Building a better employee experience, higher engagement, and a stronger culture are all important goals that fuel business performance, productivity, and employee well-being. To understand and shape the company’s culture, many companies use employee engagement surveys to measure the state of their employee experience and take action to make improvements. Since surveys and follow-up actions require significant time and financial investment, companies sometimes consider incentives to improve survey scores, aiming to show meaningful progress like other key metrics.
Concerns and challenges with employee survey incentives
While this thinking is understandable and often well-intentioned, incentivizing your engagement surveys can lead to several negative outcomes. It can damage the quality of employee feedback, hurt perceptions about the value of employee surveying, or lead to less-than-ideal behaviors around survey results. Here are some of the key risks associated with incentivizing survey employee engagement scores:
Misalignment with purpose
Engagement surveys gauge employee sentiment and gather feedback for organizational improvement. The goal is to provide employees with an opportunity to be heard and to act where possible when issues or challenges impact their engagement. Turning employee listening into a performance KPI changes how employees feel about the survey and the types of responses they will give. This may lead them to provide skewed results that don’t reflect genuine feelings and perceptions.
Motivation to inflate scores
Suppose employees know that higher engagement scores lead to monetary rewards. In that case, they are incentivized to artificially inflate their responses, making the data unreliable. This phenomenon has been well-researched. Employees give more honest and direct feedback when employee feedback exercises like surveys or 360s are used for developmental purposes. When employees know that there may be a reward or punishment related to their ratings, they often inflate their ratings to avoid negative consequences.
Potential for manipulation
When managers or other leaders know employee survey ratings will impact their financial success, they might directly or indirectly pressure team members to respond positively to increase the chances for a financial reward.
Gaming survey timing
Most companies conduct an annual survey to establish their engagement levels for the year. However, a survey is just a point-in-time measurement. Companies that want to inflate their scores can schedule their survey to avoid negative news that might impact the score or to align with positive news that might inflate the scores.
Incentivizing the uncontrollable
Daily interactions with peers and managers may influence engagement. Still, some of the largest drivers of employee engagement involve confidence in senior leaders and belief in the company’s vision. Other factors, such as poor work-life flexibility, work scheduling issues, or even pay, are often based on policy decisions from those in charge. All of these are factors that managers largely have little control over. By incentivizing engagement at a managerial level, it is possible to create an unwinnable situation for managers where, even at their best, they cannot move the needle to overcome factors outside of their influence.
Inequality concerns
Different departments or teams often have very different challenges. Tying financial incentives to engagement scores can unfairly benefit some departments while penalizing others. For example, some departments may have roles that involve mundane tasks, entry-level work, or high stress. In contrast, others may have a stable team that collaborates in a knowledge-worker environment. Increasing the score on one-team may be a relatively easy feat compared to the other.
Engaging the wrong people
It is great to have a highly engaged workforce when those who are highly engaged are also performing at a high-level. It is bad for a company to have highly engaged employees who are performing poorly. These are people who love working but aren’t contributing as they should. If a company is aggressive about managing performance, there should be some disengagement that occurs as people are pushed to perform, placed on performance improvement plans, or managed out. If a team has low performers and a manager is managing them out, their engagement scores may go down for the right reasons. Not rewarding them for doing the right thing would be a mistake.
Alternatives to incenting on employee survey scores
The best KPIs for measuring meaningful culture performance are the ones that capture real changes in employee productivity, innovation, collaboration, well-being, and lower turnover. While turnover can be a rather direct measure, it can also be difficult to outright measure these other factors in a way that can be included in an incentive plan.
Option 1: performance management (ideal)
If a company wants to build a stronger culture and improve the employee experience, those goals should be reflected in how the company evaluates and rewards the performance of its leaders. The best practice is to identify the leadership behaviors and competencies that support culture and experience improvement and to solidify those in the formal performance management system. In practice, clearly defined expectations are communicated to leaders/managers, which signal the importance of being culture-centric, guidance about what those behaviors look like, and accountability for performing those behaviors similarly to other key aspects of their job role.
This type of performance management must first be implemented at the senior leadership level to be most effective. Not only do higher-level leaders have the most leverage to bring about change, but their behaviors also communicate a powerful message to other leaders in the company about how much they should prioritize culture when leading their teams.
Ultimately, doing this right means that leaders or managers are rewarded significantly when they are true stewards of the culture. Conversely, they are held to account and even terminated when they do not perform as expected in this area. The reality is that all too often, leaders are rewarded for their competence in certain business and technical areas, but there isn’t enough courage and conviction to prioritize high-quality people leadership at the same level as other KPIs and business results. Unfortunately, what gets missed is the mistaken belief that one single leader is more important than the productivity, innovation, and energy of those further down in the organization. The result is an employee population with untapped potential and constrained business results.
Option 2: survey-behavior related
Implementing a culture-centric performance management process can be a serious undertaking. A lighter — but effective — approach is to consider incentivizing the extent to which leaders and managers are doing the right things with survey results, such as:
- Reviewing the results and self-reflecting
- Sharing the survey results with the team
- Discussing the results
- Developing an action plan
- Monitoring action and improvement
While not all steps are readily visible, a manager’s manager should be aware of the extent to which certain post-survey steps are fulfilled. More formally, there should be a visible action plan and evidence that the action plan is being pursued. For additional information, it is possible to use a post-survey check-in survey that asks employees to indicate whether they’ve seen the results, had a conversation, and seen an action plan being implemented. These exercises reinforce and incentivize leaders and managers to follow through on the actions that lead to cultural improvements.
If company managers see the employee survey as valuable — and do something productive with those results — the outcome will be positive. This approach emphasizes incentivizing the right leadership behaviors around the survey rather than the outcome of those results, which may be beyond their control or impacted by other team dynamics that may be hard to account for.
Option 3: Incentivize a single survey item
While it is not ideal to incentivize engagement scores, a more moderate approach is to consider some level of reinforcement for a single survey item. Generally, the idea is to identify a low survey statement score and consider a major focus area for the organization. When choosing a survey statement to focus on, it should be actionable, achievable, and aligned with the business.
- Actionable means that some clear decisions or actions can yield improvement. For this reason, focusing on an engagement-related statement is not recommended since it tends to be outcome-oriented. For example, an engagement statement such as “I would highly recommend working at this company” is an outcome-oriented measure that cannot be directly improved. In contrast, a statement such as “I feel genuinely appreciated at this company” can be directly improved, and increases will positively impact the number of employees who are willing to recommend the company.
- Achievability is how much a company can budget the time, resources, and money needed to inflect change in a certain area. If employees are sour on benefits, the needed fixes may be far too costly or difficult to implement as a realistic option. At the same time, negative perceptions about meetings can be much easier to improve and solve.
- Alignment is about finding improvement areas congruent with the company’s business direction and cultural aspirations. For instance, a fast-growing tech company may see low ratings for efficient processes. This may not be a good choice to act on because the company knows that there are a lot of inefficiencies while it is undergoing rapid change.
With this concept in mind, the idea is to identify an actionable, achievable, and aligned statement to incentivize leaders. This approach works best when the incentive is a whole company goal where everyone plays a part in the improvement, and success is measured across a moderate period, such as a year.
For example, if the goal is to improve employee appreciation scores, senior leaders would be responsible for supporting the initiative or providing the budget to make the initiative successful. Those funds might lead to better manager training or new technology (e.g., rewards and recognition platforms). Leader support might include communicating more purposefully about the importance of the initiative, checking in on how managers are doing, and modeling the behavior they want to see in others. Managers would be responsible for attending the training, applying what they have learned, and being stewards of any programs and technology with their teams. The results should be a meaningful change to the single survey statement when administered in subsequent surveys. In this way, it isn’t treated as an individual performance metric, but the company-wide improvement is treated as a mechanism that can lead to a meaningful incentive for all involved parties.
Option 4: Incentivize using a different measurement tool
A final alternative is using a tool, like a 180 or 360-degree feedback assessment, to understand whether the leader/manager is doing the right things to support the culture and improve the employee experience. A 180-degree feedback assessment can be used to ask specific questions aligned with key survey themes and/or post-survey actions so that direct report employees can provide feedback about how the leader/manager is performing. 360-degree feedback would include more than direct reports from the manager, with ratings from peers and one’s manager.
The questions in the assessment instrument can be easily aligned to measure survey-specific themes. For example, if a survey includes statements such as “I feel included” or “I believe in the direction of the company,” then relevant 180/360-feedback questions could be “Takes steps to make sure all employees are included” or “Speaks positively and clearly about the direction of the company.” For post-survey actions, the questions might include “Shares employee feedback results with the team” or “Solicits feedback from employees about best actions following employee survey.”
In all cases, the key is to get direct data about the manager or leader’s behavior to determine if they are doing the right thing proactively. This data is specifically about the managers’/leaders’ actions and, therefore, will best represent how they perform in their stewardship of the culture. It should be noted that the best practice is to use the 180/360-degree feedback assessment solely as a developmental exercise so that employees provide ratings designed to help the leader/manager grow. However, it is also possible to use a 360-degree feedback assessment for performance measurement reasons if it is understood that ratings may get skewed when employees know the results could be used for personnel-related actions (e.g., judging performance, providing a financial incentive, etc.) This may be a satisfactory trade-off since even skewed ratings will provide some insights into whether a leader’s or manager’s direct behaviors are going in the right direction.
Real culture change comes from feedback, not survey incentives
Ultimately, most companies want to see their cultures flourish and their employees rave about their experiences. The most effective way to build a strong culture isn’t by using incentives. Instead, it’s about using employee feedback to learn from employees, understand them, and build more trust.
When employees see that their voices matter — and that the company prioritizes their perspective — workplace culture improves. For this to happen, senior leaders must be held accountable for how their actions and decisions impact the employee experience. In contrast, managers must develop to be more skilled at culture stewardship. These are the steps that move the needle. While there is a place for engagement survey incentives, their best use should be around leader and manager behavior. Suppose managers and leaders are doing the right things. In that case, whether around survey time or throughout the rest of the year, the company culture will improve, and so will the results that come with it.
