It’s time for your employee incentive strategies to evolve. As your older workers retire and attitudes about work’s place in employees’ lives continue to shift, you need to adapt your compensation strategies. This blog post explores what workplace incentives motivate today’s employees and what makes a modern rewards strategy.

Millennial and Gen Z employees have been shaped by the Great Recession, rapid technology advancements, and a global pandemic. These early and mid-career employees will soon outnumber older workers, and their perspective on work and the role it plays in their lives will dominate the workforce. They want to spend their time on meaningful tasks and they want to feel valued. To keep these employees motivated and engaged, organizations need to be willing to adapt their incentive strategies to respond to younger workers’ needs.

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One of the most significant workforce changes that’s come about in recent years is the question of where employees get their work done. In 2020, employees and companies quickly learned that a lot of work could be accomplished remotely with relative ease, and workers aren’t willing to give up the flexibility and freedom that comes with remote and hybrid work arrangements. A recent survey from Gallup found that over half of remote-capable employees prefer to work in a hybrid environment. The survey also found that 61% of employees who exclusively work remotely would look for new employment opportunities if their companies removed the option to work from home. While remote or hybrid options aren’t accessible for every type of work, organizations should consider flexible working arrangements as another way to incentivize employees and respond to evolving workforce needs.

The incentive strategies that motivated employees in the past no longer resonate with today’s modern workforce. Organizations need to adapt their strategies to reflect their employees’ current motivations. Implementing incentive strategies based on what’s motivating the workforce today will drive engagement, improve retention rates, and increase productivity, ultimately benefiting the organization’s overall performance metrics.

Updating your organization’s incentive strategies gives you an opportunity to ensure your plans are aligned with your overall organizational goals. By implementing more flexible incentive options, you can better meet the diverse needs of your workforce. Failing to adapt to your employees’ evolving motivators can negatively impact productivity and potentially cause great talent to leave your organization.

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What Makes a Modern Incentive Strategy?

Short-term, performance-based rewards and similar strategies won’t cut it with today’s workers. While monetary rewards are still (and likely always will be) a prime motivator, today’s employees also want more fulfillment from their roles. Modern incentive strategies take a comprehensive approach to motivating employees.

In addition to traditional cash-based rewards, updating your incentive packages means considering how you can motivate employees to do more than increase their productivity. Money is a great motivator if you’re only looking to increase performance and profits, but today’s employees want to feel more connected to your organization and know that their efforts are appreciated. If you want to truly get the best possible results for both your company and your workforce, your incentive strategies must evolve to include elements that improve or incorporate the following:

• Recognition of significant accomplishments
• Work-life balance and employee wellbeing
• Education benefits
• Inclusivity initiatives and social benefits

Aim to increase your employees’ job satisfaction, engagement levels, and loyalty to your organization. Taking a holistic approach to your incentive strategies will inherently lead to performance and productivity gains for your organization.

What Incentives Do Employees Really Want?

There’s no magic formula for satisfying every employee, but offering a variety of incentives can help you keep most of your workforce motivated to achieve individual and organizational goals. Letting your employees choose how they’re awarded when they reach certain milestones or benchmarks can also go a long way in improving worker satisfaction. They’ll be more motivated to improve their performance or increase their productivity when they’re working toward goals that are relevant to their interests and needs.

Money might be a universal motivator, but here are nine other non-monetary incentives you can consider:

1) Flexible Work Arrangements

Remote or hybrid options, flexible hours, and compressed work weeks are some ways you can give your employees more control over their schedules. Employees who are parents or caregivers are likely to appreciate having more control over when they get their work done so they can possibly avoid expensive daycare costs. Employees pursuing advanced degrees will also benefit because they'll have more options for scheduling and completing their coursework. Regardless of what’s happening in their personal lives, most of your workforce will appreciate any flexible options that make their jobs fit more neatly into their lives, not the other way around.

If you aren’t able to offer flexibility on a permanent basis, consider designing the strategy so that employees can work a flexible schedule during certain times of the year. Maybe you designate one week per quarter as a “flex week” for employees who reach certain milestones. Another approach is to let employees schedule their flexible or compressed week after they’ve earned the incentive. This could be done in a similar manner to a paid time off (PTO) request so that departments and managers can prepare ahead of time for an employee working outside of their typical schedule.

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2) Unlimited or Expanded Sick Leave

People can’t pick and choose when they fall ill or get hurt. Newly onboarded employees might feel pressured to work when they’re unwell so they can make sure they’ve saved enough sick time to cover them during a future emergency. Some employees might need to take time off from work to care for sick or injured family members, leaving them with inadequate earned time to cover them if they experience their own illness or injury.

An unexpected medical event can be catastrophic for an employee who doesn’t have adequate sick leave. Modernizing your sick leave policy to account for new employees and caring for loved ones can help ease employees’ trepidations about taking time off when they aren’t feeling their best. People can’t do their best work when they’re unwell. Giving them the peace of mind that your organization cares about their health first will help reduce employees’ stress about taking time off and ultimately leave you with a happier, healthier workforce.

3) Paid Personal Time Off Work

If you currently combine your employees’ sick and personal time off into one accrual bank, consider updating this incentive strategy. Separate banks for sick and personal leave encourage employees to use earned time for their respective purposes. When time off banks are combined, sick employees might come to work even when they shouldn’t, further spreading illness and negatively impacting workplace performance. That’s because they may feel the need to save their earned time for other events during the year, such as family vacations or holiday travel.

Another way to modernize your paid time off incentive is to let employees earn leave time more quickly so that they feel less pressure to save their hours for unexpected events. You can also offer employee wellness days that let your workforce focus on their mental health. Flexible days or floating holidays are another option to consider to give employees more control over their time off.

4) Health and Wellness Initiatives

Motivate employees to take care of their physical and mental health so they can bring their best selves to work. Gym memberships, health and meditation apps, and employer-sponsored wellness programs can make improving one’s health a more accessible task for your workforce. Knowing that your organization is investing in its employees’ wellbeing can make your workers feel more appreciated and will likely lead to increased workplace morale.

5) Green Transportation Incentives

If your organization is working to reduce its overall carbon footprint, then transportation incentives are a great way to encourage employees to assist in your efforts. For employees with access to public transportation, consider providing passes for them to cover their bus, train, or subway fares. If your employees carpool or drive energy-efficient vehicles, you can designate premium parking spots at your facility as a “thank you” for reducing their carbon emissions.

6) Recognition and Rewards

People like being recognized for their accomplishments. Implementing peer recognition programs or traditional awards like employee of the month is a tangible way to show your workers that you appreciate their hard work. Whether you have a badging system, award small gift cards, or reserve a special parking space for award recipients, publicly recognizing accomplishments can boost morale and encourage others to also work toward earning the reward.

When implementing reward and recognition programs, be sure to clearly communicate your expectations for earning prizes to your teams. Everyone should know what steps they need to take to have a chance at recognition well in advance of your program’s launch date. Also be sure to have a system for tracking who receives these awards so you can equitably distribute them over time. If the same few people are the only ones being recognized, then the program will stop being effective. Include different pathways for recognition so you’re able to reach a diverse group of employees.

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7) Professional Development Opportunities

Maintaining and enhancing workforce skills is essential for your business to thrive. It’s also a necessity for employees to keep up with changing industry trends and technological advances. Giving your employees access to high-quality training and professional development opportunities can incentivize them to keep updating and expanding their skillsets, making them competitive candidates for future promotions or additional responsibilities.

Consider giving employees access to self-service professional development content through a learning management system so they can map their training progress in alignment with their professional goals, as well as your organization’s learning objectives. You can also designate funds for employees to attend workshops or conferences to help them earn continuing education credits or relevant certifications.

8) Student Loan Assistance

If you have employees in the United States, it’s very likely that at least some of them carry student loan debt. In 2023, federal student loan debt reached $1.63 trillion, and every generation currently in the workforce is sharing the burden. Gen X workers hold the most debt at 56.73%, followed by Millennials at 30.26%, then Baby Boomers at 7.01%, and finally Gen Z with 5.98%. Offering student loan repayment assistance could be a significant motivator for employees who are burdened with debt and struggling to make their payments.

9) Social Incentives

Some of your employees might be motivated by social interactions, especially if they don’t have frequent opportunities to collaborate with others in person. Designating time for employees to volunteer together is a great way to assist your community while encouraging social interaction among your workforce. End-of-year parties or other social gatherings to celebrate team and organizational achievements are another option to bring people together and encourage further collaboration.

What’s the Difference Between Incentives and Benefits?

The line is blurring between incentives and benefits. Modern incentive strategies are comprehensive and cover a wide range of options to keep employees motivated to perform at their best. Items that have previously been considered additional benefits, such as sick leave and wellness initiatives, could now be thought of as modern employee incentives and should be included in your overall strategy. Whether you call them incentives or benefits, the same logic applies: you’re offering things outside of employees’ base pay to improve their wellbeing and motivate them to enhance their performance at work.

Give yourself permission to be creative with your incentive offerings. Take time to consider your employees’ current and potential future wants and needs, and use that information to inform your reward strategy.