Article
December 13th, 2023 · 4 min read
These are the employee incentives your workers actually want
The allure of break room pizza parties and sign-on bonuses has lost its luster. While these may have been seen as enticing work perks in the past, the COVID-19 pandemic marked a shift in how employees view work. While it may be true that people will always be motivated by free food and monetary rewards, today’s employees are expecting even more from their employers. They crave meaningful incentives that resonate with their personal and professional values.
To stay competitive in the talent market and keep employees engaged, it’s imperative that HR leaders periodically revisit employee incentives and adapt to meet the needs (and wants) of their people.
The power of employee incentives
Any type of recognition, reward or initiative that’s intended to boost employee morale and engagement can be considered an incentive. The idea behind offering incentives is that employees who feel appreciated and recognized for their contributions are happier, more productive and more likely to stay with the company. Traditionally, monetary incentives, such as bonuses and merit increases, have been the default choice for many organizations looking to improve engagement.
As the workplace has evolved and workers have grown to expect more from their employers, this list has expanded to include other types of incentives that prioritize employee well-being and professional development. More on this next.
Types of employee incentives
There’s a wide range of incentives that companies can offer. Some examples include:
- Financial incentives such as bonuses, pay increases and profit-sharing
- Flexible working hours and location (e.g. hybrid or remote work)
- Education and skills development incentives, such as access to training courses, degree programs or professional certifications with partial or full-tuition coverage
- Employee recognition, such as awards or rewards for performance
- Health and well-being incentives can include gym memberships or access to free or discounted childcare
- Professional development opportunities such as a stipend to attend industry conferences
This list isn't exhaustive. Ask your employees for their opinions to possibly uncover even more incentive ideas.
How to uncover employee motivations
It pays to do your research before implementing incentives that may or may not be on workers’ wish lists. There are a couple of ways you can go about this.
- Survey the competition
Take a look at competitors with a strong employer brand. What incentives are they offering? What benefits do they have on their roster that your company may be missing? Are these benefits trending in your industry? This type of competitive insight can help you identify gaps. - Go directly to the source
It’s likely that you already send out some type of employee feedback survey. Consider including a few questions related to incentives such as, “What resources, programs or tools would help you achieve a better work/life balance?”
Keep in mind that incentives should not take the place of real benefits. These are bonus perks that can help boost morale, recognize high-performers and attract new talent to your company. But an incentive is not going to make up for poor compensation or lack of competitive benefits.
Are employee incentives taxable?
In the U.S., any employee incentive that has monetary value is taxable, including prizes and awards.
As always, there are exceptions to this rule. The IRS states that de minimis fringe benefits are not subject to taxes. These are small incentives that include things like occasional employee snacks, holiday gifts and tickets to entertainment events.
3 employee incentive programs to make your company stand out
Here are a few not-so-common incentives you might consider implementing:
- Tangible career advancement opportunities
In a recent survey, 94% of employees said they would stay longer in their current role given better opportunities for advancement.
This starts with making employees aware that opportunities for internal career mobility exist and providing them with the tools they need to build clear paths for advancement. Many companies lean on career pathing for this because it helps employees align learning and development opportunities to their career aspirations.
This incentive can also motivate employees to engage more with your L&D programs because they’re given a better view of how learning can lead to tangible career outcomes within the organization. - Access to education
Access to education is a powerful incentive for employees eager to develop their skill sets and advance their careers. When coupled with career mobility, these two incentives complement one another as employees are rewarded for engaging in learning initiatives with better career opportunities.
People crave career progress. In fact, “progress towards their career goals” is the No. 1 motivation for employees to learn according to LinkedIn’s 2023 Workplace Learning Report.
- Employee wellness initiatives
Commit to providing incentives that focus on reducing stress and burnout. This can include things such as free yoga classes, access to mental health and mindfulness resources (e.g. apps including Headspace, Calm), as well as ways to improve fitness and quit smoking.
Employee well-being has become a top priority, thus a leading employee incentive program, and for good reason. In a Gallup research report, employee wellness proved to help reduce levels of burnout, better social well-being, and increase levels of belonging and feeling of thriving. Organizations gain value too. For instance, the cost of voluntary turnover due to burnout is 15% - 20% of payroll budgets each year. That means employee well-being amounts to hundreds of millions of dollars saved annually.
Employee incentives are here to stay
A pitfall to avoid is using an incentive strategy as a replacement, or an excuse for the lack, of critical employee benefits including paid time off, health care and competitive compensation.
It must be reiterated that incentives don’t replace benefits or other influential parts of the employee experience such as a safe working environment. Incentives fail most often when they are treated as bandaids and used to cover greater problems that are present and unaddressed within the company.
Given effort on the part of the organization to provide a safe, inclusive work environment, adequate pay and career prospects, incentives as a second priority can help to strengthen your company’s working culture and keep employees motivated and engaged.
Discover more employee benefit resources: Research shows that despite being a popular benefit offering, tuition reimbursement often goes underused. Unlock more findings like this in our latest report, “Why employees want more than tuition assistance.”
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See how a partnership with InStride can meet the challenges of tomorrow, with action today.
