If anything, the business world is extremely competitive today, like never before. In such a competitive world, more business owners are looking to improve their processes and operations to stay relevant to the market as long as possible.

Some of the oldest companies in the world, like Kongo Gumi, manage to stay so relevant even today because they were able to evolve and lead the employee right.

On the other hand, some of the world’s biggest companies of today, such as Apple or Microsoft, are continually pointing out how they were able to grow so much because they had the right people.

Did you know that Microsoft is one of the first companies that listed their employees’ knowledge as their intellectual capital? That’s how important people are. However, not every company can pay engineers with a blanco check, especially if the business is just starting.

Before companies reach that maturity level to have hundreds of employees and an opportunity to focus only on the company’s knowledge, every company needs to go through specific growth phases.

Once again, companies are usually focused on cutting costs and having already highly motivated and productive employees.

Interestingly, as small businesses need to get more from their employees, at the same time, their employees are looking more from the business.

Because this is a global phenomenon, a reward, and recognition system were developed globally so companies can actually motivate their employees to reach top results.

This is where incentive plans step in. Today, incentive plans are used as powerful tools for driving employees’ profitability, and above everything – employees productivity, within the organization of any size.

That being said, you should know that incentive plans are not something this is here to be tested.

No, incentive plans are well-designed tools that even healthcare organizations, manufacturing plants, and even U.S. government departments have been using to encourage specific behaviors, drive extraordinary outcomes, and overall create better businesses.

To know how you can use the incentive plans within your organizations, let’s really understand what incentive plans really are.


For a company to kick off its operations and process good plans in need. To achieve greatness, every company needs incentive plans. What are incentive plans really? Simply said, they are methods.

Incentive plans are specially shaped methods in which employees of an organization are motivated continuously for their work, and are always given incentives on accomplishing mutual goals. Is it similar to philosophy: if you do a good job, you get a reward? Truth be told, yes.

The only difference here is that incentive plans are equally distributed to every management level. That way, lower-level employees, middle management, and senior management are similarly driven to achieve great results.

Incentive plans are designed to motivate groups and individuals to perform better. Here is how.


Incentive plans go beyond an excellent salary. It’s about building a unique work-reward philosophy, that’s easy to scale and applicable on every level. First of all, a good salary and bonus should be a matter of any job.

Secondly, incentive plans are about future results. About going that extra mile. Again, what’s the main difference between bonus and incentive plans? You give a bonus for a well-done job, but for doing a job well, you always offer an incentive.

Every good incentive plan comes with five different, but yet linked pillars. That being said, a good incentive plan is always:

  1. aligned with goals and results
  2. studies the compensation mix
  3. counts on individual workforce
  4. matches the speed of business
  5. creates easy to communicate surrounding

These five elements can be compelling if you include them carefully and with a good plan. Incentives can be compelling motivators, but only if you get them right, and implement them the right way.

Now, let’s see what incentives encourage employees the most to contribute and achieve goals.


We are all different. Usually, as an individual, we are all driven by different values. Therefore, we need proper drivers to get us going.

For some, having a salary on time is enough to feel motivated and do the job. Accent on DO THE JOB.

Doing the job is easy. You just have to follow the rules and do the minimum. For others, a work motivator is being rewarded for going that extra mile. This is where incentives step in – to drive specific behavior and performance.

Even if different things drive your employees, and they are passionate about various things, you can still motivate them to be effective. Moreover, you can design specific incentives that are aligned with company goals. Here is how. 


People love to know that they matter. After all, no man is an island. Being a part of the society, of company, of a team means that you use specific skills all the time.

After all, to reach specific results, you need to use particular skills, and you should be rewarded or at least appreciate your expertise, right?

So, when an employee is genuinely appreciated and valued in a business environment, higher are the chances to evoke engagement and a sense of satisfaction. Also, satisfied employees are more prone to creating a positive environment and a good work ethic.

Ask any employee if they would love to be recognized for their hard work and endurance, and they will say – yes. If they say otherwise, they are probably not telling the truth.

Recognition can be done in a monthly email of achievement and success or expressed in any other manner that is relevant to the employer.

Variable Pay

Variable pay is usually linked to individual employee performance. However, it can also be linked to specific revenue or a team’s contribution. In general, variable pay works by adding on the existing salary.

In addition to the base rate of pay is paid out as a bonus or even as a commission for performance that exceeds and meets certain expectations.

For example, when companies are serious about implementing variable pay, they’re meticulous when it comes to the revenue targets or even customer acquisition numbers that must be met for the calendar or even a fiscal year.

The primary purpose behind using variable pay is the part of an incentive plan as a big motivator to work harder. This is also a standard method used to achieve specific strategic goals. But, what is a variable pay exactly?

Variable pay is a pay-for-performance compensation program. This method is the main reason why some companies choose to pay employees less than the competition but tend to offer significantly higher pay-for-performance for great work. Simply said, an excellent incentive pay package can provide an optimal challenge.


This may sound expected, but rewards can do wonders for everyone’s motivation. Bonuses philosophy has been used in America for decades, and in some industries, bonuses are everything.

Some claim that bonuses are the capitalist product and that they even support the – time is money approach, meaning that how much time you invest in your work, that’s how much you will be paid. However, time isn’t everything when it comes to performance and good work.

Some people can invest significantly less time in specific operations, by simply mastering the area. Moreover, some people can even create their own hacks to perform faster and better.

Bonus programs are straightforward: they are designed to recognize individual accomplishments and encourage people to create extra profit.

The exciting thing about bonuses is that business experts advise small business owners to use bonuses as much as possible.

They see bonuses as a great way to motivate people in the early business stage. This will also give them a higher sense of purpose and let them even recognize specific accomplishments among the group. However, bonuses can also be tricky.

It’s highly unlikely for someone to be motivated with bonuses their entire career. That being said, it’s far better and safer to see bonuses as short-term motivators.

Always chasing bonuses can lead to employee’s burnout and eventually create stress in the long run. However, you should lose from your sight that bonuses are still powerful tools that should be used to encourage, motivate, and drive future top-level efforts.


People love having ownership over something. It can be a piece of a daily routine, office space, or merely a small, or even significant, part of the company.

Owning something is a huge motivator for some people. So, profit sharing is something that you should think about. You see, when you let people own a company, they will see it as theirs (because in a way it is theirs), and they will treat it as theirs, normally.

Typically, the amount given to an employee is usually equal to a percentage of the employee’s salary, and it’s often distributed over a year. What is there for the company? 

This way, a company will keep costs low, and people locked within the company. Profit-sharing is an excellent idea if you want to reward employees for their contributions to a company’s profit goal.

Usually, a specific profit goal must be achieved. A well-designed profit sharing can motivate employees to stay put and invest in their work because they have the ultimate goal – to own a piece of the company.

Also, this method can be an excellent tool for a healthy team spirit – everyone can work together to achieve a specific profit.

Still, profit sharing is something that should be planned and implemented carefully. This should go without mentioning it, but profit-sharing – if promised, must always happen. Otherwise, it’s just management propaganda that can put your company on a lousy reputation.

As you probably know, there are significant sites that review the company’s lien for free, and everything can know how good or not you actually run your business.

Stock Options

Stock options are the number one solution when it comes to rewarding management. In past years, stock options were only available for middle management.

However, with new approaches to reward and recognition, this option became popular even in lower management. It’s equally used both in start-ups and mature companies.

How do stock options work? Stock options have become a prevalent method lately of rewarding middle management and other employees as well.

Stock options are used as long-term motivators, and their primary purpose is to reward employees for being loyal to the company. Employees must spend four years in the company before they become eligible to enter the program for stock options.

Although the majority of incentive plans are shaped toward the individual, there are particular steps when it comes to group work. Therefore, group-based reward systems are present as a separate category.

Group-Based Reward Systems

Small businesses are usually heavily focused on growth. Therefore, they tend to forget to treat each department equally and overall to keep departments connected.

Frequently, in recent years business owners are looking for effective ways to reward teamwork and strong cooperation between various departments and individuals as well.

So, to reward a group effort, you can also use bonuses, stock options, and profit-sharing, as long as they are based on team performance.

These group systems are shaped to encourage individual efforts toward common business goals, as well as above-average employees.

When a reward program recognizes personal achievement next to team performance, it can provide extra incentive for employees.

Recognition Programs

It’s crucial for business owners to understand that cash is no longer the ultimate motivator for employees. The time when it was enough to reward an employee with only a wholesome bonus is gone. People want more. Nowadays, everyone is aiming toward the life-work balance.

Baby boomers are retiring, and MIllennials are taking over, meaning that the workforce is profoundly different today than only 50 years ago.

Yes, five decades ago, a salary bonus was great to take the entire family to the nearest National Park and camp for two weeks. However, today that’s not enough.

Millennials want to travel the world and to explore the diversity of it while they are contributing to the world.

So, money is important to them, but money is not the primary drive. Recognition took another level in modern time – it’s about the value. Do you really know your employees? Do you really understand what drives them, or what they are passionate about? This knowledge matters.

If your top employee is passionate about saving the Planet and you reward him or her with unlimited drinks in plastic bottles, that can only drive future low results. Why? You have entirely missed the core of your employees’ values and beliefs. That’s something that no one will forgive you.

So, when you start thinking about rewards, think about YOUR employees:

  • what drives them
  • what they talk about often
  • do they share their hobby at work

Take small things into consideration, and if needed, go that extra mile. Otherwise, you can expect a variety of problems with incentives.


Incentive plans can be tricky if they are now planned well and executed right. Moreover, in the majority of cases, incentive plans can be tricky for employers. After all, employers are responsible for make it or break it situation.

Any type of reward system must be well planned and think through.

For example: if you provide incentive sales for staff, you actually guarantee that there will be no teamwork.

Moreover, you are guaranteed at the sales force won’t work together to make sales. If you are only rewarding individuals, why should there be any team effort? That being said, you should think about the collective mindset and try to drive teamwork to reward employees.

Simply said, provide a team incentive and follow up on individual contribution and see if there is space for further individual and team incentive plan. Inspire people to work together and interact with each other.

Inspire them to share knowledge, their best methods, and, if needed – answer every technical phone call in the beginning. Don’t forget – high results require teamwork.

If you are sure that an incentive plan is what you need, make sure that you take enough time and peace to plan it right. That being said, when it comes to planning an incentive program, make sure that you are actually rewarding the specific and actual behaviors that you want to incentivize.

It’s easy to emphasize the wrong behaviors. In general, people are prone to glorifying wrong or corrupt practices easily. They need more time to recognize well-shaped and productive states. Therefore, it’s essential to know how to provide incentives.


People are, in general, afraid of things that they don’t know or they don’t understand. So, if there is considerable transparency in the work field, they will love it. It will make them feel safe.

Also, it can make them more prone to try something new, because they will have this feeling of doing something different from a safe zone. Therefore, reward and recognition activities should be transparent if you want to build trust with your employees.

Again, people don’t like secrets. If you insist on keeping the reward criteria and recognition process a secret, you can expect – no results. Again and again, people love to know if there is a reward. Moreover, they love to know how they can get that reward.

Creating perfect incentives is not easy, but it’s possible. If you genuinely want to create a reward and recognition work environment, and you want to use incentives to be successful, you should (as an employer), to do the following:

  1. Always share your vision with employees
  2. Explaining your reward system and incentive plans to your employees, make sure that employees understand it
  3. Communicate any specific criteria
  4. If possible, always provide positive examples. This way, people will connect more comfortable with your vision. Moreover, they will easier plan their own goals.
  5. Always set the timeline
  6. Make sure that employees have enough time to achieve their goals, and set them
  7. Every time an employee accomplish a goal, or a part of the goal, make sure to reward them
  8. Always communicate clearly with employees their contribution
  9. You can always go the extra mile and present your top employer with a letter of thank you note for overall contribution
  10. If a bigger goal is achieved, you can announce that accomplishment at a company meeting
  11. If needed, personally thank each recipient

Of course, to implement every step, you will need proper support. Having a good management team can’t do any harm.

Managers are those who can quickly implement any strategy from the bottom to the top, and drive results. Moreover, managers have the power to do so much on a daily level. Sometimes, a simple thank you can do wonders for employees.

Simple actions such as this one are showing people that you care about their life, that you understand how they have experiences outside the work office, and it shows them that you want them to be happy and thriving outside the office house. And this is everything. People should be glad to go to work, after having a lovely day with family.

Balance is great for high achievers. Keep it simple. Show that you care and share ‘thank you’ when it’s deserved. This way, you will actually build the right environment, and incentives will become an everyday thing.

This is also a great way to build a positive environment and transparent business. Further, this way, you will encourage the behavior that you want to see in your employees.


Incentives can boost business overload if they are treated right. Moreover, they can help employers reinforce with employees and even evoke specific actions and specific contributions that will help the organization succeed.

However, they must be used effectively in order to build engagement and employee motivation. They may not say it, but employees want to be part of something that’s bigger than themselves.

They need more incentives to help build the right morale and to be sure to feel appreciated for their work and their overall contributions.

For incentives to be productive, it’s essential to be understood well, and implement in the right way, so they can’t go wrong.

If treated right, incentives can provide robust and confirming recognition. If you want your organization to succeed, you must offer more.

What Incentives Encourage Employees to Contribute and Achieve Goals

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