Employee retention and engagement should always be a priority for businesses. However, incentivizing workers has become particularly critical for supply chains as labor shortages persist and output demand rises.

Lingering product shortages and delays have placed unusually high pressure on supply chains to act quickly and increase output. At the same time, 47% of shippers and 73% of third-party logistics cite difficulty finding, training and retaining qualified labor. Incentive programs can help supply chain organizations overcome these challenges by improving engagement, retention and productivity.

Here are eight effective ideas supply chain businesses can use to incentivize their workforce.

Incentives to Offer

The first and most straightforward way to categorize incentive programs is by rewards. A business’s unique workforce, project and budget considerations will affect different rewards’ efficacy, but these five incentives are among the most effective across workspaces.

1. Cash Bonuses

One of the most effective rewards to offer is also the simplest: cash. Generally speaking, wages have not risen as quickly as consumer prices, so many workers today are looking for higher pay. Raising base wages will help, but offering cash rewards for high performance can provide a unique and enticing incentive.

Cash has the unique advantage of meeting every employee’s needs and preferences. No matter what a worker likes or wants to achieve, more money in their pocket will help them. Cash bonuses may not be the most groundbreaking or creative reward, but they’re popular for a reason.

How much to give employees depends on a company’s budget. Regardless of the specifics, businesses should consider scaling rewards and offering more money for higher achievement.

2. Profit-Sharing

Cash bonuses are far from the only financial incentive businesses can offer. Profit-sharing is another effective option.

The primary benefit of a profit-sharing program is that it ties rewards directly to company performance. Employees will enjoy larger bonuses if the business does better and profits rise. This direct cause-and-effect relationship can be a powerful motivator to improve productivity and engagement.

Higher wages may catch people’s eyes more than profit-sharing, but the latter can be more profitable for employees under the right conditions. If Amazon hadn’t substituted its profit-sharing scheme for higher pay, each worker would now own shares worth more than $350,000 on average.

3. Extra Vacation Time

Employee incentive programs can be effective without offering financial rewards. One of the best noncash perks supply chain organizations can provide is additional time off.

Worker stress has reached astronomical levels lately, with 77% of U.S. professionals saying they’ve felt burnout in their current positions. Consistently working long hours is one of the most-cited reasons for this exhaustion, so vacation time can be an enticing reward for today’s employees. The chance to get an extra-long break could easily push people to work harder in the meantime.

Supply chain managers must be careful with how they deliver these rewards. If employees must work more hours than they’d get off as a reward to achieve them, then the program is self-defeating.

4. Travel Programs

Similarly, creating company travel programs can also be an effective way to incentivize employees. Workers may want to travel more than ever after spending so much time at home and within the same area during the pandemic.

Not many companies offer employee trips as an incentive, so these programs can be a useful recruiting tool. Since these trips can apply to a group of workers, they’re also ideal for building stronger employee relationships. Those bonds can translate into higher engagement and productivity when people return to the workplace.

Travel programs are also surprisingly cost-effective, thanks to their customization options. Companies can send smaller groups on a more remote vacation, take a larger one on a day trip or do anything in between to match their budgetary restraints.

5. Schedule or Project Choices

Some supply chain managers may choose to reward top-performing employees with more choices. Letting high-achievers have first pick over their schedule or projects can be a tempting reward in places where workflows may frequently change.

Many supply chain employees lead busy lives, so the ability to pick a work schedule that better suits them is compelling. Alternatively, some workers may simply want to break up their routine by choosing a new project or workweek. In either case, offering these choices as an incentive for better performance can be a powerful motivator.

Control over schedules has become even more popular than remote work opportunities. About 95% of survey respondents wanted flexible hours compared to 78% who preferred location flexibility.

Incentive Program Types

Supply chain organizations can also revamp their incentive programs by rethinking how employees earn rewards. In general, they should tie directly to actions that benefit the company. Here are three of the best examples.

1. Quantity of Work

One way to run incentive programs is to reward employees based on how much work they accomplish. This option is ideal for supply chains facing tight deadlines or rising demand for higher output.

Not every job or metric is a good fit for quantity-based incentives. For example, truckers can only drive for 14 hours between 10-hour off-duty periods, among other restrictions. Consequently, logistics companies can only offer incentives for longer drives up to these legal limits.

Warehouse tasks are often a better fit. Businesses should choose whatever metric they need to improve most, such as picking rates, and define consistent goals and rewards to motivate employees.

2. Quality of Work

Supply chains can also reward workers based on the quality of their work. This may be a better alternative for transportation employees, using metrics like delivery times or safe driving habits to measure performance.

For many supply chains, completing tasks faster is one of the most practical ways to monitor work quality. However, reduced errors or improved safety statistics can also be helpful, relevant metrics.

Quality-based incentive programs are better at motivating employees to take more care and give more attention to their roles. As a result, these schemes can help supply chains impress clients and build positive work environments.

3. Retention

Some supply chain organizations may need to focus more on retaining employees than improving the quality or quantity of their work. Incentive programs can fit this goal nicely, too. This strategy is increasingly helpful, considering the industry had a 49% turnover rate in 2021.

Retention incentive programs are among the most straightforward to run, too. Employees receive increasing rewards for staying for longer periods. This won’t necessarily improve individual productivity, but it can help mitigate labor challenges.

Keep Employees Engaged With These Strategies

Supply chains must do all they can to motivate, grow and retain their workforce. These eight incentive program ideas provide plenty of opportunities for organizations to achieve that goal. The industry could move past its current labor-related obstacles as more businesses implement these reward schemes.