Employee incentives are used by many US companies given their proven ability to attract talented employees and keep them engaged.
Employee incentives are used by many US companies given their proven ability to attract talented employees and keep them engaged. The Incentive Research Foundation estimates that approximately half of all US business have some form of reward programs in place, spending approximately $100bn a year on them. This industry has doubled in volume and worth over the past decade, and there are now more options than ever available to US organizations who want to boost their bottom line by investing in human capital. Below you will find an overview of the types of employee incentive programs available in the United States.
Before going into the types of incentive programs available, it is important to establish the reasons why they are beneficial. A report published by the Incentive Federation showed that US organizations that have a reward program in place enjoy the following benefits:
Employee incentives are also a timely solution considering the changing state of the global economy. A Conference Board study revealed that the levels of employee satisfaction have been declining since the late 1980s, and the same can be said about turnover rates. In this climate, it makes sense to invest in intangible assets like talent, human capital, and brand reputation.
For many years, cash incentives were the predominant component of many employee incentive programs. However, according to data published by the Incentive Research Foundation, non-cash incentives currently account for 46 per cent of all corporate expenditure on employee reward programs. In particular, gift cards are among the most widely used incentives, since they are being offered by approximately 62 per cent of all US firms who offer such programs. Among the benefits of gift cards we can highlight ease of administration, their broad audience appeal, and the perceived value they carry.
An interesting variation is the use of prepaid cards, which can be divided into 3 types: open prepaid cards function like debit cards and can be used to pay for goods and services everywhere. Closed prepaid cards can only be redeemed at a specific vendor (such as a restaurant or gym chain), whereas restricted cards are only valid at specific venues, being similar to traditional gift certificates.
Employee recognition programs are another popular option due to their cost-effectiveness. Recognition can come from the management team or from other employees, and can be expressed using traditional and digital means, such as bulletin boards, e-cards, a "wall of fame", or social networks. AT&T, E.ON, and Walt Disney World are good examples of how recognition programs can benefit organizations and the people who work for them.
Wellness incentive schemes can help improve staff retention levels and reduce costs by up to 25 per cent. These are typically incorporated into employee healthcare plans, and according to the Care Continuum Alliance, they are being used in nearly 90 per cent of all surveyed health plans. Examples of effective wellness incentives include fitness classes, gym memberships, and support with smoking cessation plans or disease prevention programs.
Lastly, safety incentive programs are used to promote safe lifestyles inside and outside the workplace. These often involve a gamification element, where employees are rewarded for promoting safe practices or for helping create a safer environment. Typical safety incentive programs include appointments to lead safety committees, defensive driving lessons, and rewarding safe behavior with prizes and trophies.