Implementing the ‘Right’ Employee Incentive Plan can Boost Retention

Business owners are becoming concerned over the economic recovery: although the recovery is moving at a slow pace, businesses realize that with an improved job market comes employee departures.

CareerBuilder conducted a recent survey that demonstrates almost half of U.S. business owners are anxious about losing valued staff as job opportunities open. Taking measures to counteract the ‘grass is greener’ propaganda employees may be faced with employers need to initiate effective incentive and rewards programs to help hold onto their top talent.

The problem arises in finding the right incentives for a particular business. Each business has its own culture and goals, it’s important to implement rewards that will enhance employee satisfaction and morale, thereby enhancing employee retention.

BusinessTown.com explains that an “incentive plan properly implemented can drive your business ahead like a rocket ship.” Rewards and incentives demonstrate that the employer appreciates the employees. This, in turn, creates a sense of community and belonging.

In addition, incentive programs that are well-designed provide employees with needed guidance; they can also help motivate a higher level of employee productivity. But, it’s important for business owners to realize the incentive ‘fit’ must be right for the company’s structure, culture, and staff. Some initiates can backfire.

One common incentive is profit plans. The benefit of this type of plan is that it creates unity, all employees can reap the benefits. If the company does well, it reflects in each employee’s profit sharing. The downside is that this type of program is structured on base salary. Why would an employee feel motivated to enhance performance if it won’t affect the reward?

In regard to pay-based systems, the employee’s performance is what reigns. This is a strong incentive for employees to attain peak performance. But, on the flip side, “employees may feel that they deserve a higher pay-out; it can be divisive when, all too often, a top performer tells other people what a big bonus they got.”

Having employees more concerned about their individual performance and appearance than a cohesive company team effort can become problematic. It might be advisable to base rewards on the group or team accomplishments. This type of incentive program will help foster “cooperation and participation, it will also improve retention rates across a wider array of workers.”