From the Blog:

How to Motivate Employees With Rewards (Not Penalties)

You know the great benefits that your well-being and engagement program can bring — improved employee engagement, productivity, well-being and satisfaction. But do your employees know? 

You’re not alone if your employees don’t seem interested in your well-being and engagement program. The Limeade State of Workplace Well-being survey found 52.6% of employers surveyed said participation is the biggest challenge to the success of their program.

The problem might be the way you motivate your employees. Financial incentives have become more and more popular in well-being programs, but are you using them to reward or punish employees?

Why employee rewards are more effective than penalties 

Financial incentives have been the natural next step for employers to include in their well-being and engagement programs. It makes sense — inspire employee motivation and behavior changes with the reward they want.

Financial incentives usually start small. The first year employers use them, they reward employees for completing awareness activities. This might be a $500 health savings account contribution for completing a screening, taking a health assessment or getting a yearly physical.

The next year, employers interested in seeing health outcomes usually move to rewards that are offered to healthy employees. Those who are within healthy levels on biometric indicators like BMI, blood pressure, blood sugar and cholesterol, earn points and incentives. Those at unhealthy levels are offered activities to help improve their health factors and then they can earn points and incentives as well.

It’s in the third year that employers tend to go wrong. Healthy employees earn rewards for their biometric indicators and those with unhealthy numbers receive a penalty.

Why have employers moved toward this trend? Because they believe loss-aversion inspires employee motivation. But the truth is, this tactic doesn’t work.

Why penalties don’t work

In theory, penalties seem like an effective way to motivate employees. To avoid the penalty, employees will want to change their behavior, participate in the program and commit to healthier habits.

But it’s not that simple. When employers use penalties, they damage the relationships they’ve built with employees. It erodes the trust between them. And here’s the kicker — it doesn’t even promote employee motivation. Employees are more motivated to complete a task when they feel like they are in control, not when they feel forced.

Employees will feel much more motivated to make a change if they feel they’re being rewarded, not penalized for their actions.

Employee rewards work

Giving rewards for hard work is one way to boost employee motivation and participation. When employees are rewarded, they feel like they trust their employer and feel supported — and that’s powerful.

Building trust between employees and employers is critical in well-being and engagement programs, and in the workplace as a whole. Programs that miss this element usually aren’t successful and can damage employee engagement.

Rewards help employees feel like their employers care — penalties don’t.

How to motivate employees with messaging

The difference between employee rewards and penalties comes down to messaging. Shift the communication to present rewards instead of penalties.

For example, you could tell employees that smokers are charged $50. That’s a penalty. Or, you could do the same thing financially and present it as a $50 reward given to non-smokers. This way, you’re rewarding healthy employees and boosting employee motivation with positive reinforcement.

The messaging makes all the difference and has a huge impact on how employees perceive your program. Shift the communication to focus on rewards and the upsides of your program. You might be surprised by the results.  

Reward choice and improvement with a broad view of well-being. And you’ll see better business results. Check out the Limeade “outcomes nice” two-pager to see how to bring this to life.