Good things come to those who…work?

By Lorna Davies

Company incentives can help employee morale and retention, but with budgets tighter than ever businesses must be creative when looking for the most effective and appropriate ways to reward their employees.

An incentive is a tangible award that is earned by reaching a predetermined goal. Sales representatives, for example, may receive a prize for reaching a particular sales goal. The most common award types are travel vouchers and merchandise like electronics and gift cards. Incentives can be used for varying business types. Many firms use them to recognize employees for length of service, birthdays or other contributions. Even in this economic climate, incentives play an important role in maintaining employee morale and shouldn't be abandoned, according to Karen Renk, executive director of the Incentive Marketing Association in Naperville, Ill.

"In good times or bad, organizations are well served by creating a culture of recognition for their employees as well as their customers," she told the Washington Post.

In today's competitive market most employees have come to expect bonuses, products, and trips, but what can businesses do to allow recognition successfully? Many tech industry experts, especially in Silicon Valley, offer a range of perks and benefits to attract and keep employees. Several offer on-site benefits, which have the added bonus of keeping the employee workforce in the office more often. Give employees enough reasons to stick around and you'll likely see productivity go up.

Google is famous for its perks. The search engine giant is currently number four on Fortune's '100 best companies to work for' list. Some of the reasons why include: onsite haircuts free of charge, a state-of-the-art gym, swimming pool, ping-pong, foosball and video games all on site. Google's healthcare plan includes onsite medical staff, and employees can even treat themselves to subsidized massages. Another famous benefit of working at Google (as mentioned in our exclusive interview with Liane Hornsey - Global VP of People Operations at Google on page 44) is the 20 percent program. Google allows its employees to use up to 20 percent of their work week at Google to pursue special projects. That means for every standard working week, employees can take a full day to work on a project unrelated to their normal workload.

SAS repeatedly tops Fortune's list due to the company's impressive employee perks. Employees of the SAS Institute, the world's largest privately held software company, are offered on-site healthcare, high quality childcare, summer camp for kids, car cleaning, a beauty salon and a 66000-square foot gym! Whilst most companies are a little too cash-strapped to offer the array of choice at SAS and Google, it is worth taking note of the successful employee retention of organizations that treat their staff. Last year, with revenue up more than 20 percent, Google sweetened this already rich pot of perks by giving every employee a ten percent pay hike. Googlers can also award one another $175 peer spot bonuses - last year more than two-thirds of them did so. Whilst this may be a more difficult idea bring in on a small business basis, companies can still utilize the peer-to-peer awards with simple employee of the month votes and smaller prizes such as gift cards on offer.

Health incentives

Fidelity Investments, a leading service provider of employee benefits, in conjunction with the National Business Group on Health (NBGH), have released a study that found financial incentives have taken on greater importance in the drive to increase employee participation in health improvement programs. The survey, which looked at the behaviours and offerings of 147 mid- to large- size companies in various industries nationwide, is a follow up to previous research by the pair in 2009.

According to the study, employers utilized several different types of incentives in 2010 to encourage employees to participate in health improvement programs. These included offering cash and gift cards and making additional contributions to health savings accounts, along with more punitive efforts such as reducing employer contributions to health plans if employees didn't engage in any programs. The incentives provided by employers averaged a total of $430 per employee in 2010, which was a 65 percent increase from $260 in 2009.

Half of all companies that provided such incentives in 2010 also offered them to dependants of employees, at an average value of $420. A small number of companies (12 percent) utilized negative incentives to encourage participation (reducing employer contributions to health plans for those not participating). More employers (62 percent) were offering incentives last year than in 2009 (57 percent).

Small business tips

Providing Google-like perks may seem like a struggle in these dollar-stretching times. So what can small businesses or even larger cash-strapped ones do to encourage their staff? Rewarding employees by improving their work/life balance can often prove a top incentive. Things like providing telecommuting opportunities  can allow for productivity and freedom for employees. Another idea is to devise a flexible schedule plan such as offering a four-day working week. Some companies allow this kind of schedule all year round while others offer it only during the summer months. Also, consider allowing flex scheduling which allows employees to, for example, adjust their working hours so they start and leave later in the day. Team-building, morale-boosting activities are also more cost-effective incentives that also improve productivity by existing outside of the office space.

Often, it is a simple 'thank you' that employees need to feel appreciated. Gestures of gratitude such as giving an unannounced half-day on a holiday staffers don't usually receive time off for, such as on New Year's Eve or President's Day, can be great morale boosters. Another incentive could be work-based, such as providing staff with the opportunity to work on a high-profile project, such as a task force or committee. This is one of the more creative ways to rewards employees as it not only gives the employee more visibility within the organization,  it also provides him or her with valuable work experience. Gift cards to grocery stores or gas stations can be both convenient and economically more viable than larger presents, so try this for a money saving incentive.

Diane Shaddock, the founder of Easy Small Business HR, Employee Hiring and Managing Tips, offers some further tips for cheaper incentives.

"Offer extra incentives for excellent performance during quality checks," she says. This can be an asset to both employee and manager. "Recognize employee accomplishments publicly. You might publish it in the company newsletter, announce it over the intercom system, or applaud it at a corporate gathering. Also, try entering a recognition letter into the employee's personnel file or hosting home cooked meals for staffers. Treat employees and their spouses to lunch or dinner and finally: be a good leader (this one, of course, is a smart way to retain employees no matter what your budget!)"

"As a small business owner or manager wondering how to reward employees, don't fall into the trap of thinking you're limited by a less-than-ideal budget. Retain your most valuable asset - your employees - by recognizing their hard work and boosting morale. Start finding ways to reward employees," says Shaddock.

Through the Employee Hiring and Managing Tips podcast, blog, and weekly 'quick tips' e-newsletters, Dianne offers expert advice on how to make better hiring decisions, manage difficult employees, develop employee policies, motivate staff, and more.

Incentives can be an excellent way of motivating, engaging and retaining staff. But as not everyone has Larry Page and Sergey Brin's (Google founders) budget - often smaller perks can provide just as rewarding and valuable.

Recent news

Idaho lawmakers are considering ways they can stimulate job growth in the area to help spark the state economy after an employment drought. A group of Idaho chambers of commerce weighed in on Tuesday, February 8, introducing a measure that would give businesses more incentives to create new positions. Named the Idaho Chamber Alliance, the bill will now get a hearing in the House Revenue and Taxation Committee. The bill would allow an employer to receive a portion of their new employee's income taxes - in the form of a four percent refundable tax credit of a new employee's gross wage. Companies would have t o hire new people earning at least $12 an hour with benefits to receive the credit. The chambers say that the money returned to companies would go into hiring more workers and growing their business, Bloomberg reported.

Accountemps, a provider of staffing services for temporary accounting, finance and bookkeeping professionals, conducted a recent survey that zeroed in on perks employees want. Conducted by an independent research firm, the survey includes responses from more than 1400 CFOs from a stratified random sample of U.S. companies with 20 or more employees. The CFOs were asked, "What perks, if any, is your company offering or planning to offer in 2011 in an effort to attract and retain employees?" Their responses included:

-       Subsidized training/ education - 29 percent

-       Flexible work hours or telecommuting - 24 percent

-       Mentoring programs - 24 percent

-       Matching gift programs - 13 percent

-       Free or subsidized lunch or snacks - 11 percent

-       Onsite perks such as childcare, dry cleaning, fitness center and cafeteria - 11 percent

-       Subsidized transportation - ten percent

-       Subsidized gym memberships - nine percent

-       Sabbaticals - eight percent