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How to create an (affordable) employee incentive plan that works
By Lawrence Franchetti, CEO, One Beat Medical
For years, Google was famous for the many perks it offered to employees. From free massages to laundry services to free high-end snacks, the tech giant went to incredible lengths to make its employees happy. But all that changed earlier this year.
After making drastic cuts to their employee incentive program, morale has plunged at Google. The company’s leaders have said the cutbacks were unfortunate but unavoidable—a necessary evil in the current economic climate.
I can understand where they’re coming from. But as a CEO myself, I believe it’s possible to create an employee incentive plan that makes people feel valued (and motivated to do their best work) while also staying within the company’s financial means.
In fact, I know it’s possible, because our team at One Beat Medical has done it.
Now, there are obvious differences in scale here. We’re one of the rare companies that’s actually continued to grow since the pandemic started—from 2022-2023, we increased our headcount by 22 percent—but we’re certainly not a multinational juggernaut with revenues the size of a small nation’s GDP.
However, creating a great employee incentive plan isn’t just a matter of spending X dollars on Y perks. There’s an art to it. And luckily, it’s one that any leader can learn.
Here’s how to start.
Ask your employees what they actually want
This step should be obvious, but it’s often skipped because leaders think they already know the answers. Also, it can feel awkward to start the conversation. Many leaders fear that employees will make unrealistic requests (“ponies for everyone!”), which then puts leaders in the uncomfortable position of having to walk back their offer.
In my experience, those fears are overblown.
When I started as CEO of One Beat, I wanted to know what my employees needed to do their best work. So I walked around the office and asked them—literally. Their answers were both surprising and entirely reasonable.
For example, many of our employees are parents. So they wanted our workplace to be child-friendly: to be able to bring their kid to the office when schools had a day off, or to know they wouldn’t get yelled at if Junior popped into the background of a Zoom call.
Others wanted a healthcare plan that included more specialist coverage in their area. That required some paper-pushing on our part, and some patience on theirs, but in a few months we’d found a solution that left both our employees and accountants happy.
The point is: when you talk to people about what they really want, you’ll often be surprised how achievable their desires are.
Acknowledge when something’s not working
We all know that the best-laid plans occasionally go awry—which is as true for employee incentive plans as anything else. You can implement a policy or perk for smart reasons, with the best of intentions… and it still might be a dud.
That’s OK! You live and learn, and then allocate that budget elsewhere.
Here’s another example from personal experience:
During the course of many conversations with our employees at One Beat, I noticed that a lot of people loved plants. Many had gardens at home, and would bring flowers or produce to the office. They were obviously proud of what they’d grown.
So we decided to start an office garden where people could plant their favorite flowers or vegetables, and cultivate them together with their colleagues. Great team-building idea, right?
It sure was—for a minute. After an initial rush of enthusiasm, people lost interest in tending the company garden. As much as they might’ve loved growing plants, it turned out that this activity was best enjoyed at home during non-working hours.
This would’ve been an easy time to fall for the sunk cost fallacy. But I didn’t think it made sense to invest more money and effort into a perk that people weren’t going to use. So instead, we took those resources and allocated them elsewhere, to much better results.
Update your incentive plan on a rolling basis
Imagine you’re a CEO of a company staffed primarily by single people in their mid-20s. What kinds of perks do you think would be on their wish lists? Now fast forward five years.
The conditions of your employees’ lives have changed—doesn’t it make sense that their needs and desires would too?
At One Beat, we do an annual review of our employee incentive plan to make sure it’s working as intended (i.e., actually incentivizing our employees by providing perks that are relevant to their lives). Other companies might do this more or less frequently; the important thing is to do it regularly. It’s not realistic to do it every month, and it’s not effective to do it every decade, but smart leaders can find the right balance.
Like a strong company, a strong employee incentive plan is always evolving. Not in a frivolous or reckless fashion—change for the sake of change—but in ways that effectively adapt to the wider environment. It’s a mistake to think you can “set it and forget it.”
But it also doesn’t have to be an exhausting, Herculean feat. If One Beat can do it, your company can too, regardless of its size or revenue, because the key to crafting a great employee incentive plan isn’t springing for the most exotic or expensive novelties.
It’s showing your employees you care, in tangible ways that make their lives better. They’ll thank you for it, and your CFO will too.
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.