you offer. If they are part of your employees' contracts, you will need to gain their consent prior to changing any conditions or removing them. If you do not get consent, the employee may be entitled to sue for breach of contract or resign and claim constructive dismissal. See how to change an employee's terms of employment.
Tax considerations for staff perks
Most perks with an equivalent cash value have tax implications - see expenses and benefits.
Set up a staff incentive scheme
Steps employers can take to set up staff perks and incentive schemes.
Remember that pay and financial benefits are not the only things that may improve staff performance and drive productivity.
Other key motivators for employees include:
- job security
- job satisfaction
- good working conditions
- appropriate training
Setting up an incentive scheme: steps to take
An incentive scheme is perhaps the most straightforward way to motivate staff. If you are considering setting up a staff incentive scheme, you should:
Identify the incentive scheme's objectives
For example, encouraging the recruitment or retention of staff, changing the organisational structure of the workplace, or reducing any likely areas of conflict. Alternatively, you might want to encourage teamwork and motivation or to set specific targets for productivity, revenue, or sales.
Consult with staff and trade unions
This will help you identify where to aim the incentives, eg, at your entire workforce, managers, or a specific group of employees. It will help you find out what incentives your staff value most and what training they need to help them achieve a business target. See work effectively with trade unions and employee engagement.
Relate the incentive scheme to the business's remuneration system
Consider whether the incentive should be financial or non-financial. Think about how the proposed incentive will relate to other cash benefits and how much administration will be needed.
Establish any tax implications for your staff
Consider related costs and funding. See expenses and benefits, and special types of employee pay.
Ensure that the planned incentive scheme is competitive
Look at similar incentive schemes within other businesses.
Decide on performance measures for your staff
You might set targets for performance levels or work quality. See manage staff performance.
Run a pilot incentive scheme and evaluate results
See ensuring the staff incentive scheme is successful.
Regularly review your incentive scheme and obtain feedback from staff
Make sure that you document, communicate, and obtain feedback from staff to gain an understanding of what works and what doesn't work. See encourage staff feedback and ideas.
You can also consider commercial providers of benefits packages who, for a fee, can manage the staff incentive scheme for you.
Ensuring the staff incentive scheme is successful
How to evaluate your staff incentive scheme and ensure it works effectively.
Staff incentives and perks must be affordable, transparent, and appropriate to your business and the jobs they link to. For example, in a sales environment, an employer may wish to offer extra pay or benefits when sales targets are achieved.
It is also worth consulting with staff or unions before introducing incentives and perks to your workforce.
Staff incentives and perks work best alongside good pay schemes and working conditions, and can be most successful when implemented with other good management practices, such as performance management, appraisal, and appropriate communication and staff training programmes. See manage staff performance.
Establishing the staff incentive scheme
You can take measures when setting up a staff incentive scheme to help ensure its success. These include:
- briefing the workforce on the incentive scheme and how it will work and benefit them
- training supervisors to answer employee or trade union queries on the incentive scheme
- documenting how the incentive scheme will work to avoid misunderstandings
- running a pilot incentive scheme to see if any adjustments should be made before rolling it out fully
Is the staff incentive scheme working?
Establish a system that keeps a record of objectives and goals that you would like the staff incentive scheme to achieve. Remember that some incentives/perks can indirectly benefit the business, and so it may be difficult to assess their impact.
Review the staff incentives and find out through feedback whether staff value them.
Your incentives should be open to all and must not discriminate against certain staff, eg, membership of a men-only golf club. See prevent discrimination and value diversity.
Evaluating the staff incentive scheme
Set a time for evaluating the incentive scheme and involve staff or union representatives if appropriate.
Your evaluation process should aim to find out:
- whether the staff incentive scheme is achieving its objectives
- whether the staff incentive scheme is fair in terms of who benefits
- whether incentives linked to performance really do motivate staff
- how the incentive scheme is promoted and how well staff understand and buy into it
- whether staff require further information or training to help them achieve their performance targets
- how the incentive scheme compares with those of competitors or industry norms
Monitoring your staff incentive scheme or schemes is an ongoing process - problem areas should be highlighted and promptly addressed as they arise.
Using staff benefits to motivate and retain staff - Outsource Solutions
How Outsource Solutions engages with its staff and has introduced a variety of benefits to help attract new employees.
Outsource Solutions is an IT managed services provider offering IT, communications, and consultancy services. The company is based across various locations in Northern Ireland, including Antrim, Belfast, and Cookstown, and also has offices in Dublin and Scotland.
Sara Allen, Head of Communication and Culture, explains how the company engages with employees and, through incentives and benefits, retains and attracts staff.
Our approach
"The organisation is committed to creating and maintaining a company culture that values staff and actively listens to them. Our regular team days, random treats, and ongoing celebrations, when we want to mark a moment of success, are a small part of this ethos. Outsource staff also have access to benefits including flexible working, health schemes, medical insurance, and a bonus day off on their birthday. We believe that our approach and some of these benefits help to contribute to increased staff engagement and employee retention."
Promoting a healthy work-life balance
"The importance of work-life balance is recognised by Outsource, so flexible and remote working is open to all staff. The only exception to remote working within the company is for our telephone 91香蕉黄色视频 team, where staff need to have a physical presence in the office for a set period. In this instance, that team benefits by personally managing their rota so that 91香蕉黄色视频 cover is always available, but individuals also get to enjoy regular time off on a rotational basis."
Offering a birthday day off
"Another benefit we offer is that staff employed for a year qualify for an extra annual day off on their birthday. If this day falls on a weekend, the employee can choose to take either the Friday or Monday as leave. Staff with birthdays that fall during a public holiday, such as Christmas, can take an alternative day. This approach works positively to boost staff morale, as employees get to enjoy an extra day off. From a company perspective, staff birthdays fall relatively evenly across the year, so absences never affect operational function on any one single day."
Focusing on health and wellbeing
"Staff health and wellbeing is an important focus within the organisation. A financial benefit we provide to staff is automatic enrolment in free healthcare when they have been with the company for a qualifying period. These employees get access to dental care, private medical care, counselling sessions, and a discounted family membership.
"We 91香蕉黄色视频 health and wellbeing events organised by staff throughout the year. We also have Vitality Champions, who we recognise and celebrate for their individual health or fitness achievements - this could include a team member who quit smoking and took up running."
Offering surprise treats
"Staff incentives don't have to be expensive. We have had a positive response to surprising staff with random treats. These can be to celebrate success, boost morale, or even just because it's Friday! We have had everything from speciality doughnuts, pastries for morning coffee, or an ice-cream van arriving at the offices on a sunny afternoon. These small gestures frequently bring a smile to faces and make staff feel appreciated."
Asking staff for their opinions
"Outsource places importance on listening to staff. We value feedback from every member of the team. The company actively makes and creates space for staff to be heard. We have impromptu team huddles - these gather staff together to provide feedback on ideas. These sessions aim to allow equal opportunity for staff to share their views and opinions."
"Another way that we engage with staff is through our employee forum. The employee forum aims to achieve two-way communication between staff and management. The group meets on a quarterly basis and assembles staff from various site locations and different teams to voice concerns and table ideas for improvement. Ideas often range from suggestions for enhancing organisational processes to improving site facilities. Engaging with staff is important, but we believe that it must be balanced with implementing positive suggestions for change and delivering on any promises made."
"Other ways that Outsource makes and creates space for staff to be heard are through management open-door policies and regular staff surveys. We believe that our approach and the benefits help to contribute to increased staff engagement and employee retention We are a growing team, our motto, 'work with us not for us' is certainly bought into by our staff who give us regular positive feedback confirming they feel valued, trusted and happy to come to work."