Keeping employees motivated can be difficult, but with the right incentives, the job can be easier.

Employees usually work harder when there is some sort of incentive to do so. This can be as simple as telling a worker he’s done a good job, or as complex as giving an end of year performance bonus. What you do will depend on the time, money and resources you have to devote to creating a performance incentive plan.

Step 1: What Will You Give as Incentive?

First, determine what you’ll give. Incentives fall in two main categories:

  • Casual Incentives: such as movie tickets, a “thank you,” or a gift card.
  • Structured Incentives: stock options, performance pay, days off.

As a small business, it may be easier to start with casual incentives and work up to larger structured incentives. With casual incentives, it’s easy to give one as you feel it’s earned rather than setting up a system where employees must do X to get the incentive. Experiment with both “surprise incentives” and planned ones to see which gets the best response.

You can buy bulk numbers of gift cards at a discount and have these on hand to distribute as you see fit. Movie theaters too often offer discounts for larger numbers of tickets sold, so do your homework to see where you can get the most bang for your buck with smaller rewards.

If you don’t have the budget for small rewards like these, consider giving days off or extra vacation days as incentive. It may seem small, but your employees will fight to win an extra day off!

You might also surprise your team by taking them all out to lunch, bowling or a movie on a work day. Companies like Yahoo! that offer entertainment during office hours as a way to compensate employees for hard work find they have a lower turnover rate as a result. Valuing your employees is key to getting them to want to work for you.

Structured incentives make it easier for employees to see where their hard work will get them. You might set up stock options or equity as an incentive for reaching a certain productivity level, or give a cash bonus for meeting or exceeding sales goals.

Step 2: What is Required?

Next, you need to establish what an employee must do to get the incentive you’ve decided on. These could include:

  • Zero days of accidents
  • Sales goals exceeded
  • No sick days over a period
  • Improved customer service ratings
  • Cutting company costs
  • Productivity metrics

Make your incentive requirements align with areas of the company you’re trying to improve. For instance, if you’re seeing low average sales per cashier, set an incentive for getting the highest average sale in a given week or month. You can chart this in a place where everyone can see it, which serves to stimulate all to do better.

It’s a good idea to list your performance incentive plan in your employee manual so new hires see what opportunities they have. Be sure to train your human resources manager on the program so that she can clearly explain it to new employees that join your company.

Step 3: Share the News

Your employees can’t work toward the incentives if they don’t know about them. Hold a company meeting or send a company-wide or department-wide email that outlines what the incentive plan is and what they need to do to qualify. Set dates for the plan if it’s a contest or a limited time event. Speak with department managers to enlist their aid in monitoring the progress and performance of their employees.

Measure results throughout the incentive program to see if it’s working. If it’s not, talk to participants to determine whether the incentives aren’t enough to motivate them to work harder, or if they have some obstacles in their way that prevent them from achieving the goals you set.