Common Incentives That Don't Work (and How to Fix Them)

Luke Rodenburg
December 11, 2018

Many organizations use incentives to encourage their employees to be more productive and give their best. However, when researching some of the most common incentives, we were surprised to discover that many of these incentives just don't work.

Many organizations use incentives to encourage their employees to be more productive and give their best. However, when researching some of the most common incentives, we were surprised to discover that many of these incentives just don't work.

Read on to discover which incentives don't work, and how to fix them. We provide alternatives for these ineffective techniques which will help your staff to be engaged, happy and high-performing in their roles.

1. Offering the same incentives to every employee

Managers often assume an incentive will motivate an entire staff. But in reality, motivation is personal.

When managers hand out generic incentives to employees, such as bonuses, it's likely that only some employees will be encouraged to work harder. For others, the incentive is unappealing and their behaviour doesn't change.

Generic rewards are easy for managers to allocate, but we've discovered that personalized rewards are more effective at motivating staff.

Findings from a study on gift giving suggests that people are happiest when they receive a gift they have asked for rather than a surprise.

The results demonstrate that when it comes to gifts and rewards it's better to listen to the requests of the recipient rather than to guess and make assumptions.

If you don't personalize rewards you'll risk striking the wrong note with your attempts to incentivize employees.

A gift card for a famous steakhouse is a great reward for many, but a bad reward for a vegetarian.

Movie tickets are a popular reward for some, but will sit unused if the employee doesn't like movies.

A bottle of wine is a thoughtful reward for some, but the wrong choice for an employee who doesn't drink.

What's the best way to know what type of incentives will motivate your employees? Ask them!

2. 'Employee of the Month' Awards

Rewarding employees for their hard-work is an essential part of motivating a workforce.

To achieve this, many organizations ask managers to give out individual awards based on murky criteria, like 'Employee of the Month' awards.

These awards have the tendency to be based on personal preference. If some mangers have better relationships with particular employees, it's likely that those employees will be awarded more often. Counterintuitively, these kinds of subjective awards can demotivate employees who feel that they're disadvantaged by office politics.

Giving out awards based on objective targets such as 'highest sales this month' are a more objective way to reward and incentivize high-performing employees. These objectives are much less likely to be seen as being based on managers getting along with particular employees better than others.

Having a competition or sales leaderboard with a standardized target ensures that all employees have the same opportunity to receive the award if they work hard enough.

3. Cash Rewards

Person with cash

The days of money being the answer to all employee motivation problems has come and gone.

The most motivated people aren't the best paid. Instead, they're the employees who feel a strong connection with their work. Therefore, the best incentives have the ability to create a connection between an employee and their work.

Cash rewards don't create this connection. Instead, there are many meaningful non-monetary incentives that managers can use. Things like a half-day off or a 'work from home' day are incentives that generally have a higher return on investment for the business.

The basic idea is trading money, for flexibility.

Perceived flexibility is a proven motivator for employees. It's important for employees to feel as if there's flexibility in their jobs. Further, employees who are rewarded with additional flexibility are much more likely to love their jobs than employees without flexibility at work.

4. Short-term Objectives Without Long-Term Goals

Incentivizing short-term objectives without a connection to long-term goals can encourage a short-sighted approach to goals, where long-term aims are sacrificed in favor of short-term benefits. Here are some examples where short-term goals can be harmful when disconnected from long-term aims:

  • Using pressure-tactics on a loyal client in order to meet a monthly sales target
  • Replacing a quality component with a cheaper plastic component that is much more likely to fail in order to make a short-term cost saving
  • Recommending unnecessary upgrades to customers in an effort to drum up sales

Any metrics you incentivize must be balanced against the long-term needs of the organization. Without this, there is a risk that rewarding only short-term achievements will damage long-term goals.

The solution is to offer smaller rewards for reaching short-term objects and larger rewards for reaching long-term objectives. Both types of goals must be included in your incentives system.

5. Repetitive Rewards


Repetition of the same rewards can cause employees to become bored by the incentives on offer.

The same old gift card for the same old sales target can start to become stale over time.

Creating a points-based program where behaviours that contribute to the organization's goals are counted and tallied is an excellent replacement for bland and repetitive rewards.

Employees are given the opportunity to earn points and redeem them for rewards that are important to them.

Having a library of available rewards allows employees to choose a new reward each time they earn enough 'points'. This also gives employees that option to choose a reward that is most meaningful to them, and to save their points for larger rewards.

A 'rewards library' system is the best way to keep your rewards from growing stale. An even simpler solution is to change the rewards you have on offer from month to month.


One Size Does Not Fit All

  • All employees are motivated for different reasons.
  • The perfect reward for one employee might be the wrong choice for other employees who don't share the same lifestyle or interests.
  • Rather than assume, take the time to ask your employees what motivates them.

Set Objective Criteria

Subjective awards like the classic 'Employee of the Month' award can breed jealousy. Set standard objectives that every employee can aim for.

Replace Cash Rewards

  • Money is an expensive incentive to use and has a relatively low return on investment.
  • There are many different types of incentives that don't involve money.
  • Additional flexibility is a more powerful incentive than money.

Reward Long-term Goals

  • Short-term objectives without long-term goals can encourage employees to make short-sighted decisions.
  • It's important to incentivize both short and long-term objectives.

Refresh Your Rewards

  • Repetition of the same rewards can cause staff to lose motivation to perform.
  • Having a range of options for employees to choose from is important.
  • Where possible, change the rewards you offer from month to month.

Arcade helps you to offer your employees a library of custom rewards with automated fulfillment. Run a cutting-edge rewards program without spending hours on administration. Interested to learn more? Request a demo.

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