At Ideawake, one of the most common questions we get from customers and leads is whether to include incentives for participation in their employee idea programs.
Although our response is always a resounding “yes,” from a best practice perspective, only ~50% of the organizations we work with elect to include incentives. This is for a variety of reasons, but they normally fall into one of three categories:
- Not wanting to deal with tax implications of monetary rewards since it requires several layers of approvals and creates more overhead for the program.
- Wanting innovation to be organic and seeing incentives as something that results in the program being inorganic.
- Thinking that incentivizing innovation is sending the wrong message or that it doesn’t fit with the culture.
Although these are all legitimate concerns, incentivizing idea sharing and collaboration is something that can have a material impact on your idea programs participation and long-term outcomes.
In this post, we’ll make the case for why you should reconsider using incentives to maximize the value per unit of effort you as a leader put into your employee idea program.
The Numbers Don’t Lie – Including Incentives in Your Employee Ideas Program Can Increase Participation By Up to 40%
A 2015 Study by Gallup found that employee idea programs with tangible rewards had participation rates that were approximately 40% higher than those without any incentives. Other studies done over the last decade show a wider range of participation increases, between 20% at the lower bound and up to a 70% increase at the upper bound.
What’s more, when looking at top performing employee idea programs from industry leaders, most of them incorporate incentives for participation including monetary rewards. Here are a few examples:
- Toyota: Toyota’s suggestion program offers monetary incentives for valuable suggestions. The rewards can range from small amounts for minor improvements to large bonuses for major innovations.
- Cisco: Cisco’s Innovate Everywhere Challenge encourages employees to submit innovative ideas and solutions. The company offers significant incentives, including cash prizes, funding for project development, and executive mentorship. Winning ideas can also lead to career advancement opportunities and global recognition within the company.
- Google & 3M: Google’s “20% Time” policy allows employees to spend 20% of their work hours on projects they are passionate about, leading to innovative ideas and products like Gmail and Google News. 3M has a similar “15% Time” program, but also offers other rewards including cash bonuses, stock options, and recognition awards for successful innovations.
How to Incentivize Employee Ideas and Suggestions
There is no one size fits all for what types of incentives to include in your employee idea program, but here are a few categories that you can get started with. If you’re looking for inspiration or more specific examples of each one of the categories we cover below, check out our resource 25+ Prize and Reward Examples that Will Improve Participation in Your Employee Idea Program.
- Monetary Rewards: Monetary rewards have proven to be an effective incentive for driving both short-term and long-term participation. A few examples include a flat cash reward for ideas that result in a predefined threshold of savings or revenue, paid time off, or earning points that can be spent within your current internal rewards platform (ie: Guusto, Kudos, Bonusly, etc).
- Non-Monetary Rewards: If your organization’s policies prevent you from incorporating monetary rewards, you can provide incentives like company swag, featuring top ideators in your monthly newsletter, or preferred parking for a month in the front of your company parking lot.
- Building Into Employee Performance Reviews: Tying participation to performance reviews is the single best way to encourage long-term participation in your employee ideas program and is what we at Ideawake define as achieving a true “culture of innovation.” For tips on how to integrate employee ideation into your performance review process, see Incorporate Employee Ideation into Your Formal Review Process.
What Should We Incentivize?
To design an incentive system that maximizes participation and outcomes, what we’ve found works best is not simply giving rewards to all team members who share an idea. Instead, we believe designing an incentive system that focuses on when ideas are submitted, the types of ideas that are submitted, and other collaboration metrics that go beyond idea sharing works best.
- Early Participation: We’ve found incentivizing early participation when your program goes live or for early participation in each challenge you post can be incredibly helpful. For example, giving $25 gift cards to the first 10 people who share an idea.
- Ideas that Match Success Criteria: Providing a reward to anyone who shares any idea (or problem in many cases) can often lead to lower quality ideas and misalignment. Instead, make rewards contingent on ideas meeting predefined criteria such as alignment with your organizations strategic objectives in order to qualify for credit.
- Collaboration and Activities Outside of Simply Sharing Ideas: On average, 27% of your frontline team members will voluntarily share ideas in your employee ideas program whereas closer to 40% will leave feedback or suggest improvements to ideas that are posted. As such, we’ve found incentivizing collaboration activities like commenting and rating can unlock another layer of participation in your program.
Rewarding Idea Sharing Is Not a “Catch-All” to Solve Underlying Participation Problems
Although rewarding participation can measurably improve the engagement in and impact of your employee idea program, its effectiveness will be diminished if you have underlying issues in your program like lack of communication and transparency.
To make sure that you’re avoiding the top 5 drivers that cause lower participation in employee idea programs, see our blog post on the 5 Top Reasons Employees Stop Sharing Ideas.