More Carrot, Less Stick: Creating Better Incentives for Employees

More Carrot, Less Stick: Creating Better Incentives for Employees

The phrase “carrot and stick” is very commonly used, especially when it comes to work and motivation. Unfortunately, more often than not, many organizations miss executing motivating their employees, and instead rely on the “stick” part of the equation. This can result in a lot of turnover, and can negatively impact productivity significantly.

In addition, incentives were usually only reserved for people working in sales. But companies that want to take their organization — and their productivity and creativity — to the next level have utilized incentive programs, and have been successful in doing so. Basically, happy employees generally make for productive and driven employees — the less they have to complain about, the more they can focus on their work and how to improve and excel. This in turn translates to better products and / or services, more satisfied customers, and a more robust bottom line. All-in-all, it’s a win-win for everyone involved.

>> Recommended reading: Employee Engagement: Motivating People to Be Better in the Workplace

Why incentive for employees work (and why they don’t, sometimes)

There is always room for an incentive program in any organization, since in any industry there will always be people who put in years of service, highly productive employees, and just staff who generally and consistently do their job well. It’s only fitting that they see a little bit more reward than most — which motivates them to continue, and inspires others to follow their example. Which in the long run, is one of the keys to the success of any kind of company.

One thing to clarify: Incentives don’t necessarily mean a tangible reward like a bonus on a paycheck. It can take many forms. For example, highly creative people can be given an opportunity to work on a pet project in addition to their daily tasks, similar to what Google is doing for its employees. This helps them break the routine of their regular work to also exercise their skills in a way that they are passionate about that also benefits the company. Incentives can take the form of better facilities or recreational spaces; even a good interior layout for a workspace can serve as an incentive.

The point is that organizations need to be more proactive in offering their employees avenues to excel, grow, and develop within the organization, and recognizing their progress all throughout.

It is noteworthy to mention though, that incentives for employees don’t always work out the way they are supposed to. It is also possible for incentive programs to backfire. Co-workers can complain about unfair treatment during assessment for these incentives, employees can become unhealthily competitive (resulting in less productivity and less collaboration), or some may just work themselves too hard for their own good.

The Harvard Business Review reported that (in the United Kingdom at least) not all incentives had a positive effect on the organization. Profit-related incentives for employees resulted in more distrust towards management and executives (“Are they really reporting the right profit?”), while another form of incentive, share ownership, either had generally a negative effect on employees or did not make a difference at all.

>> Recommended reading: How to Create a Culture of Ownership Among Your Workforce

Only performance-related incentives for employees was seen to make a generally positive impact. The study also indicated that employers may generally believe that organization-wide benefits are somewhat better than an individual rewards system, but the opposite was shown to be true. They study showed that many employees feel that more pay was a good reward for better performance and productivity.

Developing better incentives for employees

So what does an organization need to do in order to develop an incentive program that works? Let’s look at the ways.

1. Work towards internal motivation

The goal of any incentive program is to motivate people to work. By motivation, we mean they generate that drive and passion to be better at what they do BY THEMSELVES. As opposed to FORCING one’s self to work just to get that reward at the end. Effort given wholeheartedly generates better results than when someone simply forces themselves.

2. Don’t let people focus on the reward

It’s not that you should spring some sort of surprise incentive program, but more on trying to take people’s focus off the reward at the end. You can do this by not announcing rewards, for one. Language and the way the management communicates also contributes to this. If anything, focus on the importance of the task at hand, and doing the work well. If you like giving announcements, make sure to at least temper people’s expectations. Don’t make grand promises (even if you can keep them) so people don’t fixate on the reward.

3. Be consistent

Don’t make incentives for employees a one-shot deal kind of thing. If you want to put an incentive program in place, then stick to it. In the same way that you expect employees to deliver consistent quality performance, the same should apply to any rewards that you want to give. Sure, you can throw in something surprising or even grand from time to time, but make a rewards system generally consistent. Even small rewards for daily performance (when it applies to your organization, of course) can make a difference, especially in the long run.

4. Don’t reward in secret; be transparent

Part of the reason why at times, employees distrust an incentive program rather than welcome it is because they don’t trust it. To help establish that trust and legitimize the program in employees’ heads is to keep it as transparent as possible. Reward people publicly and don’t make qualms about giving reasons why. That way, people won’t just trust the program more, but you also get to communicate and define what you want and what you expect from people before you give out a reward.

5. Get people to appreciate each other

There this thing at Google called gThanks. It’s an online tool, developed internally, where employees can give each other appreciation. reports that Google’s former Senior Vice President of People Operations Laszlo Bock created the tool, where employees can give any other employee a “kudos” for a job well done. This recognition was available for anyone in the company to see. They may not be a tangible reward, but the program is still not only wildly successful within the organization, many other companies have recognized its value and have adopted it into their own operational processes.

The effectivity of this kind of reward from social recognition is even supported by science; a study published in the National Center for Biotechnology Information indicate that merely “witnessing or hearing about someone doing something good for another person” can have a positive effect on a person, inspiring them to be better at what they do and become more productive. Even the act of recognizing someone has a positive psychological effect on the person who is acknowledging the excellent work of someone else.

>> Recommended reading: Why Google’s Company Culture Should Be Everybody’s Workplace Culture

6. Reward good ideas

This is not to say that employees can just hand out any idea to get a reward. You can, for example, create a program where employees can submit ideas that the company can benefit from. The idea can then be voted on, with the idea with the most votes winning the reward. Besides the obvious benefit, this also helps promote healthy competition, and makes employees feel valued and important, and not just expendable cogs in a massive machine. This kind of program also works with the whole idea of promoting transparency and trust, since the idea is voted on, and that anyone can submit — thus also illustrating that management does not think that they’re the only ones with good ideas.

7. Respect the way people work

For many traditional companies, workflow is standardized. “This has always been the way we do things” is their motto. However, take into consideration that employee mindsets have changed with the times. Instead, look how you can incentivize employees by giving them more freedom work in the way and pace they are comfortable with — within certain parameters, of course. We’ve said it before — incentives for employees don’t always need to be monetary or material in nature.

8. Keep things exciting

Incentives for employees that work are exciting. They keep people on their toes (in a good way) and inspire. We’ve talked about helping develop an internal motivation in employees and the benefit of psychological rewards. These are some of the ways incentives for employees can be made more exciting, appealing, and more effective. The more creative the incentive program, the more creative employees will be in their participation — creativity that may very well spill into their work, output, and productivity.

>> Recommended reading: 31 Motivational Movies That Will Change Your Perspective on Leadership

9. Finally, utilize the right tools to evaluate you employees

The whole purpose of having incentives for employees would be defeated if you did not have a way to monitor their performance and productivity accurately. Tools like’s Smart Time Tracking, for example, is a great way of keeping track of how time is spent in general, and even how much time is spent on a particular project or task. Especially when you add the Dashboard tool, data on productivity and other information can be pulled and compiled easily. You can even opt to post the data for everyone to see so the incentive program process is transparent, and everyone understands how and why people are rewarded.

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