Employee Rewards Programs: The Key to Engagement

For the past few years, organizations have struggled against the ebb and flow of rapid change. Now, organizations—and employees—crave stability and order. Unfortunately, CHROs expect employee retention and engagement to drop. An effective employee rewards program can address this problem.

Workers who don't feel appreciated are more likely to search for new job opportunities. Moreover, those who don’t feel valued are 34% more likely to quit within the next year. By recognizing and rewarding desired behaviors, employers can show appreciation and respect for the employee’s contributions.

What are employee rewards programs?

Employee rewards programs are formal programs with guidelines on how leaders and peers can recognize exceptional performance by employees. Rewards programs differ from recognition programs because of the incentive they offer. Rewards programs include incentives (whether monetary or not) that the recognized employee receives for their exceptional performance.

Why is recognition important?

Recognition is a catalyst for employee engagement. When managers acknowledge employees' work, those employees are over 40% more engaged compared to those who do not receive recognition. Harvard Business Review also found a direct link between employee recognition and engagement.

Also, a clear difference exists between the business outcomes of companies with high and low employee engagement levels. These business outcomes include absenteeism, turnover, shrinkage, safety incidents, customer loyalty, productivity, and profitability.

Why do employee rewards programs fail?

Not all employee rewards programs are the same. Program coordinators must consider the organization’s culture, goals, and resources. When an employee rewards program doesn’t fit the growth, needs, or values of the organization, they can fail.

Here are a few common reasons rewards programs fail and how you can avoid these mistakes.

Rewarding the Wrong Behavior

The purpose of employee rewards programs is to recognize behaviors that are critical to organizational success. By rewarding the wrong or irrelevant behaviors, the program may do the opposite. To determine the most impactful behaviors, first understand the organization's goals, such as growth or increased revenue. When employees know how their actions match the company's values and goals, they are more likely to engage in those behaviors.

Competencies clearly align a job to observable and measurable behaviors. As such, they are a great tool for leaders to objectively assess an employee’s performance. In some cases, an employee may drive the desired results, but how they got there was through behaviors the company doesn’t condone. By rewarding the employee based on results alone, they may promote unwanted behaviors.  

Lack of Participation

Employee rewards programs require participation from all levels of the organization. Company leaders should actively contribute to creating, funding, communicating, and facilitating the program. When managers help plan programs early on, they are more prepared and likely to take charge.

If your rewards program includes peer recognition and employees aren’t participating, it could be a result of unclear expectations. Restate the value of the program and how employees can take part. Ask for feedback on whether employees think the instructions are unclear or too cumbersome. When a program is easy to follow, employees are more likely to participate.

The Rewards Don’t Match the Impact

Employees will notice if the company gives rewards arbitrarily or unfairly. For example, an employee who strives for higher-level behaviors will notice if they are rewarded as well as someone who is just meeting expectations. Although still rewarded, the first employee may feel that the value of their contributions isn’t fully recognized or appreciated.

Not sure what to consider exceptional behavior? Multi-level competencies clearly define job expectations and help leaders measure employee performance.

How to Reward Employees

There are many factors to consider when rewarding employees. In an employee rewards program, it’s critical that rewards speak to and motivate employees. Consider whether employees want:

• Public (like an announcement at a company meeting) or private (like a one-to-one) praise;
• Monetary (like a gift card) or nonmonetary (like leaving an hour early) rewards;
• Formal (like a written letter) or informal (like a handshake) praise; or
• Recognition for individual efforts or overall team performance.

Employers can survey employees to understand what form of praise and incentive they want to receive. Others may opt to offer unique rewards based on an individual’s preferences. How you set up your rewards program will depend on how big your organization is and what resources you have.

Map Competencies to Each Role in Your Organization

Competencies provide measurable value to organizations who implement them correctly. By mapping competencies to each job in your organization, leaders have a tangible and trustworthy touchstone to base performance assessments on. This way, they can objectively discern which employees deserve certain praise and recognition. Learn more by talking to one of our experts.