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Any organization needs an employee reward system for a number of reasons. They can raise morale, drive, and output among staff members. Additionally, they can improve workplace culture and support the retention of talented workers.
Employee recognition and appreciation are among the critical drivers of employee motivation at the workplace. It affects an organization significantly, from performance and motivation to how long employees stay with their employers. Therefore, most organizations and business owners are leveraging employee reward systems in today’s competitive business landscape to attract and retain the best talents and improve employees’ productivity.
Subsequently, employee reward programmes are growing in popularity. According to the founder of American psychology and well known-psychologist William James, “the deepest principle of human nature is the craving to be appreciated.” Employees aren’t an exception, and they’ll genuinely like a workplace where appreciation is common. Are you an HR staff, manager or business owner? Let’s explore what the employee reward system entails, its types and why it's crucial to an employer and employees.
An employee reward system is a reliable formal way that helps companies or employers recognize their employees for a job well done, a goal achieved, or a significant contribution to their work. Usually, it entails encouraging and rewarding employees through gifts, praise and monetary and non-monetary incentives.
Employee reward systems refer to all the monetary, non-monetary and psychological rewards that an employer or organization provides for its employees to encourage and appreciate them for exceptional effort, achievement or behaviour. On the other hand, a total reward system is a strategy that an organization/ employer integrates to help them build a robust benefits structure for employees based on three key pillars, i.e. compensation, benefits and work experience.
The definition of a total reward system differs for each employer. Often, a comprehensive reward system may help form the overall reward strategy of an organization. However, the main goal of a total reward system is to enhance the relationship between an organization and its employees based on the outcome they’re trying to achieve.
An example of a total reward system is when an employer provides career development opportunities, flexible working hours and pay bonuses to attract outstanding talents and reduce employee turnover.
An example of an employee reward system is when an employer gives an employee a promotion or a professional development opportunity for a job well done. It may also include gift cards, bonuses or other tangible benefits.
Here are four different ways to reward employees:
One of the common forms of employee reward systems is monetary reward incentives. It entails financial rewards to employees for their exceptional performance or for meeting a specific goal. Often, this type of reward system works best with employees who are motivated by money. Among the common forms of monetary reward include:
· stock options
· profit-sharing plans
· cash awards
· Additional paid time off etc.
Non-monetary reward incentives entail non-cash perks or benefits an employer provides to their employees. This type of reward system satisfies and motivates employees who like perks. Among the best non-monetary reward incentives for employees include the following:
· flexible working hours
· additional time-off
· opportunities for personal/professional development
· public recognition
· fringe benefits, etc.
Employee assistance programs are designed to help employees maintain a healthy work-life balance. It also entails employers supporting employees’ physical and psychological health, so they’ll be better able to give their best at the workplace.
According to statistics by the American Institute of Stress, approximately 48% of people believe stress negatively impacts their personal and professional lives and costs employer about $300 billion annually in stress-related healthcare and missed work.
Examples of employee assistance programs include:
· health screenings
· educational seminars on stress management, crisis management, retirement planning etc.
As the name suggests, this type of employee reward system entails sharing employees’ accomplishments with the rest of the team members and the organization. A report shows employee recognition drives 2.7X more engagement in the workplace. Besides, a survey found that 37% of employees value recognition in the workplace.
Employee recognition can be as simple as genuine verbal praise to an employee or a ceremony for their excellent work. This program also encourages other employees to work harder and perform better, aiming to be recognized.
Other recognition programs ideas employers may explore include:
· an employee of the month
· customer service award
· weekly shoutouts on social media to the best employee
· top performer award etc.
Here are five steps to follow when designing and implementing an excellent employee reward system that works:
Start by creating a list of employee performance expectations. How does an employer expect employees to perform? What are the goals? Outlining and reviewing these aspects will give an employer traction and direction for creating an effective employee reward system.
Before an HR team or business implements a reward system, they must examine the effectiveness of such a program and identify employees' expectations. It can easily be achieved by using a structured survey and an open section for suggestions. More importantly, ensure the surveys are anonymous. They can also be done online.
Surveys also offer detailed feedback on reward ideas that employees would appreciate more.
The next step entails designing a sound system based on employees' survey feedback and insights. It also involves selecting awards that employees value while staying within your budget. More importantly, you should design a sustainable reward system to keep long-term.
Consider creating group rewards.
Designing a reward system is not enough; employees need to know about the new reward system in the organization. HR team or manager may consider scheduling brief meetings with employees to review the program. Additionally, responsible persons may send an email to employees outlining the details of the new reward system.
Getting feedback after the implementation of a reward system is essential. It can be after a month or quarter. It helps to know about employee satisfaction with the system and their expectations. Besides, employers can constantly adjust to align with employee expectations based on their feedback.
An employee reward system is essential and beneficial to both employers and employees. Below are the benefits and reasons a business/organization needs to have a reward system:
A good employee reward system influences how employees interact among themselves and with customers. It also impacts the image they portray and what they about a business out there. A reward system can profoundly boost your company's culture and reputation.
A great employee reward system motivates employees to put extra effort into their responsibilities because they feel valued and appreciated. Consequently, there is more productivity which is suitable for any business.
Besides, motivation brings about a positive type of competition among employees and teams since they have an equal opportunity to be rewarded.
When an employer has a good reward system that matches employees’ expectations, there is a likelihood of low turnover. Additionally, you easily attract great talent during the recruitment stage since they know what they expect in return after onboarding.
Rewards help team members come closer and create a sense of team spirit to achieve a milestone.
In addition to making employees feel valued in a work environment, an effective reward system also provides opportunities to enhance their well-being. In the long run, they'll be more engaged and less stressed.
An employee reward system is one decisive way employers and leaders can get closer to employees and transform businesses. There are endless ways of showing employees you value and appreciate their efforts and achievements. It ranges from gift cards, offering professional development opportunities, giving shoutouts and bonuses to sponsoring memorable experiences. All that matters is an employer tailoring a good employee reward system that matches employees' expectations.
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