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How financial incentives and recognition can improve productivity

Nikki drowsinessService Operations Manager. It specializes in personnel onboarding, human capital management and human resource infrastructure.

after Bureau of Labor Statistics Reported productivity rose sharply in 2020, and companies may be concerned that it will soon see a decline. With the BLS reporting that “total factor productivity” fell 1.2% last year, it may be time to consider new initiatives to excite and motivate employees. One option is to implement performance-based incentives, including referral bonuses, performance-based bonuses, formal awards, and recognition.

Referral bonuses

While referral bonuses are usually part of a company’s hiring strategy, these programs can raise productivity for several reasons. First, when a successful, high-performing employee refers a friend or former colleague to a vacant position, this often indicates that the candidate fits the qualifications of the role and has the capabilities the organization needs. In many cases, employees only refer individuals whose competence they believe reflects well on their own judgment. As a result, these candidates are likely to be high performers who will increase the organization’s overall productivity.

Second, if a referral candidate receives and accepts an offer, it can boost the morale of the colleague who referred them. The referrer will usually have a close relationship with the candidate, ensuring they work well together, and they will also feel proud to contribute to recruitment and organizational growth. This can increase engagement, which leads to better productivity.

Pay based on performance

Adopting a performance-based pay strategy can help employees avoid stagnation and encourage initiative, keeping in mind that employees who are paid the same regardless of their performance may not be pushing themselves as aggressively. In particular, once employees reach a point in seniority where their next promotion may seem distant, performance-based rewards can increase motivation and motivate high performers.

Some companies distribute bonuses based on the performance of the company as a whole, set amounts based on experience or job title or simply divide the money evenly among the workforce. One option for determining whether annual bonus amounts are based on performance-based data. Another approach might be to set salary levels for each role based on grade, with employees with the highest job grade receiving the highest pay.

Awards and recognition

Employees don’t just want higher compensation; They want recognition from leadership for the work they’re doing. With this in mind, consider using awards and recognition programs that reward and motivate your workforce. It can be distributed on a monthly, quarterly, or yearly basis based on productivity, contributions to culture, or any number of factors that you believe are essential to productivity.

In addition to the recognition that comes from the top down, invite employees to publicly praise their colleagues as well. This could be as simple as nominating each other for awards, such as “Most Valuable Player on the Team,” or sending someone a company-funded gift card to honor their hard work and contributions. These programs will help create a culture that values ​​achievement and encourages employees to stay productive.

Leaders who are concerned about employee productivity can easily overcome these challenges by pursuing an achievement-inducing strategy. Regardless of the method, it is important to ensure that any option fits the organizational culture and is clearly documented. Communication about how incentives will be awarded is as important as the initiative itself. This is how a business can increase engagement and set employees up for success.

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