Adding Incentives to Your 2023 Budget

Sep 20, 2022 | Incentives & Recognition

Tips for incentive and recognition budgets

For many, fall isn’t about football or pumpkin spice lattes. It’s about budgets. Budgets may not be fun, but they can – and should – contain fun elements that contribute to your company’s bottom line, like incentive programs.

If you’re currently tracking incentives with spreadsheets and budgeting a lump sum for discretionary “good job!” kudos, stop and ask: what will best serve your organization by linking desired behaviors to organizational goals?

Humans are wired to need positive motivation. How can you foster that desire and link it to both personal and organizational success?

Benefits of Formal Incentive Programs

  • Useful data: One part of a formal incentive program is the software to run it. Managing spreadsheets can be more work than a purpose-built tool, like the One10 PerformX® solution. Rather than hunting around for data you think could be useful, use a tool that gives you data to drive decisions.
  • Feeling Rewarded: Cash isn’t king or queen when it comes to motivation. Surveys show that respondents who already have incentive programs said they use cash rewards to pay for everyday necessities, like gas and groceries. Is that helpful? Yes. Does it make your employees feel rewarded? Not as much. Points are both flexible and less likely to be spent on paying the bills.
  • Retention: Pre-pandemic, One10 surveyed 3,000 working adults on the strength of relationships between employees, companies, and managers. More than 70 percent were likely to remain with a company when they felt they were being properly recognized. And this was pre-pandemic! In 2022, with the great resignation and “quiet quitting,” it’s even more important to make employees both feel valued and feel like what they’re doing makes a difference to the organization and the bigger picture.

Three Categories of Questions

Once you’ve decided to move beyond spot bonuses and spreadsheets, how do you know what amount to build into your 2023 budget for incentives?


Decide what kind of budget: closed (designed not to exceed a certain amount) or open (based on performance)?

While an open budget might sound tricky – how do you plan for that? – these kinds of programs generally pay for themselves. Why? Because you’re paying only for incremental sales and performance that exceeds the goals. So yes, you may pay more, but you’re doing it from a larger revenue base that the incentives helped create. That’s a very provable ROI.


Look at projected results and participants’ earnings potential. If you haven’t done a formal incentive program before, you’ll need to make an educated guess on results. That will help figure out your budget.

For earnings potential, look at the value of the reward that will motivate your audiences. You can then do a calculation for ROI to determine both budget for incentives and sales goals.


How long do you want your sales incentive program to run? Short or long-term?

Studies show long-term programs can produce more motivation, which in turn leads to higher sales or other desired behaviors. (Remember your incentive program should line up with key objectives for organizational success, not only sales.)

On the other hand, short-term programs have built-in flexibility. As things change, you can adapt. For example, your programs could adjust for seasonal or marketplace trends.

Recognition versus Incentives

We’ve been talking here about incentive programs, but the same thinking applies to recognition programs.

We shared in another blog the finding from a report by Inspirus showing recognition programs can reduce turnover by 31 percent and absenteeism by 41 percent. Plus, they make the workplace more fun by increasing employees’ feelings of inclusion and overall happiness.

Recognition programs can help with remote workers, too. The report also estimates a 31 percent increase in productivity, which is even more pronounced among remote workers.

Recognition and incentive programs can, and should, go hand-in-hand. When it comes to budgeting, recognition programs are more straightforward, typically based on a percentage of payroll (1.5 to 2 percent).

As you look at budgets, think about results. You have to spend money to make money, as the saying goes. So, what should you be spending, and how, to generate the results you need?

Ready to go? Here’s a step-by-step guide to building an awesome incentive program.

Mark Smith

Mark Smith

Mark is the senior director of rewards at One10. Mark worked for 10 years as an official team licensed apparel buyer and planner for clients such as the NHL and His experience also includes working in a Rewards Service Group as Ecommerce Marketing Manager for over 3000 programs internationally. You will rarely find Mark in a bad mood and his talents are many as he plays the stand-up bass in a community orchestra and the bass guitar in a rock-and-roll band.