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Employee Incentives – A New Approach

September 10, 2010

A traditional Employee Incentive Plan rewards employees for a job well done; however, many companies are taking a new approach to employee incentives.  The new incentive plans are aimed at achieving specific company goals such as cost savings, going green or promoting healthy behaviors.   Research has found that offering financial incentives increases the success rate of changing behavior, so companies have found their pain points and set out to change behavior.

Benefit premium costs have been on the rise and are increasingly hard to swallow for many companies.  Healthier employee populations mean lower premiums, so promoting healthy behaviors is in the best interest of both the employer and the employee.  According to one survey, 73 percent of those surveyed would be willing to positively affect their health behavior if it meant saving money.  Realizing this, companies are motivating employees to be healthier and in turn, reduce their benefit costs.  One example is GE who has begun to offer lower premium costs to employees who do not smoke.  Their new plan reduces premium costs for non-smokers while requiring an additional contribution for those employees who do smoke.  At the same time, GE is also offering a smoking cessation program to provide the support necessary to aid smokers in their efforts to quit.

Large travel budgets are another cost companies are looking to reduce.  A recent NY Times article highlightsEnergizer Battery Company, where many employees travel for business.  Energizer shares the difference of a coach ticket over business class for travel overseas and offers up to a $2000 incentive for employees and $3000 for travel to Asia.  With implementation of this program they’ve seen a significant reduction in their travel costs.

What do you think about these financial incentives?  Does this change the way we motivate employees to perform in the way we desire?  What do you see as the negative effects of such programs?

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