The value of incentives in the workplace is undeniable, with larger companies like Google becoming quickly well-known for how well they treat the contributions of their staffInstead of punishing poor behaviour, rewarding good behaviour can have a more socially beneficial effect on your staff, and can create a more positive workplace which fosters creativity which can in turn boost productivityIncentives don’t have to be cash rewards or expensive holidays though, there are a number of different things that can encourage or motivate your staff to do their best.

Incentive Plans

A viable incentive program should have achievable and measurable goals with specific rewards attached to the accomplishment of those goalsThese can be corporate goals, individual goals, or a blend of both to foster individual growth and healthy social encouragement in the workplaceIt’s important that the employee(s) being offered the incentive program are able to make a difference and see how their actions affect the outcome.

Deferred Compensation

Most people have heard of deferred compensation strategies, but the reality of them is a little more complicated than the simplicity of the titleDeferred compensation can come in many forms, including the withholding of a portion of the employees income as part of a retirement plan, or the stalling of paying out a bonus to avoid tax.

Deferred compensation can also work as an incentive to keep your key employees with your

company for longer, and on top of that it can be tied to equity participation or partial ownership of the company, aligning the interests of the employee with that of the company and its shareholders.

There are two distinctly different forms of deferred compensation, qualifying and non-qualifying.

Qualifying Deferred Compensation

This is the typical deferred compensation that most people receive, it must qualify with the Employee Retirement Income Security Act of 1974Qualifying plans include the 401k, 403b, 501c, and 457bThere are stringent rules and limits associated with qualified deferred compensation, although the main benefit is that these plans are protected in the event that the company goes bankrupt.

Non-Qualifying Deferred Compensation

Non-qualified deferred compensation is typically a written agreement between an employer and an employee where the employee voluntarily agrees to have part of their compensation temporarily withheldthe company, invested on their behalf, and given to them at a predetermined time in the future.

The difference here is that employers can pick and choose which employees they extend this invitation to; they’re more flexible than qualifying plans in that there’s no legal promise to follow the vesting schedule; although the contributions here are not tax-deductible and employees must pay taxes on the deferred compensation at the time it’s eligible to be received.

This kind of deferred compensation is often referred to as “golden handcuffs” as it can ensure that key employees will stay with the business knowing that they will later receive a monetary benefit.

Corporate-owned Life Insurance

One way many companies will fund deferred compensation efficiently is through corporate-owned life insurance (COLI)That is a life insurance policy which is ownedand paid forthe company with the employees as the beneficiariesWhen an employee on this kind of program retires, they usually begin receiving the deferred compensation which is paid forthe COLI policy.

As the policy owner the company is allowed to borrow against the policy, even using those borrowed funds to cover the policy premiumIf the employee were to die before retirement, then the company would collect the death benefit.

Group Insurance

Another option is to offer employees cover under a group insurance policy which works out much cheaper and easier to manage than individual policiesOffering group dental or vision insurance can be a great boost for some of the senior staff members who are naturally having to deal with such problems; or a group life insurance policy can ensure that the spouses and/or families of your staff will be covered in the event of the death of an employee.

Offering less typical forms of insurance in the form of group insurance can show that you care about the general health and quality of life of your staff, which can encourage them to treat you and your business with more respect.

However you decide to incentivize your workplace make sure to seek out professional help, as there are many variables like tax deductions which can also benefit your companyGenerally your accountant can help with these things, although seeking external advice can give you a better idea of the market as a whole.