How to develop an employee incentive plan

Incentive plans provide a goal to motivate team members within a company or organization. Rewards in an incentive program are a positive way for an organization to recognize and respect the efforts or achievements of employees. Consider what “carrot” motivates your employees to excel, and involves the team throughout the process to get feedback that improves your program.

Plan according to your business model

Identify a set of clear objectives. Meet with managers to create a concrete list of objectives that the company must achieve at the end of each quarter and year. To get help with the identification of objectives, management should refer to the business plan and the company’s mission statement.

Determine how employees will cooperatively contribute to all corporate objectives. Create a comprehensive list of corporate goals, then ask each department manager to generate a list of department goals that will be presented to their employees.

Meet with employees to let them know the goals. Review corporate objectives during a meeting with all employees and include specific data such as percentage increases and amount of money that the company should reach for specific dates. Ask department managers to hold group work meetings with team members to review and discuss the department’s objectives.

Survey employees to determine the incentives that motivate them most. Create a list of various incentives – from company or department parties to money – and ask employees to order incentives, starting with the one they consider best.

Design an incentive plan scheme that combines incentive objectives using the employee incentive survey. Assign incentives that allow all employees to achieve broad corporate goals and individualized incentives for department objectives. For example, offering a full day to wear casual clothes can be an attractive incentive to achieve a corporate goal; However, if employees achieve a goal in a particular department, have each employee win a gift card for the local coffee shop.

Launch the incentive plan during a party with all employees. Discuss how the participation of employees directing the objectives and incentives of the company makes them feel more trained and enthusiastic about the objectives of the meeting. Generate a small instruction or provide brochures detailing the program and incentives.


Display monitoring charts of the objectives in common areas or rest rooms to remind employees of the goals.

Review the incentive plan every six months or every year to determine if it is effective or if it should be altered.

Train employees as often as necessary to ensure that they have the knowledge and tools necessary to achieve the objectives.