Well-designed employee incentive programs are a great way to keep your employees motivated, engaged, and feeling valued. Since many programs contain a variety of incentives ranging from financial rewards to recognition measures, the real question is, how do you assess their impact and effectiveness? In this article, we’ll tell you how.

The Purpose of Employee Incentives

Before diving in, it’s important to understand some of the common objective(s) behind why companies roll out employee incentive programs. Some of the objectives might be to:

  • Increase employee engagement and satisfaction
  • Boost productivity and performance levels
  • Reduce turnover rates and attract top talent
  • Foster a positive and motivating company culture

Ways to Assess Employee Incentive Programs

Now that you are familiar with some of the common objectives, let’s discuss how you can assess the effectiveness of your incentive programs.

1. Revisit the Objectives

Start by revisiting your company’s objective(s) behind why it implemented employee incentive programs in the first place. Your company’s objectives will give you clear and measurable goals to look for so you can define success and accurately measure their impact.

2. Solicit Employee Feedback

Next, ask workers for direct feedback about the incentive programs. This may be done using surveys, focus groups, and one-on-one interviews to assess employee satisfaction with incentives, their fairness, and their influence on motivation and performance. The comments you receive will reveal the truth of how your employees see the incentive programs and their effectiveness. Positive comments mean the incentives are working, while negative comments mean you may need to go back to the drawing board or you may be out of touch with your employees.

3. Analyze Performance Data

Next up, it’s time to start analyzing your data. Depending on your objectives, you may need to look at sales, customer service, or productivity metrics. These numbers will show you if your incentives had a direct impact on employee output by comparing the performance data before the incentive program(s) were implemented to the data after. If the incentives are working, expect to see a nice bump or increase in these numbers indicating the incentives are having a positive impact.

4. Monitor Retention and Turnover Rates

Employee retention and turnover rates are another great way to gauge the success of your incentive programs. A good incentive program should reduce turnover since satisfied and motivated workers are less likely to depart. Good companies always monitor their turnover rate. This not only helps you assess the short—and long-term performance of your incentive programs but can also help you identify if a larger issue is driving workers away.

5. Evaluate the ROI

Now that you know how your incentive program(s) affect your employees and firm, you can calculate your ROI. Compare the expense of implementing the program against the revenue saved by reducing staff turnover and your increase in sales and productivity.  A positive ROI will indicate that your incentives are effective and cost-efficient for the company.

Continuous Improvement

The evaluation of your incentive programs is something that should be ongoing and not a one-time thing.  To maintain their relevance and impact, these programs should be regularly reviewed along with feedback and performance data and adjustments made when needed. This approach ensures the incentives continue to meet the evolving needs and expectations of both your organization and employees.


Employee incentive programs are a great way to contribute to your company’s success by enhancing employee motivation and performance. However, if you are not assessing their effectiveness there’s a possibility you could be throwing money away or negatively impacting your workforce.  The best way to ensure your incentive programs are having a positive impact on your company is to establish measurable objectives, gather frequent feedback, and continuously analyze the data. Ultimately, well-crafted employee incentive programs are a great way to create a win-win situation for both your company and employees to thrive.

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About Author
Brad Wedin

Brad Wedin brought over 25 years of management and operations expertise to NextRev Services. He founded the company with the strategic goal of helping Business Owners, CEOs, GMs, and Upper Management overcome their operational challenges and obstacles.

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