Employee Incentives: 3 Best Practices to Drive the Right Behaviors

Sep 07, 2021
1 min read
Employee incentives are critical to driving performance. Learn how to motivate your employees and design incentives that motivate the right behavior and empower employees to succeed in their role.

Motivation is the main driver behind every successful employee. Motivated sellers know which prospects to target and how to structure deals to increase their commission pay. And it’s all thanks to their incentives. For your sales team, motivation is driven by your incentive compensation plans. But regardless of whether an employee is in sales or not, incentives are key to driving behavior and revenue in any organization. 

Using Employee Incentives to Drive Top Performance

Employee incentives are a pay structure that motivates employees to reach specific goals. Like sales compensation plans, they work because they motivate employees and drive specific behaviors. It comes down to psychology. Your incentives reinforce and reward a specific behavior, which motivates employees to repeat it. 


Here are three best practices to create employee incentives that drive top performance.

1. Align Incentives with Organizational Goals

Successful employee incentives motivate and encourage the right behaviors because they are aligned with company goals. An easy way to integrate this into your planning is through the ABCs of incentive planning: 

  • A: Aligned with corporate objectives
  • B: Benchmarked against industry data
  • C: Constructed to drive the right behaviors

2. Tailor Employee Incentives to Individual Roles

Every person in your organization plays a different role in your business operations. The best employee incentives are focused on individual strengths and responsibilities. This motivates employees on a personal level and gives them the ability to succeed in their unique roles.

Personalized incentives ensure that each individual has control over their own performance. It shows you and your employees how they each play a valuable part in the success of your company.

3. Utilize MBO Programs

The most popular employee incentive is a sales commission structure. For non-sales employees, management by objectives, or MBO programs, are highly effective at driving performance.

MBOs are goals set for each individual employee around their specific job responsibilities. These goals are rewarded with a bonus-type payment when the target is achieved in a specified amount of time. Using a combination of sales compensation and MBOs aligns your entire workforce around common goals. It shows how each employee is valued and contributes to the overall success of the company.

Learn more about employee incentive best practices and how to improve performance in the guide, "How to Build and Retain Employees to Drive Top Performance."

  • Incentive Compensation
  • Sales Coaching and Motivation
Karrie Lucero
Karrie Lucero
Creative Strategist

Karrie Lucero is a Creative Strategist at Xactly Corp. She earned Journalism and Marketing degrees from New Mexico State University and has experience in the tech and SaaS industries, content strategy and creation, video production, and brand storytelling.