How to design an employee incentive scheme

uploaded on 21 June 2023

Improving employee incentive programmes can boost organisational performance by 44%. Here’s how to design an effective employee incentive scheme that motivates employees.


Employers that want to motivate employees need to create comprehensive strategies that cover a wide range of factors - from management training to wellbeing support and better opportunities for progression. But the mix also needs to include simple and effective incentive schemes that encourage employees to achieve specific targets.

Nowhere is this truer than in the field of sales. Figures from the Incentive Research Foundation show that 90% of top-performing companies use incentive programs to reward sales people. However, there is also clear evidence that well thought-out incentive schemes motivate all kinds of employees and can increase overall business performance by as much as 44%.

Too many organisations currently feel their incentive schemes don’t work as they intended. In the worst cases, cumbersome processes, and mechanisms for giving and accessing rewards leave employees feeling unintentionally frustrated rather than valued.

With this in mind – here are 7 simple tips for designing a scheme that will help you incentivise employees effectively and achieve your business goals:

7 steps to designing an effective inventive scheme:


1. Make incentives and rewards distinct


Make sure any financial incentives you provide are visible. For example, if you provide rewards through regular salary payments, they will likely get lost in day-to-day spending. Instead, provide distinct rewards through separate channels like prepaid cards or eCodes that recipients can swap for gift cards. Employees are much more likely to value such payments and use them for treats they will remember – in turn, this will incentivise them to be more productive and perform better.


2. Reflect people’s experience as online consumers


Go digital and ensure employees can access the incentives you provide easily online or through an app. As online consumers and users of social media, employees want and expect the same experience from their interactions with their employer. Digital reward systems also provide choice: employees can choose from a range of rewards that they can tailor to their needs and will value more highly.


3. Aim for immediacy


When you deploy an online recognition and reward system, you can also empower management teams to issues rewards ‘in the moment.’ One of the biggest problems with many older incentive schemes is the length of time it takes between earning and receiving reward. Rewards need to be immediate to encourage repeat behaviour.


4. Recognise the small acts as well as bigger achievements


Recognise and incentivise the ‘big’ achievements, such as reaching a sales target, but also reward the smaller acts of teamwork that contribute to the overall success of the organisation. Both kinds of recognition combined gives employees a stronger sense that they are valued. Saying a regular thank you also builds trust and rapport that incentivises people to do their best work.


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5. Celebrate success


Publish who has been rewarded via your incentive scheme through monthly newsletters and social channels. Also, give those people a voice. Ask them to share their tips for achieving success, how they will spend their reward and what they are aiming to achieve next. This will help to raise awareness of your scheme and drive ongoing engagement.


6. Make rewards and incentives consistent


If you have implemented a digital rewards and recognition platform, use the management information it provides to ensure that incentives are being distributed equitably and consistently across your organisation. Word will soon spread if it is not – which could have a negative impact on overall workforce motivation. If appropriate, you can also use the data to ensure you are meeting DE&I targets.


7. Ease the administration burden


As administrator and owner of the incentive programme, make sure you also do yourself a favour. Modern recognition and reward platforms provide you with all the tools you need to set up, automate, and communicate your incentive programmes online with ease. As well as helping to ensure you provide an efficient and effective scheme that is truly valued by your employees – this will help you save hours of admin time.

Find the perfect employee incentive scheme for your company

At Edenred we provide the reward mechanisms you need to set up, manage, and deliver targeted incentives that make a real difference to your employees' performance. Find out more about how we can help.

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