Types of Employee Performance Incentives

Posted by Gary Purcell on May 20, 2019
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There are numerous types of performance incentives that can be deployed in your company, each with different measurement requirements and levels of gamification. Some incentives require more budget than others, and some are more suited to certain performance criteria (eg sales) than others.

The right incentive for your company will depend on the criteria you want to incentivise, the measurement systems available, and the profile of employee you want to motivate. The different types of performance incentives include-

  • Do This / Get That
    Employees earn a specified reward every time they achieve a specific goal or complete a specific task. This could be – earn €1 for every €100 sale you make this week. Or earn €1,000 for every candidate you refer who is subsequently hired. Or €500 for every business lead you send to sales that results in a new customer. Or get entered into a draw for every month you have 100% attendance.

  • Leaderboard
    Compete against other employees by earning league points for specific goals or actions. At regular intervals, a leaderboard is updated showing the employees with the most accumulated points. Employees are emailed their total points and relative position every time the leaderboard is updated, regardless of whether they have reached the leaderboard or not. At the end of specific period – usually quarterly, monthly or yearly - the leaderboard employees are rewarded with prizes and/or entry into a prize draw, or both!


 "The right incentive type for your company depends on the incentive goals, the available measurement tools, the budget and the profile of employee you want to engage with."

  • Incentive Race
    Employees who are first to reach a specific goal during the promotion period win a prize. It could reward the first 10 employees that reach their sales target for the month, or the first 3 employees who make a new employee referral, or who complete an online training course. This incentive type can be good for short term campaigns.

  • Nomination-based
    Managers nominate employees for rewards based on a specified list of performance criteria. The nominations could be “Employee of the Month” type with the manager tasked with nominating their top performing team member each month. Or the manger may be given a reward budget to nominate team members each month.  Alternatively, nominations are made by co-workers with HR and/or Leadership reviewing and selecting winners from the nominations each month.
  • Prize Draw-based
    Everyone who achieves a certain performance target gets entered into a draw for a specific prize, normally every month. Because there is a fixed number of prizes each month, the reward budget is fixed in advance, and this can make budgeting for the programme a lot easier. It also allows the budget to be concentrated on a smaller set of monthly prizes, so the prizes themselves can be of higher value.

There are two different types of prize draw – single entry and multiple entry. In single entry, employees who achieve the performance criteria are entered into the draw once. In multiple entry, the more times the employees fulfils the criteria in the month, the more entries they earn, thus favouring the higher performers in the prize draw, though giving everyone a chance to win.

  • Stepped Rewards
    Employees must complete tasks successfully to progress to the next level of the programme. How far employees progress (ie the higher the level they reach) determines the levels of prize they win at the end. Used a lot for training incentives, this type can be used successfully where the completion of a series of related tasks is required (eg completing a set of surveys, completing a set number of training modules, health & safety lessons, or compliance certification).

  • Team-based Performance
    Team-based programmes can either be standalone or run in conjunction with individual employee programmes. Typically, the best performing team based on a defined set of criteria, which could simply be the average or the team’s individual performance scores, win a night out or get to share in a group prize of their choosing.

    Team-based prizes open up further possibilities for gamification and can even lend themselves to fun head-to-head play-offs between teams. They are often awarded on an ad hoc basis as part of a larger employee-based incentive programme.

  • Matrix Model
    This combines different incentive types in a single programme, such as ongoing points earning with a year-end prize draw. For example, in a recent sales incentive for a mobile phone company, employees could earn “tickets” each month for hitting targets. These tickets had a monetary value and could be spent online on a catalogue of rewards, and in addition each ticket provided entry into the year-end prize draw for luxury weekend breaks in London and New York.

Which incentive type is right for your company? Well, that depends on a number of factors including the incentive goals, the frequency of prize giving, the budget and the profile of employee you want to engage with.

Download the Guide to Incentive Performance eBook
Get our expert guide on best practice for designing and running employee performance incentive programmes. What works, what mustalkkejs should you try to avoid. What are other companies doing? Download it for free today by clicking the Download Now button below.


The Definitive Guide to

Performance Incentives

This expert guide gives lots of practical tips and insights into running employee incentive and reward programmes.

  • What Performance Incentives can be used for
  • Types of Performance Incentives
  • Types of Rewards
  • Steps to a Successful Performance Incentive
  • Calculating the ROI on Performance Incentives
  • Mistakes to Avoid in your Incentive Programme
  • Case Studies

Click here to Download Guide


Tags: performance improvement, high performance team, employee performance, performance management, human resources, talent management, performance incentive, employee incentives, incentive programme

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