Role Of Incentives In Employee Motivation | 3 mins read

How Incentives Play a Role in Motivating Employees

how incentives play a role in motivating employees
Dakota Sheetz

By Dakota Sheetz

Introduction to Motivation and Incentives

Business professionals should not underestimate the role of incentives in employee motivation. Research shows that an incentive program increases a company's overall profits by $104,000 a week and can increase employee motivation by 85%.

What are Incentives in the Workplace?

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An incentive is any valuable or desired item, object, action, or event that encourages an employee to perform more of the good work that the reward recognition acknowledges. Within a work environment, incentives can range from a financial incentive to nonmonetary recognition.

Employers regularly use an incentive system to increase employee engagement and employee performance levels. Rewarding employee performance and recognizing good work can support long term improvements to business bottom-line profitability.

Various incentive reward examples include-

  • Financial incentives- Bonuses, salary raises, profit sharing opportunities, signing bonuses, and technology allowances. A financial incentive will motivate employee performance and employee engagement in a direct, immediate way.

    On top of these everyday incentives, employees may be given long term incentives to look forward to, including mid-year and end-of-year bonuses. A financial incentive will help show your employees that you value them and the good work they produce for your company.


  • Recognition incentives- These employee incentives are generally nonmonetary such as taking time to personally say thank you to employees. If you want to get more creative you can create awards to publicly recognize employees who consistently perform good work and consider rewarding employees publicly.

    Employee recognition for good work performed can positively affect the work environment of your business. Practice employee recognition as often as possible, whether daily, weekly, or monthly.


  • Reward incentives- These incentives can be a mix of nonmonetary and financial incentive rewards and can include gifts, gift certificates, or service award presents.


  • Appreciation incentives- These incentives can also be a mix of nonmonetary and financial incentive rewards and can include company parties and paid social team-building outings.

    Working from home, flexible work hours, and other employment perks should be implemented into your employee incentive system. The great news is that these perks can not only increase your productivity but will also help with long term employee engagement and satisfaction.

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How do Incentives Improve Employee Motivation?

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An incentive program will increase a company's overall profits by $104,000 a week on average and will additionally increase employee motivation by 85%.

An incentive system is one of several long term employee engagement and employee performance strategies that business professionals should consider in order to optimize their work environment and bottom line.

Employee motivation is defined as the measurement of commitment, energy, and creativity that employees bring to their workplace. It is essential that business professionals consider employee motivation in order to keep long term employee engagement and employee performance levels high.

Profit increase is not the only benefit that occurs when you reward good work at your business. A motivated employee boosts a positive work environment and will encourage employee collaboration. An incentive program additionally helps employees to have a better work-life balance and job security perception.

Make sure to provide generously for good work as incentives should not feel scarce or ingenuine. For an incentive system to be most effective it must reflect the positivity and gratitude you have for your hard-working employees.

However, business professionals should be careful to transparently distribute incentives in order to increase trust in the work environment and avoid perceptions of employee favoritism.

Proper employee motivation strategies and an incentive program will assist in long term good work ethic and higher job security with less staff turnover. The role of incentives in employee motivation encourages savvy business professionals to develop and sustain an incentive system to reward employee performance.

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