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Does Incentivizing Employee Performance Increase Productivity?

What is the co-relation between reward and productivity?

Humans crave recognition for their work. It is only logical that employees who are rewarded for their work feel encouraged to perform better. Incentives work as a powerful motivational tool. Correspondingly a lack of appreciation can bring down the morale of the employees. They do not feel motivated to give their best in an environment that does not value it.

A customer would be glad to be rewarded with a cashback program. This gives them a reason to come back to your business. Similarly, rewards enhance employee performance. Studies have shown that companies with good employee reward programs have higher employee productivity rates, profit margins, and employee and customer retention.

Incentivizing Ensures Job Satisfaction

Maslow’s hierarchy of needs provides a comprehensive outlook of the vital needs of a human being. Fulfilment ranks highest in the list. A feeling of having met one’s potential is integral for the survival of humans. Rewarding employees ensure that this need is met.

Employees get a sense that their work is valued and that they have a purpose in contributing to your company’s vision. In a study conducted, nearly 49% admitted that management’s recognition of their work was crucial to job satisfaction.

Ensures Overall Happiness and Retention

A happy employee is a productive employee. Reward generates positive associations with the company. It can create an overall happy environment in the company, motivating everyone to take joy and pride in their work.

Low recognition is one of the foremost reasons for employee fallout. If an employee is dissatisfied, they go searching for other places that reward their efforts. Retaining employees is a worthwhile goal, as training new staff utilizes an abundance of time, money, and resources.

Ensures Loyalty to the Company and Its Values

Making the employee feel valued will lead to them being loyal to the company. It increases their regard for the company. The employees will promote and sell better if they feel closer to the brand they are promoting. A recent poll on recognition and engagement revealed surprising insights. It showed that when management centres on the employees’ strengths, his involvement in the job increased—whereas focusing on the weakness led to a decreased engagement.

Career Development

Incentive compensation can be combined with career development to make it more effective. Help the employee feel involved in the company’s long-term vision by giving him controlled, achievable goals and corresponding rewards. It will encourage them to engage with the company’s growth actively.

Today numerous performance monitoring tools keep track of employee performance and productivity. Rewarding them based on these results will assure them that their work will not go unnoticed or under-appreciated. This act enhances performance and encourages employees to perform better consistently.

Rewards can be in the form of:

  • Peer- Peer recognition:- recognition by peers and fellow staff. It can cultivate team bonding and nurture a positive work environment.
  • Instant recognition:- applauding efforts instantaneously.
  • Long-term awards:- Long term service awards for completion of a set period with the company
  • Goal reward:– a reward for achieving a set goal. It will motivate them to achieve it. For example, cashback programs are a type of goal reward to the customer for buying a certain amount of products.
  • Monetary incentives- includes cash awards, gift cards, etc.
  • Title recognitions- “Employee of the month,” “Best Performer,” etc.


Incentivizing is a powerful tool that can channelize the employees’ energy in the right direction. It should be regular and frequent enough for the employee to expect and achieve it. Overall it is best for both the employee and the company.

Crazy about technology, sports, cinema, my colleagues, and useless anecdotes. Far too connected and curious. When I'm not on my smartphone, you can find me tinkering anything tech!


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