It can be daunting to think of taking away people’s cash rewards and giving them points. We get it: people like money.
But the research tells us that employees actually work harder for items they’ve personally selected – even over cash. Odd, isn’t it? People say they want cash, but don’t work for it nearly as hard.
We’ve seen it time and time again, though: organizations that switch from cash-based prizes to a well-crafted points-based program see tremendous results. Still not convinced? Here are just a few reasons why you need an employee incentive program.
Increased Work Ethic
One of the great parts about an employee incentive program is that the participants are able to select their own awards. When you’re daring people to dream – to have a goal in mind – you’re encouraging the fact that if they work hard enough, they can achieve it.
And with a tailored goal in mind, most people do achieve their goals, especially if it’s, say, a Disney vacation for their family they’d never be able to afford otherwise. Or perhaps they’re working for an air conditioning unit for their home – people are a lot more likely to work for something they know is going to bring them daily pleasure opposed to a check that will likely get lumped in to pay bills.
When you give people a dream, you give them a reason. You give them a purpose. With cash, they can stop when they have some of the money needed for their goal and think of it like getting a discount. But with points, they need to work to earn the full amount to achieve their dream. This way, you’re awarding people only when they’ve truly earned it, which promotes both an increased work ethic as well as a greater sense of accomplishment.
Once the participants have set goals & wishlists for themselves, you’re now able to leverage this information in a unique way. One of our clients, a Fortune 100 company, noticed this trend upon switching from a cash-based bonus program.
“Our supervisors now had development conversations with their employees and allowed them to take a completely different approach,” the client writes. “They talked about where [the employee] was in terms of points for the month and how many points they would need to shoot for the prize that’s specific to them. Managers could discuss what they were looking to do with those points, whether it is a vacation, a new set of golf clubs or whatever is completely tailored to their lifestyle.”
This also translates directly to effective sales discussions with customers. Instead of turning the conversation to short-term spiffs, sales reps can “play the long game” and increase business by referring to their points goal.
Not only do managers have information to help your business and encourage better performance, but they also have information to learn more about their employees as people – an important aspect for any leader.
We’ve long talked about the benefits of points & merchandise over cash (see the article Why Cash Incentives Fail for more), but one of the biggest reasons why tangible incentives work is because they’re just that – tangible.
When you reward people with cash, it goes right into their bank account with their paycheck – and thus often being spent on bills or other necessity items. When you’ve got an effective incentive program in place, the mindset shifts. Participants will think, “Hey, I can get a really nice thing for myself, and I’m not taking money off the table for my family.”
In most employee incentive programs, points roll over month to month. This means that participants can build up their points accounts in order to work towards a larger award that they’ve selected for themselves. In the process, people become more invested in their work.
Our client (mentioned above) writes, “We found that employees had more skin in the game; they were more invested.” As opposed to a monthly, short-term goal (like many cash programs are), participants will have a longer-term goal to work towards. They’re no longer looking to the end of the month; they’re looking to the end of the year.
And what does this mean for you? More engaged and invested employees, less turnover, and higher sales. Win-win all around, wouldn’t you say?
To read more about our incentive programs and performance improvement solutions, check out our services page.