EMPLOYEE INCENTIVES THAT WORK – EPISODE 056
In this episode of The Digital Broker, Ryan Deeds and Melissa Wilder look at employee incentives within insurance agencies. By listening to this episode, you will learn:
- What an incentive is supposed to do, and which incentives are best at achieving it
- How to deal with incentives that are commonplace but don’t work
- How to measure an incentive from the employee’s point of view
- How to make incentives work even when you’re short on cash, by providing time off, remote days, and validation.
What is an incentive supposed to do? Usually, reward employee performance, but there’s more to incentives than that. Incentives are bids for employee loyalty. When evaluating an offer from another agency, employees will study incentives to determine how well they’ve been treated by their current agency versus how well they’re likely to be treated by the other one.
This has made incentives another battleground where rivaling agencies compete for employees. In the resulting quest to outdo one another, principals have been known to roll out incentives of a wide variety. Dance parties, day trips, happy hours, ice cream socials, company picnics—all of them intended to foster closeness and cohesion, gratify employees, and ultimately get them to stay.
But do those incentives work? We don’t think so, because their success rates tend to be all over the place. Ice cream socials are a great idea until you find out that two of your employees are lactose intolerant. Day trips will thrill your outdoorsy and sociable employees, but your introverted creatures of habit, not to mention anybody who’s behind on work that week, would rather be back at the office. Benefits are doubtlessly important, but people at different stages of life value their 401(k)’s a little differently.
Any incentive that restricts employee freedom is likely to make employees less happy. Picnics on a day off? Happy hours after work? Your employees are the best judges of how they want to spend their time; when you co-opt some of it to pressure them into doing something that they didn’t choose, it will annoy the heck out of them. They’ll know better than to protest because nobody wants to come off as unappreciative or selfish. But it will bother them.
There’s no sense in getting too creative with incentives, custom-tailoring them to suit every employee’s preference. When it comes to incentives, you’re better off keeping it simple. Here are four universal incentives guaranteed to appeal to anyone: money, time off, remote days, and validation.
If the worst incentives are the ones that restrict employee freedom, it follows that the best incentives are the ones that give it. That is why cash is king and always will be. A day trip might be a dream to some and a nightmare for others, but everybody knows what they would do with a nice bonus. Money also helps you stay competitive: insurance agents and brokers talk amongst each other all the time, trading war stories about who pays high, who pays low, and who barely pays anything at all.
The challenge here, of course, is that money can be scarce, insufficient to give everybody a raise or bonus even if they deserve it. Does this mean shelving incentives indefinitely? Not at all. Incentives are somewhat convertible. You can explain to your employees that although you can’t afford to pay them more at this time, you’re ready to reward them with a little time off. We get it, though—as, with money, time off is not in infinite supply. That is why we recommend remote days, which are the best of both worlds: you give employees time away from the office, but they’re still getting work done.
We can hear some principals trembling already. Employees working out of the office? What is this heresy? Thankfully, we’ve put together a comprehensive guide to getting started on remote work, covering everything from why you should do it to how you would measure and ensure productivity, down to the equipment you should be using. In the meantime, let’s look at what happens when Melissa gets a remote day and works from home. Naturally, she can start her day sooner. Because her commute to work is normally an hour both ways, she can put those hours into her work; notwithstanding the obvious gain in time, this is also a boost to her attitude and the quality of her work, since an hour in traffic is likely to deplete a person’s energy. Because her place is so quiet, there are fewer interruptions, enabling her to focus and think more clearly. Put it all together, and she’s got more time to get better work done in a stress-free environment that’s conducive to better thinking. Remind us why you don’t want your employees to feel this way?
Remote days have something else going for them: they show employees that you trust them to get the job done however they choose. This is a powerful show of appreciation. Your employees are spending half of their waking lives within the confines of your office, and most of them would be depressed to think that they’re only doing it for a paycheck. Everybody wants to feel that their job matters, that they’re doing it well, and that other people are noticing. This is what we call validation.
Not to minimize the impact of cash bonuses and time off, but validation happens in the soul. Because of this, it is the single most powerful incentive you can provide. Asked about the time she felt most valued at an agency, Melissa doesn’t talk about the money she made or the time off she was given. She recalls the manager who showed her the ropes and stood by her no matter what and commended her to other managers whenever she did something awesome. She remembers all the opportunities that she was given to do new things and master new skills because the agency believed in her. When people feel like they belong, they tend to stay, no matter how rich a bouquet of incentives they’re being offered at another agency.
Validation is also the hardest incentive to provide effectively. There is no secret to writing a check, but how do you get employees to love what they’re doing? That’s the topic of another episode, but as we’ve already advised in a previous one, invest in your employees and they will invest in you. Take the time to figure out where they want to be, and develop a plan for them—in practice, this means career development. If an employee is doing a great job, probably they want to grow in that position. Are you helping them do so?
As we will discuss in greater depth in an upcoming episode, we recommend taking your performance reviews more seriously. Right now, performance reviews are some of the most de-incentivizing things that happen inside an agency. What if they were a venue for validation and career development? What if you took a couple of hours every month to work with an employee, single out and comment on his or her strengths, determine where they’d like to be in three to six years’ time, and help them develop a strategy to get there? By now, we hope you understand why you shouldn’t throw a rally in that employee’s honor and force everybody to attend. Keep it simple. Every good incentive is.
Is there something we can do to incentivize you to join our Digital Broker LinkedIn group? How about this: if you do, you can ask Ryan any question you want. You can also see how our community of agents and brokers is leveraging the wisdom of incentives and other principles of operational excellence. Do you know of any good incentives that we didn’t cover on this episode? Would you like to see Ryan Deeds be replaced by an AI host? This, and more, at the Digital Broker LinkedIn group.