Most employees enjoy being rewarded in one form or another, are you getting it right? Organisations have realised as much – with 86% of companies worldwide implementing some form of rewards programme. Traditionally, extra rewards have been distributed in the form of additional financial compensation. In fact, cash rewards still top the pile as the most commonly bestowed reward.
However, a recent study of 1,000 UK workers found that simply handing out lumps of cash is not an effective way of increasing efforts of employees. 78% of those surveyed said they would not work any harder for a bonus of up to 10% of their annual salary, and 59% said they would not work any harder for a 25% bonus.
Employees expectations are changing. So how can financial rewards be made more effective for increasing employee engagement, productivity and retention?
Make Them Clearly Tied to Recognition
Research has shown that recognition has a big part to play when it comes to rewards. Simply paying a predetermined bonus at the end of each financial year doesn’t work. Doing so means employees aren’t rewarded for hard work on specific projects during the year. Similarly, if bonuses are tied to company profits, an employee can work twice as hard during a tough year of trading and receive no bonus whatsoever, after relatively coasting through a better year of trading that provided a bonus.
A recent study emphasised the importance of recognition by offering three rewards for completing a specific work task. The rewards were $25, a $25 pizza voucher, and verbal recognition. Productivity on the task went up for all three rewards. However, productivity dropped afterwards for both the cash and pizza voucher, whereas productivity improved for the verbal recognition group. Thus demonstrating an employee’s intrinsic motivation (the desire to do well) has more of a bearing than just a generic reward of monetary value.
Therefore – when using financial rewards – it’s important to recognise the recipient, explaining why what they have done that is deserving of the award. Just handing out financial incentives without much explanation may actually have a detrimental effect.
Make Them Unexpected
Closely tied to the point made above, it’s often a good idea to keep a potential financial reward under wraps. That way you – as an employer – are not falsely raising productivity levels, and are instead recognising good work by employees that would have completed anyway.
Smaller surprise rewards can have a beneficial effect. In fact, 1 in 5 workers stated that they are motivated to work harder for minor but regular rewards, such as weekly or monthly “treats” which can be assigned at random. Of course, you should always aim to reward good performance instead of poor working habits.
Avoid Making Them Purely Cash
Whilst some employees may enjoy a bit of extra cash in their bank account, many actually prefer rewards given as experiences. For example, rewarding employees with a company meal or night out ranks highly for the country’s most motivated employees. Better still, these types of rewards have the added pay off of bringing teams closer together by celebrating their successes together.
If such rewards are not suitable or practicable then think about vouchers or similar gifts that would excite a specific employee deserving of a reward of monetary value. One employee’s idea of a great reward will do nothing for others, so it’s important to take the time to understand your employees’ interests.
Intersperse Financial Rewards with Those of No Monetary Value
It’s essential to remember that not all rewards should be of financial benefit. They should only form part of a wide toolset for recognising and rewarding employees for their hard work. As we’ve already discussed, the value of a pat on the back and congratulating an employee on a job well done can be just as gratifying (if not more so) than giving them extra money.
You should always try to individualise your rewards as much as possible, so you have the best chance of making them as effective as possible. Remember that congratulating someone in front of the whole team can be an introverted employee’s worst nightmare, whereas more extroverted employees may gain a lot from the same experience.
Rewards Help with Employee Engagement
When planning a rewards programme, it’s important to realise that monetary awards alone may not be the answer. Recognition is important, as is not announcing the award in advance. But perhaps most important for staff motivation and productivity is individualisation. By finding out what makes your employees tick, you can target rewards to match their values.
Rewards – financial or otherwise – help to improve employee engagement and wellness when executed correctly. Engaged employees lead to increased profits, lower staff turnover, and reduced sickness absence.
Here at DocHQ we can help you deliver a tailored employee rewards programme based around health and wellbeing. Companies that execute a formal employee engagement programme report a 64% increase in employee engagement than those without one. So if you think you are ready to reap the rewards of more engaged and motivated employees speak to a member of our team today to discuss your requirements.
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