Size your Employee Incentive Programs!

Size your Employee Incentive Programs!

Posted by Stephen on Mar 9, 2015


When it comes to your employee recognition programs a big reward may not always give you the result you are looking for when it comes to your employees hitting their goals. Hitting goals is the big picture and you need to make sure that your employee incentive programs are 'Proportionate' and have a good ROI. But how do you establish an ROI?

Budgeting & ROI

As a starting point you should begin by allocating a budget of 1-2% of your monthly payroll dollars to be used for the employee incentve programs. So if your payroll is $25K, a monthly budget of $250-$500 for recognition rewards is recommended. Based on this allocation you can then get a quantitative return at the end of the month, establish an ROI and scale your program to deliver bottomline results! (Review our smart goal example below in blue to give you a detailed plan on how to do this). But be careful, you need to make sure you create a recipe for success by using the right ingredients...

The Secret Sauce

Recognition awards may be too small if they do not incentivize your employees to participate and engage. Employees may also disengage because they feel the reward is too far away or because there is only one winner. So the secret is getting the right balance of rewards that:

  • are equitable to the goal
  • engage daily, weekly and monthly
  • are distributed to multiple team members

Goal Difficulty

Perfectly balanced employee incentive programs  take into account the energy necessary for the employee to hit that goal. Would you expect a Sales Person to double his quota if you offer him a $5 Starbucks cards? Probably not. Would you expect your customer service team to close twice as many service tickets in half the time for a $10 Gift Card? No, because it is not realistic. So when allocating your 1-2% of payroll think about the SMART goal you are setting for your employees and make sure that the reward is equitable.

Rewards & Timeframes

The second ingredient to successful employee incentive programs is a carefully distributed recognition awards over multiple time intervals. Creating contests that are too lengthy or too short will be detrimental to the engagement and participation of your team members! We recommend creating 30 day timelines using  CrewHu's Contests tool (an employee recognition software platform) to help you drive a specific goal. But only offering the reward at the end of the month is dangerous and not advised!

We suggest creating additional spontaneous and weekly rewards within the 30 day period so that all of your employees feel that recognition awards are always around the corner. This anticipation keeps your employees on their toes and consciously active to achieve your SMART goals. Spontaneous rewarding is made easy and fun with the CrewHu value based badges which can be customized to any value and is associated with a specific reinforcable behavior.

Bonus: Smart Goals Examples

So you've decided that you will dedicate $500 to your employee rewards this month by creating a contest to boost sales for your 5 person sales team! You've set two SMART goals: 

"Increase Sales Rep Average Monthly Sales by 10%"

"Increase sales rep average weekly sales by 2.5%"

You have then decided to disperse your rewards in a CrewHu Contest that will give anyone who reaches their goal weekly and an extra bonus for the person who has the highest Sales increase at the end of the month. This is what the rewarding will look like:

  • $15 Reward for hitting 2.5% Sales Increase by End of Week 1
  • $15 Reward for hitting 5.0% Sales Increase by End of Week 2
  • $15 Reward for hitting 7.5% Sales Increase by End of Week 3
  • $15 Reward for hitting 10 % Sales Increase by End of Week 4
  • $100 Reward for Employee with Highest Sales Increase at End of Month

Based on this calculation you will spend at most $400 in Rewards leaving you with $100 left in your budget to allocate to CrewHu badges that you will create worth $5 each to be given out spontaneously! A 10% increase in your Sales would be equivalent to $3000 additional monthly profit which cost you $500 in rewards yielding a 500% ROI, Woohoo!


Winner Vs. Winners

When managing teams of employees the amount of people who can win rewards plays a major part in your contest's success! While you can create a contest that only one person wins (called a winner takes all) a better strategy is to allow for multiple winners (called a goal based contest) or a ranked method (called a places contest 1st 2nd 3rd ) Creating a multi-winner contest (as described in the SMART Goals examples above) creates a more collaborative and supportive environment and ensures that everbody who deserves to be recognized gets recognized for their effort.


The end game just like anything else is a positive return on investment! By utilizing the 4Ps and creating a 'proportionate' contest you set your employees for engagement and your SMART goal to be hit! Don't forget to take the other 3Ps---Personal, Prompt and Public---into account when creating your employee recognition program. Make sure you're employees hit their SMART goals this month and create a CrewHu contest using the employee recognition program template below.  Stay tuned for more SMART goals examples.

FREE Employee Recognition Template [Download Now]

Topics: employee recognition

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