In today’s fast-paced business environment, companies are always looking for new and innovative ways to boost productivity and stay ahead of the competition. And it has to be said that your staff play a key role in this. Your workforce is a vital part of your business and it is essential that you keep them motivated and engaged. One of the most effective ways to do this is through incentivisation. 

Incentives can actually take many forms, from financial rewards to more intangible benefits like increased autonomy or career development opportunities. However, finding the right type of incentive can be a challenge, as businesses have to balance the needs of their staff with their own ability to stay profitable and successful. 

In this article, we will explore the different types of incentives that are available to businesses and examine the pros and cons of each. Whether you’re a business owner, manager, or HR professional, this article will provide valuable insights into how to motivate and engage your staff, and help you make informed decisions about the best way to incentivise your team.

Understanding Incentivisation: What is it and why does it matter?

Incentivisation refers to the process of motivating and encouraging individuals or teams to perform at their best. It’s a crucial part of staff management, as businesses compete to find new and innovative ways to get ahead. 

Whether it’s through financial bonuses, flexible working arrangements, or career progression, incentives are a key way of improving performance and boosting employee satisfaction.

“The benefits of such incentives programs are not just financial,” says Hugh Bachmann, writing for McKinsey. “As the war for talent intensifies and com­panies grapple with record numbers of resignations, the retention of high performers has increasingly become a top priority for executives. Compensation is a key reason why people switch jobs, and providing financial incentives can help organisations retain their top employees.”

But, of course, it is important to say that incentivisation is not just about handing out rewards and bonuses. It requires a deep understanding of what motivates employees and a carefully crafted approach to implementing incentives. By finding the right balance between financial incentives, work-life balance, and personal development opportunities, businesses can drive up productivity, improve morale and boost staff retention.

85% of workers say that they feel more motivated to work hard and remain with a company when they are supprorted and have an incentive. However, it is important to remember that there is no one-size-fits-all approach to incentivisation. The most effective incentives will vary from one business to another and you will consider your employees, tailoring incentives to meet their specific requirements. 

Cash incentives

Clearly one of the most valuable ways to incentivise staff is to offer them more money. Primarily cash incentives come in two forms: pay rises and bonuses. Both of these can be effective ways to encourage more from your staff, especially if any increase in money is tied to excellent performance of the job. 

You might also consider matching pension contributions or paying for training to be a form of cash incentive. However, it is not the case that everyone believes that cash incentives are the right way to motivate. 

“Intuitively, one might assume that monetary incentives are the most effective reward system,” says Lydia Stevens, writing for Preciate. “People like money, so monetary rewards should increase effort and maximise productivity. Despite this common assumption, research shows that higher rewards don’t always lead to more effort and employee engagement.” 

Non-monetary incentives

The incentives that fall into this category can be extremely broad – it essentially covers any kind of perk that doesn’t offer a financial reward to staff. However, it is important to take this kind of incentivisation seriously.

If you only ever offer financial rewards to your staff, you are teaching them that their only value at work is in monetary terms. This isn’t good for your business and it isn’t good for your staff either. Incentives are all about providing staff with a reason to work to the best of their ability and show them that they are appreciated. This should be the focus of your incentives. 

Some of the most popular non-monetary incentives include employee recongiiton and praise schemes, as well as earning extra days off. It might also include team days and outside-of-work activities. 

Offering shares

One way that falls potentially somewhere between cash and non-cash incentives is offering employees shares in the business. For example, there are possibilities such as the EMI Share Option Scheme in which “certain employees are permitted to acquire rights to the acquisition of its shares at a fixed pre-agreed price (known as the ‘exercise’ or ‘strike’ price) at a date in the future. This price will normally be the market value of the shares at the time the option is granted.”

A scheme like this is actually an extremely tax efficient way to provide shares to staff. And allowing your team to have a stake in the success of the company can make them bound to produce their best work. If they know that they benefit from the overall success of the business it makes them more likely to give it their all. 

Incentives can take many forms, and HR and management must work together to determine the best approach for their organisation. They must consider factors such as the company’s budget, the desired outcomes, and the preferences of employees when selecting incentives. Furthermore, they need to ensure that incentives are fair and equitable, and that they align with the company’s values and culture.

Ultimately, you will know your business best and it is important that you take steps to offer incentives that your staff genuinely want and would benefit from.