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Choosing an Employee Rewards and Recognition Program

by AIMM MAITD

Role of Incentives

A well-functioning employee performance management system incorporates a mix of incentives and rewards. Some employees don't need external motivators to get and stay motivated. These employees have an intrinsic interest in the work they are performing. For these employees, managers simply need to provide the necessary resources to do a good job and then get out of the way.

However, given the low levels of employee engagement1, 2, 3 reported by most studies on employee motivation, there is an important role for external incentives to play in motivating employees. External motivators can even help employees who are internally motivated to do even better. These kinds of incentives send a clear signal to each employee about which goals and behaviors are most important to the organization. They also tap into a basic human need; the need for social belonging and recognition.

In my article4 on designing an effective incentive scheme, I drew on the latest research and insights in organizational psychology to describe six key principles you need to consider in your design. In this article, I want to go on to outline in particular your options in choosing which rewards to include in your incentives program.

Types of Incentives

I have divided your program choices into monetary and non-monetary incentives. What I mean by a "monetary" incentive is a reward that puts purchasing power into the hands of the employee. This includes any reward that the employee can convert into a product or service, with some discretion over what it is they purchase.

In Table 1 below, I list examples of monetary incentives, with a brief explanation of each. Conversely, Table 2 illustrates a range of non-monetary incentives. Reflect on each option and weigh up the extent to which that kind of reward fits in with your company's existing culture and rewards system. Consider also what will appeal to your employees. The important point here is not to select what you or your management team find attractive, but what will interest the people you want to motivate.

Notice how there are many more options for non-monetary rewards compared with monetary rewards. The limit is your imagination and the imagination of your employees. Many incentives are zero cost or near zero cost, so rewarding people for doing things in a different way need not be expensive. And remember that one of the strongest drivers of high performance is recognition; recognition that the employee is doing something important for the company and is appreciated. It costs nothing for the person's supervisor and higher level managers to thank them, and yet this can make a world of difference to the employee and to the organization.

The rewards listed below can and should be used in combination. It is unlikely that any one type of reward will appeal to all employees. Use a combination of team and individual rewards if these can be used to leverage off each other. If you are using financial rewards, it is imperative that your supervisors and managers also use the more personal rewards, such as thank you notes and shared social occasions. Remember, employees are people too.

I said that rewards will need to be seen as relevant to employees. How recognition is given will also need to respect how people prefer to receive rewards. Some people like to be recognized publicly, giving them a special "buzz". On the other hand, some employees dread the thought of being the center of attention. Rewards given in these circumstances will act as a demotivator for these people. Find out beforehand how people like to be recognized and then respect their preferences.

Table 1. Examples of monetary incentives

Monetary Reward Description

profit sharing

sharing with employees a percentage of the company profits based on the company's earnings

gain sharing

sharing with employees a percentage of the financial gains made through increased productivity

company shares

awarding employees a quantity of the company's shares based on the achievement of set targets

salary/wage/casual rate increase

awarding an employee a fixed or percentage increase in their base rate, dependent on the achievement of set goals

one-time bonus

paying a fixed amount to an employee over and above their base rate for exemplary performance

gift voucher

giving an employee a voucher for a fixed amount from a retailer that can be exchanged for goods or services

Table 2. Examples of non-monetary incentives

Non-monetary Reward Description

promotion

elevating an employee to a role at the next level in the organization

interesting and challenging work

creating or reserving a task or project for an employee that is both absorbing and demanding

assignment to another area

expanding an employee's view through working temporarily in another department or project

certificate of achievement

awarding a certificate that recognizes a goal or milestone achieved by the employee

employee of the month award

regular awarding of a certificate or trophy to an employee for outstanding achievement or the most improvement

paid time off work

giving time off regular work for an employee to use at their discretion

extra long lunch break

giving a longer lunch break to an employee to run mid-day errands or relax

team dinner

getting the team together for a company paid dinner to celebrate winning an important milestone or goal

paid dinner with partner/family

giving a dinner voucher for a local restaurant for an employee to enjoy with their family

lunch with manager

an employee's manager and the employee sharing a meal and time together at a local eatery

lunch with member of senior management/executive

a senior officer in the organization and an employee sharing a paid lunch at a restaurant

catered lunch party

assembling the team for an on-site nutritious and tasty lunch paid for by the company

fruit basket delivery

delivering a healthy basket of fruit from a local supplier to an individual employee or the whole team

personal praise

saying a heart-felt thank you to an employee face-to-face for a job well done

handwritten note of thanks

writing out a thank-you note by hand and leaving it on an employee's desk or delivering it by hand

thanks from manager's manager at a special meeting

delivering a special commendation at a specially organized meeting from two levels up in the organization for a major achievement by an employee

formal letter of thanks with copy sent to senior management and employee's personnel file

handing to an employee a formally written acknowledgement of superior performance, storing it in the employee's personnel file and forwarding it on to the executive team

discounted parking space

lowering the cost for an employee to park their car in the company car park or partly subsidizing the cost of public car parking

collection of photographs of employees displayed in a public place

displaying photographs of top performers in a well-travelled space, such as a main foyer or canteen

Conclusion

Having a system of incentives and rewards won't fix systemic and resourcing issues in your organization. Incentivizing production workers to produce more will have little impact if machines are continually breaking down. Providing bonuses for reaching sales targets won't help if your sales people are still waiting on payment of last year's bonuses.

However, when people have the right tools and resources and the organization's systems are working in support of the incentives scheme, a well-designed mix of incentives can help motivate people to even higher performance. And that's what marks the difference between middle-of-the-road organizations and top performing companies.

In developing your incentives scheme, ensure that it integrates well with the other components of your organization's performance management system. Does the mix of incentives motivate the right goals and behaviors? Are the targets and desired employee behaviors clearly articulated? Are they communicated often and at all levels of your organization? Do the incentives reward individual excellence as well as team collaboration? Get the answers to these questions right and your organization is on its way to achieving its strategic objectives.

End Notes

  1. Allan, L. P. "CIPD Study: Employees Neutrally Engaged"
    http://www.businessperform.com/blog/2012/08/31/cipd-study-employees-engaged-2144.html
  2. Allan, L. P. "Employee Engagement Remains Low – BlessingWhite 2011 Report"
    http://www.businessperform.com/blog/2011/03/01/blessingwhite-employee-engagement-936.html
  3. Allan, L. P. "Employee Engagement Study Supports Employer Focus on Career Goals"
    http://www.businessperform.com/articles/human-resources/employee-engagement-career-goals.html
  4. Allan, L. P. "Principles Underpinning an Effective Incentive Scheme"
    http://www.businessperform.com/articles/human-resources/effective-incentive-scheme.html

The above is a condensed adaptation from Leslie Allan's book, From Training to Enhanced Workplace Performance.

Copyright © Leslie Allan

About the Author
Leslie Allan

Leslie Allan is Managing Director of Business Performance Pty Ltd; a management consulting firm specializing in people and process capability. He has been assisting organizations for over 20 years, contributing in various roles as project manager, consultant and trainer for organizations large and small.

He is also the author of five books on training and change management and is the creator of various training tools and templates. Leslie is a member of the Australian Institute of Management and the Quality Society of Australasia. He is also a member of the Divisional Council of the Victorian Division of the Australian Institute of Training and Development (AITD). Leslie may be contacted by email at office@businessperform.com

Leslie Recommends
From Training to Enhanced Workplace Performance

Find out more about building employee capability and motivating for success. Check out Leslie Allan's practical resource kit packed with ideas, tools and templates for implementing effective learning and driving superior employee performance. Visit the From Training to Enhanced Workplace Performance information portal to find out how to download the free Introductory Chapter and start using Leslie's comprehensive training guide and toolkit today.

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