Incentives Aren't an Expense, They're an Investment

 When budgets get tight, there comes a time to shave costs any way that you can. Companies will typically cut expenses that they don't see as vital to the operations of a company. For many organizations, this involves not only cutting advertising costs but their employee rewards programs as well. It's easy to see incentives as an expense, something that isn't necessary for the company to survive day-to-day. What if you were to change that viewpoint? What if a company looked at incentive programs as an investment and not an expense? 

Let's break things down to the basics. Yes, I'm pulling out the ol' dictionary on this one.


  • cost or charge; a cause or occasion of spending


  • The investing of money or capital in order to gain profitable returns, as interest, income or appreciation in value.

So let's look at things this way. An expense is a cost that you don't receive any increased return on. You exchange money for some good or service. End of transaction. Electric bills, operating overheads etc are all expenses, things that don't typically appreciate in value. 

Then look at investments. An investment is money spent in order to hopefully gain even more in return in the future. Retirement plans are investments along with other things like real estate and stocks. Investments typically involve money spent to achieve some sort of long term result. Incentive programs should work the same way for your company. You are making an investment in your employees. Incentive programs (should) be designed to improve work performance and to achieve - dare I say exceed - company goals. Spending money on a reward program should empower your employees and make them better performers. Over time, as they achieve success, you would continue to raise the bar of and make your employees that much more valuable assets. Valuable employees make for valuable companies.

What kinds of investments are you making?