At zappos, incentive programs are so effective because they are, to borrow from Abraham Lincoln, “by the people, for the people.” Cash bonuses, for instance, can be given by any employee to any employee based on exemplary behaviour that supports the company’s values. Everyone is given $600 a year to give out as they will. The effect is two-fold. Not only are the receivers given an incentive, but also the giver is as well. Who doesn’t want to give out a nice bonus cheque to a coworker? Zappos is unique in many ways, but every business can benefit from offering effective, carefully thought-out incentive programs to its employees.

The folks at zappos can also earn “zollars,” which they can spend at the – you guessed it – zollar store on logo-identified merchandise. zollars are issued whenever and wherever managers and employees feel its warranted; Kenny created “fun and a little weirdness” – here are some zollars, Kenny. You’ll look great in a zappos t-shirt. Lillian delivered “WOW through service”: now go get a zappos travel mug to fuel more WOW. When employees are “caught” demonstrating one or more of the company’s Ten Core Values, they are rewarded.

They can also be “rewarded” for quitting. Zappos offers an anti-incentive of $4000 to every trainee who quits. You don’t like it here? Don’t think you ever will? Ok! Those who don’t value the company leave. Those who do, and reject the $4k, value their jobs even more and are motivated to validate their choice to stay. How do you encourage appropriate behaviours in the workplace? Incentives. They work. According to research, incentive programs, when properly implemented, can increase productivity, engagement, and help attract and retain talent.  Incentive programs come in all shapes and sizes, but here is a quick look at a few different variations on the theme:

• Sales Incentives. These are the most commonly understood programs. Companies or departments set targets for their salespeople, and these need to be achieved. That’s the baseline job requirement; the incentive here is to overachieve. A small percent of the overachievement or increase in profit, funds the incentive program and, of course, rewards the salespeople who have gone above and beyond. The benefit is that the salespeople are receiving reward and recognition,  for over-achieving, and the company enjoys profits beyond targets.
• Innovation programs. This type of incentive program depends heavily on the importance of recognition. A manufacturing plant, for instance, might give employees the opportunity to seek out safety concerns because accidents and shutdowns are tremendously expensive.  Or to recommend a new process to increase efficiency on the line which cuts costs. An innovation incentive program encourages the exchange of ideas and broader thinking, and rewards the employees at all levels in the company.
• Suggestion box. This is an old standard, but a good one none the less. American Airlines once asked its people, “How can we do better?” They put out a suggestion box, and someone wrote, “Get rid of the olives – no one eats them.” The airline removed one olive from each salad and apparently saved $70,000 a year. Hopefully that suggestion’s author received a little piece of the olive money and/or recognition.

This is not a zappos plug; I do not receive compensation for every “zappos” mention. I’m not raking in the zollars here. But they do deserve recognition because of the efficacy of their incentive programs – and because they demonstrate our next point so perfectly: Cash is not always the best incentive. We saw that with the employees who turned down $4000. They earn less than that in zollars (which, while cool and fun, are restricted to one store and one logo!). But they’re much more satisfied and productive nonetheless.

If you ask employees what type of incentive they prefer, the answer is almost always money. But, there is a much higher perceived value associated with unique and creative compensation. Winning a trip and travelling with the CEO, bringing home a new plasma TV, or having your idea become the basis for a new program or initiative – and getting your name on a plaque in the lobby…these are the incentives that keep us coming to work happy and productive. They are constant reminders of success; the cash, though, it’s easily spent and forgotten.  No matter how much it is, it is never enough.  What do people in your organization find motivating? How do you encourage the types of behaviours that will drive achievement of goals and objectives? When these questions are addressed by incentive programs, the entire organization will benefit.