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Despite budget constraints and economic uncertainty, Canadian companies are opening their wallets to give employees incentives to work harder, a new study found.

Forty per cent of the 767 companies surveyed planned to increase incentive programs and only 10 per cent thought it would decrease them in the coming year.

During the recession there was a focus on the bottom line; companies were obsessed with maintaining profits and paid less attention on employees. "Now that we're recovering, the focus has shifted to retaining and motivating talented employees to grow more quickly in a slow recovery," said David Eason, chief executive officer of Berkeley Payment Solutions Inc., which did the study.

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The survey shows a steady year-over-year increase in the number of organizations using incentives for employee programs. There was a 25-per-cent increase in 2010 and a 21-per-cent increase from 2011 in the number of companies using incentives for employee programs.

Employers are looking for carrots to inspire short-term performance, Mr. Eason said. "The challenge that year-end bonuses set goals that are a year away."

However the survey found that only 6 per cent of employers have found that a single type of incentive motivates all generations. "While older recipients prefer a more experiential incentive like a vacation trip, employers said employees in their 20s and 30s prefer cash incentives, Mr. Eason said.

Companies in the survey ranked retail gift cards as their most cost-effective choice, and said recipients most valued prepaid credit cards.

"Designing compensation and incentive programs that appeal to individuals across all age groups can be difficult," said Ingrid Buday, human resources co-ordinator of on-line land registration service Teranet, Inc.

"We've implemented a branded Visa prepaid incentive-card program that is easy to change as our business objectives shift," she said.

Editor's note: An earlier version of this story gave an incorrect name for the company that did the study on incentives.

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