What Kind of Incentives Motivate Employees?

Health incentives can be tricky. HR execs and benefits administrators know that incentives can be a vital component of a successful health benefits platform, but it can be hard to predict which incentives will increase employee engagement or get the population to adopt healthy behaviors.

Most HR execs have learned, some through trial and error, that having a one-size-fits all plan for incentives doesn’t work. Yet most companies continue to use a unilateral approach to incentives. In fact, a Rand employer survey found that only 10 percent of employers — who used financial incentives to spur health-related engagement — tied incentives to individual goals.         

There are a two ways to personalize incentives programs: First is to personalize the ways to earn. For example, different people earn rewards for achieving their own unique health goals. Second is to to personalize the rewards themselves.

Here are four ways to personalize the rewards to individuals based on their preferences and goals:

Cash

As they say, cash is king. But it’s important to be strategic about this type of reward, so as not to overpay. The program’s budget could quickly balloon if the incentives are too costly. It’s ok to start small and then steadily increase cash rewards. In fact, 84 percent of employees surveyed would participate in a health benefits program for just $5 a week or $250 a year, according to an Alegus study.

HSA Deposits

These serve a very similar purpose to cash, which can be used to further improve health. However, the challenge with this type of reward is that many employees don’t value HSA deposits as much as they value cash or other (admittedly more fun) rewards. An HSA may not offer the instant gratification associated with a reward, but employees will appreciate that this type of incentive helps offset the cost of deductibles, co-insurance, or copayments that come with a high-deductible health insurance plan.

Gift Cards or Credit Card Rewards

Pre-loaded gift cards or credit card rewards offer a diverse range of reward options for program participants. Some employees may be highly motivated to earn more airline miles or hotel points, while others may want to spend a gift card on a new piece of fitness equipment or a nice dinner.

Regardless of how they’re spent, these types of incentives give HR execs the flexibility to offer a reward that piques each participant’s individual interest.

Points

A points system allows incentives to be closely aligned with the participant’s health goals and needs. For example, a diabetic employee’s health goals will be much different than someone who is incredibly healthy, and should be encouraged to participate in different types of healthy activities.

To solve this problem, health program administrators can award points to the diabetic patient for visits to their health provider, and the healthy employee could receive points for walking an extra 5,000 extra steps a day. Participants can track their progress via a feedback loop — a functionality borrowed from game mechanics — that spurs the employee to go back to the program’s app to see how many points they’ve accrued and how much closer they are to achieving their goal. What’s more, these are the most flexible of all of the rewards, and allows participants to redeem points for the prize of their choice in the program’s virtual store.

This is just a sampling of the types of rewards that can be offered to the employee population. And when the right incentives are coupled with great benefits plan design, employers will see their workforce adopt the healthy outcomes needed to keep healthcare costs down.

For more information on how to diversify your rewards, read The Psychology of Rewards.