Incentive programs can be a powerful motivator that can help to improve company productivity and make employees feel more content. Incentive programs are tricky, however, and not just any old incentive strategy will work. Starting up an incentive program helter-skelter and using it inconsistently can do more harm than good, so it is important to make sure you truly need an incentive program and then execute it in just the right way to get results.

Figure Out the Goals of the Program

Most companies want to increase revenues and improve productivity, but those goals are far too vague to actually be effective for an incentive program. Pinpoint specific things that may help to increase revenues, like selling more of a high dollar item or reducing waste. Make sure that the goals are achievable and measurable and set an amount of time for attaining them.

Determine Whether You Have the Budget

Incentive programs cost money that is not always recovered. It is important to determine how much you can afford to spend on an incentive program and look at the money that you are spending as an investment that will not necessarily have a favorable ROI. Incentive programs do not have to be high dollar, so even a small budget for an incentive program may be workable and may allow you to do a test run to see how well it works for your company.

Avoid Common “Incentive Traps”

There are a few common incentive traps that companies often fall into when they don’t have a lot of experience with incentive programs. While contests may seem like a good idea and may actually drum up a bit of friendly competition, contests end up isolating people that work hard to achieve the goal but that do not place high enough to receive a reward. Selecting gifts as an incentive may also bomb if not enough research is done, because employees may not end up caring about the gifts being offered.

Keep the Rewards Small

Small rewards for small behavioral changes have shown to work better than large rewards for large accomplishments in the grand scheme of incentive programs. When employees make small behavioral changes to receive an incentive, they are more likely to sustain that behavior after the incentive program ends – especially if the management views that behavior as favorable in general. Large rewards imply large struggles, so employees may feel relieved after a program ends and go back to business as usual.

Carefully Select Rewards

Rewards can be fun to select, but a good deal of thought should be put into selecting them. Things that employees need to buy but don’t necessarily want to spend money on, like gas or oil changes may make good rewards, or leisure rewards like movie tickets or a Netflix subscription may also work. Try to get a few rewards together to suit different interests and get an idea of what everyone likes and needs so that your rewards don’t fall flat.

Communicate Effectively and Frequently

Make sure that all employees understand the goals of the incentive program, how they can “win”, what the prizes are, and when the incentive event will take place. If the program will be continuous or ongoing, make sure all employees understand how it works. Make a special effort to drum up excitement for the program so that employees will feel motivated instead of forced to participate.