A business has much to gain from giving deserving employees rewards. While it might appear obvious that all companies need to have a reward system, only the more progressive companies actually do it. Ironically, those who don’t bother wondering why they have so many disengaged employees and a high turnover rate.
In essence, there are two aspects to rewarding employees.
One, obviously, is that they deserve it for a job well done. The second is that it helps make them more productive, self-assured, and motivated, among other benefits; in other words, it reinforces what they’re doing and sets a good example for other employees.
For these two reasons, it’s important to create a well-structured reward system. Companies can reward employees by recognizing achievements, appreciating contributions, increasing compensation, and providing perks.
Let’s take a closer look at these four established methods of rewarding employees:
1. Recognizing Achievements
Employee recognition programs like Employee of the Month awards are all about publicly noticing or acknowledging that an employee has made an important contribution to your company.
Stellar employees feel validated, and new employees feel encouraged to reach higher goals. In effect, the entire workplace benefits—because it boosts overall morale. All employees feel reassured that they are working at the right company, which rewards effort and initiative.
The best way to introduce this type of program is to make an event out of it.
Collect a list of nominees from all your employees and then have an awards night. Award plaques or give out a framed certifications to the winners. These rewards are as tangible for employees as medals are to athletes who win a sporting event: they symbolize a significant moment in a person’s life.
Some companies even have their own Hall of Fame. Besides the plaque, you can also give generous bonuses—like a paid vacation for two to an all-inclusive resort in Cancun.
2. Appreciating Contributions
While recognition is a public event, appreciation is more personal. It is more one-on-one. It might be an invitation for a multinational company to go on the CEO’s yacht for a day-long excursion. It might be an invitation for a smaller company to have dinner with the boss at a fine restaurant.
Other ideas might be getting a tour around the company’s headquarters, receiving a gift certificate, or giving a paid day off.
3. Increasing Compensation
While recognition and appreciations are one-time events, increasing compensation is more enduring. This is more of a career marker than an event marker. Someone has done something consistently well for a long enough time to be recognized for their improvements. They are now publicly acknowledged as people who have a promising future with the company.
Increasing compensation is often accompanied by promotion and an increase in responsibility. If increased compensation isn’t related to promotion, it could be either associated with a spiff for reaching a sales quota or a way to reward a C-level executive for improving the bottom line.
Increased compensation may not result in a promotion at an executive level simply because the employee may already be at the highest position possible in their company.
If someone is a CFO, there is not much higher up they can go other than managing the entire company itself. At this level, then, increased compensation usually comes in the form of annual bonuses. For instance, if a CFO increases company income by, say, 10 million dollars, their bonus might be a small percentage of that profit at the end of the year.
4. Providing Perks
Perks are things that improve an employee’s quality of life. They are rarely standalone forms of reward but more often added on to other rewards. For instance, an Employee of the Month may also get a designated parking space for that month too.
Other common perks are things like a flex-time schedule or an additional paid day off.
Some perks can be indirect, too; for instance, an employee appreciation dinner with the boss might be followed up with the company making a charitable contribution to the employee’s favourite charity.
If you reward desired behaviour (good performance), you’ll likely get more of it. Conversely, the lack of reward tends to encourage average behaviour, or worse. Want to read more on how to get the most from your valued staff? See this article.