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5 Problems With Incentive Programs

Cassandra Rose, SPHR, SHRM-SCP

Incen­tive pro­grams are woven into the cul­ture of mod­ern busi­ness prac­tice. They are intrin­sic to how some com­pa­nies approach moti­va­tion and often serve as their only employ­ee-focused system.

How­ev­er, it’s a wide­ly debunked myth that incen­tive pro­grams are about the employees.

The truth is that they’re usu­al­ly about money.

And yet, thought lead­ers in the pro­duc­tiv­i­ty and employ­ee moti­va­tion indus­tries con­tin­ue to tell busi­ness­es that if they want to suc­ceed, all they have to do is tie a car­rot to a stick and place it just out of their team’s reach.

Why is that?

Employees Aren’t Laboratory Animals

Many thought lead­ers, busi­ness gurus and C‑level exec­u­tives stand behind this prac­tice because that’s what behav­ioral the­o­ry dic­tates. Ani­mals in lab­o­ra­to­ry set­tings will work hard­er if it earns them some­thing spe­cial. Why wouldn’t human beings work in the same way?

Because human beings are not lab rats hunt­ing for a block of cheese to sati­ate induced hunger. Human beings aren’t just moti­vat­ed by mon­ey any­more. They’re moti­vat­ed by hap­pi­ness, free­dom, human­i­tar­i­an and social caus­es they val­ue. Com­pa­nies can’t just hold up a fist­ful of cash and call it suc­cess­ful employ­ee man­age­ment. They must rein­vent the way they approach motivation.

The essen­tial mechan­ics of employ­ee reten­tion and inspi­ra­tion are fast-chang­ing, and con­ven­tion­al incen­tiviza­tion is a rel­ic of the past. Here are five prob­lems with incen­tive pro­grams that are impos­si­ble to ignore.

1. Money Isn’t Motivating

The idea that peo­ple aren’t moti­vat­ed by mon­ey any­more shouldn’t be con­fused or con­flat­ed with ​“peo­ple don’t val­ue mon­ey.” 84% of Amer­i­cans are finan­cial­ly stressed. Fair and ade­quate wages should remain the goal for all busi­ness­es. Mon­ey is still nec­es­sary — it just isn’t motivating.

When asked what peo­ple care about most, mon­ey ranks rel­a­tive­ly low on the list. There’s no rea­son to believe that finan­cial incen­tives pro­mote bet­ter per­for­mance or more work. Instead of wav­ing mon­ey at their team, employ­ers should think of new and inno­v­a­tive ways to pro­vide the things that actu­al­ly mat­ter to their employees.

2. Less Motivation, More Stress

The dri­ve to achieve is fun­da­men­tal­ly human. So, if an employ­er sets a goal, their employ­ees will (usu­al­ly) do every­thing in their pow­er to reach it. This can be prob­lem­at­ic for two reasons.

Employ­ees will push them­selves in ways that can be emo­tion­al­ly and phys­i­cal­ly stress­ful, which can have a neg­a­tive impact on their well-being. Not meet­ing these goals can make them feel deflat­ed, under­val­ued and even more stressed. These issues can cause a severe drop in morale and can spread through teams like a virus.

Employ­ers should pro­mote an atmos­phere that decreas­es stress and rec­og­nizes indi­vid­u­al­ized talent.

3. Lack of Rewards = Punishment

Receiv­ing rewards can feel great, but not receiv­ing rewards can be a pow­er­ful demo­ti­va­tor. Employ­ees may even begin to equate their abil­i­ty to reach goals with job secu­ri­ty. It makes sense, right? Why would a com­pa­ny keep some­one around who can’t reach the low­est met­ric of opti­mal success?

That’s when incen­tive pro­grams become dam­ag­ing. Fear and coer­cion destroy employ­ee moti­va­tion. If employ­ees feel that their work is under­val­ued or that they may be in dan­ger of los­ing their job, they’re more like­ly to look for employ­ment elsewhere.

4. Competition Fosters Toxicity

Some incen­tive pro­grams work to encour­age com­pe­ti­tion between employ­ees, which may cre­ate a tox­ic work envi­ron­ment. Employ­ees should be dri­ven to work togeth­er, not against each oth­er. Pro­duc­tiv­i­ty, moti­va­tion and over­all job sat­is­fac­tion may all plum­met if/​when employ­ees are expect­ed to work in oppo­si­tion with each other.

Instead of incen­tiviz­ing com­pe­ti­tion, employ­ers should pro­mote team­work and cama­raderie. This will result in hap­pi­er employ­ees, high­er pro­duc­tiv­i­ty and health­i­er work­ing conditions.

5. Wellness and Well-Being Are Not the Same Thing

Well­ness pro­grams are pop­u­lar because they serve as a cost-cut­ting mea­sure for busi­ness­es. They are cre­at­ed with the hope that employ­ees will become health­i­er, thus sav­ing mon­ey on poten­tial med­ical absences and health­care costs. Some com­pa­nies have even begun to finan­cial­ly incen­tivize par­tic­i­pa­tion in these programs.

Human Resource Depart­ments will coor­di­nate with Well­ness Incen­tive Pro­grams, offer­ing small amounts off of their health­care pre­mi­ums or oth­er med­ical­ly-relat­ed incentives.

The prob­lem? There’s no data that sup­ports the idea that these incen­tives or pro­grams result in improved employ­ee health. In fact, they are proven to have lit­tle impact on an employee’s health and well-being. So, why do com­pa­nies pro­vide incen­tive programs?

Obvi­ous­ly, peo­ple should be able to pri­or­i­tize health and well­ness. That’s a fun­da­men­tal right to life. Being healthy can be crit­i­cal to hap­pi­ness, life longevi­ty and free­dom. Unfor­tu­nate­ly, well­ness pro­grams are rid­dled with issues. They famous­ly lack inclu­siv­i­ty, ignor­ing employ­ee dis­abil­i­ties, dietary restric­tions, cul­tur­al dif­fer­ences and finan­cial constraints.

They sim­ply don’t con­sid­er the whole pic­ture. Their pur­pose is to pro­mote diet and exer­cise, while what most peo­ple need is com­plete well-being. Com­pa­nies should focus on pro­vid­ing phys­i­cal, men­tal, emo­tion­al and finan­cial sup­port to their employ­ees. This begins with under­stand­ing who their employ­ees are and offer­ing them ben­e­fits tai­lored to their indi­vid­ual lifestyles and needs.

What Is the Goal?

Com­pa­nies need to think more holis­ti­cal­ly about what they’re offer­ing their employ­ees. Who do these incen­tive pro­grams ben­e­fit, and what are their out­comes? Should com­pa­nies be wor­ried more about their bot­tom line or the bet­ter­ment and well­ness of their employees?

The answers to those ques­tions are easy. Com­pa­nies should pri­or­i­tize employ­ee well-being over the per­ceived, poten­tial and minus­cule finan­cial gains they receive from prob­lem­at­ic incen­tive pro­grams. The truth is, they just don’t work for the mod­ern employ­ee. It’s time to try some­thing new.

Offer Personalized Lifestyle Benefits

Fringe has a cus­tomiz­able lifestyle ben­e­fits pro­gram that is sim­ple. Employ­ers give points to their employ­ees. Employ­ees log into the plat­form and use those points to choose from over 100 dif­fer­ent lifestyle ben­e­fit options.

Per­son­al­ized ben­e­fits enable employ­ers to moti­vate their team with ben­e­fits that actu­al­ly mat­ter to them. Plus, per­son­al­ized ben­e­fits are proven to increase per­for­mance and job sat­is­fac­tion. Rather than con­tin­u­ing to use tired meth­ods that are inef­fi­cient and inef­fec­tive, rev­o­lu­tion­ize the way your employ­ees are motivated.

Try Fringe for Free today.

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