Motivating and Rewarding Employees with Unconventional Benefits

Organizations must find ways to recognize and reward their best employees, or they risk losing them.

Your top performers are your biggest asset. Other organizations would love to have them on board and are eager to poach them.

Motivating and rewarding employees requires creative thinking, especially when budgets are tight. These unconventional benefits will help you stand out and give your best people a reason to continue going above and beyond for your organization.

Understanding the need for alternative compensation

When it comes to compensating your high performers, higher salaries and annual raises are certainly options, but they may not always be financially viable, especially in times of market uncertainty and constrained budgets. Fortunately, salary isn't your only option for motivating and rewarding employees.

While unsatisfactory pay is a top reason for quitting, the Pew Research Center found it was far from the only one. Other issues commonly reported in their survey included:

No opportunities for advancement
Felt disrespected at work
Childcare issues
Disappointment over workplace benefits

Solving these issues can go a long way. Employees may be willing to accept lower pay in exchange for a better work environment, more generous benefits and future career growth. This highlights the value and need for alternative compensation.

5 unconventional ways to reward your high performers

Unsure of what else you can offer your employees? Here are some unique options to consider:

1. Performance-driven compensation

People respond to incentives. If your high performers put in more work and extra hours and drive more results for your organization's bottom line, it can feel unfair and frustrating if they receive the same pay and cost-of-living raises as everyone else. Think about how your compensation plan could better reward results.

McKinsey found that financial incentives for employees can drive rapid performance improvements. At the same time, when employees produce better results for your business, it can generate more revenue and resources you can use for their compensation. It's a win-win for motivating and rewarding employees.

There are a few ways to design performance-driven compensation, including:

Bonuses: One option is to set year-end bonuses based on specific performance metrics, such as achieving sales targets, reducing departmental expenses or successfully meeting product development milestones. To reduce turnover, you could also partially base bonuses on seniority and the number of years an employee has worked at your organization.
Stock options: Another option is to set up a stock option program. Top employees receive shares in the business, giving them partial ownership over their results. When the business does well and share value increases, your employees benefit, as well. You could set up stock options with a vesting schedule to reduce turnover. In other words, employees must work a minimum number of years to keep everything. If they leave before then, they forfeit their shares back to the business.

2. Professional development and career opportunities

Top employees are driven. They want help advancing to the next level in their careers. That's why professional development is such an important factor in why employees stay at a job. Think about how you could offer more employee training and mentorship programs. When employees continue learning, they stay excited rather than stagnating.

If your budget allows, consider offering stipends to employees who pursue professional degrees or certifications that will benefit your organization. To protect your investment, you can require a minimum work commitment for full reimbursement.

You should also clearly outline how employees can grow within your organization through promotions. Share the steps, timeline and expectations for advancing into more responsibility and higher pay. Even if you have big plans for your top performers, they may look elsewhere if they don't see a path forward. Recognizing and rewarding employees' ambitions helps them stay engaged and loyal.

3. Enhanced health insurance and retirement plans

Employees highly value workplace benefits in addition to their salaries. For example, 82% of employees ranked medical insurance as their most important workplace benefits, according to ADP's 2023 Employee Benefits Survey.

Investing in more generous health insurance could be especially important for more experienced employees, who are more likely to have families or medical needs than their younger peers. Lower out-of-pocket costs and broader coverage can go a long way in keeping your best workers happy.

Retirement benefits also matter — 60% of employees ranked a workplace retirement plan, such as a 401(k), as a top-three workplace benefit to ADP. Workplace retirement plans enable employees to save more per year with tax benefits compared to an individual retirement account outside of work.

You could further enhance a 401(k) by offering matching contributions for your employees. For instance, your business matches 50% of employees' contributions up to 6% of their annual salary. Those matching contributions could use a vesting schedule, where employees must work a minimum number of years to keep all matching funds.

4. Nontraditional benefits and personalized perks

Beyond the standard health insurance and retirement plan, what other benefits would top performers at your organization prefer? Some unconventional offerings include:

Dental and vision insurance: According to ADP survey data, 63% of employees rate dental insurance and 31% rate vision insurance as top-three workplace benefits. They are excellent additions after medical insurance and a retirement plan.
Student loan repayment programs: You reimburse employees who developed the skills you want most, giving you one more edge for hiring top talent.
Parental leave and childcare assistance: This can help new parents maintain work-life balance, another top factor for employee retention.
Additional wellness benefits: Wellness programs can help your employees live happier, healthier lives while reducing your medical insurance expenses. Gym memberships, mental health resources, nutrition programs and smoking cessation programs are a few possibilities.
Pet insurance: A thoughtful way to support the furry family members of your staff.

Consider polling your employees to see what less-common perks would be most popular.

5. Flexible work arrangements

During the pandemic, employees got used to remote work and flexible schedules. Today, many employers are rolling those back. In 2024, 75% of workers with jobs that could be handled remotely reported being required to have at least some in-person days, up from 63% in 2023, according to the Pew Research Center.

The same survey found that many employees were willing to quit their jobs if remote work was no longer available. This creates an opportunity for you to stand out.

Can you offer some level of flexibility? Options might include hybrid schedules with a mix of in-person and remote work, flexible hours with schedules not locked to the traditional 9 a.m. to 5 p.m. schedule or more accessible paid time off. Flexible work arrangements show trust and support for your high performers without micromanagement.

As flexible work arrangements become less common, offering them can help you attract and retain top talent, even against higher-paying competitors.

Thinking outside the box

The best employees have options. Competing on salary alone is difficult and costly. However, by thinking outside the box with your compensation strategy, you can offer meaningful ways to keep your high performers motivated and loyal.

As you make the case for these benefits to leadership, emphasize the long-term financial value of recognizing and rewarding employees. The ADP benefits team can assist you in designing and implementing these programs for your workforce.

Learn more about the value of employee benefits

Get our complimentary guidebook, "Meeting the needs of the modern employee," because now is the perfect time to evaluate your existing benefits and enhance them before the next open enrollment.