Sets The Employee Rewards Up and Make Your People Happy


Nov 5, 2021 • 8 min read

Many business owners have distinct goals of reducing costs while simultaneously enhancing the quality and, at times, the quantity of work performed by their employees. In today's highly competitive business world, it is crucial to make thoughtful considerations in order to maximize the productivity of your workforce.

Employee reward programs have witnessed a surge in popularity. A new study of H.R. workers, employees and managers in the U.S. found that half of the employees would rather work for a company with a culture that regularly acknowledges and appreciates individuals for their exceptional work, even if that company pays 10% less than others that do not offer such recognition or appreciation.

Also, A well-designed recognition and rewards program can boost average employee performance by 11.1 %!


While some companies have recognized the significance of rewarding their employees, a staggering 59% believe that their current reward systems are not effectively meeting their needs.

An insightful survey revealed that 47% of employees express a desire for spontaneously receiving personalized rewards.

Even though the new ideas should not be overlooked, employee rewards are a time-tested strategy that can be applied in both small and large businesses.

Let's explore how employee rewards can motivate employees to modify their work habits and everyday behaviors a time-tested strategy that can be applied in both small and large businesses.

What is Employee Reward? Is it the Same as Recognition?

While these terms are often used interchangeably, rewards and recognition systems should be considered separately. Employee reward systems are programs established by a company to acknowledge and motivate employees on an individual and/or group basis.

These systems are typically separate from an employee's salary, but they may have a monetary component or an impact on the company's finances. While previously thought to be the domain of large corporations, small businesses have also started to employ them as a means to attract top talent in a competitive job market and enhance employee performance.

As mentioned earlier, even though employee recognition programs are frequently integrated with reward programs, they serve a distinct purpose. Their aim is to provide not only a financial benefit but also a psychological one.

While many aspects of designing and maintaining reward and recognition systems are the same, it is crucial to keep this distinction in mind, especially for small business owners looking to motivate employees while managing costs effectively.

Why is it Important to Reward Your Employees?

Employee rewards are crucial in shaping a company's culture, and providing employees with recognition for their efforts yields advantages for both parties.

Demonstrating your appreciation to your employees can enhance productivity, foster teamwork, and even aid in attracting talented individuals to your company.

Therefore, can you afford not to express your appreciation? We will explore into why rewarding your employees is so important in more detail below.

1. Retention

It's crucial to recognize that rewarding employees is equally vital in retaining your current workforce. 52% of employees are either actively looking for new opportunities or would consider leaving their current company due to compensation concerns, while 43% cite the lack of career advancement opportunities, and 19% express dissatisfaction with the absence of rewards and recognition.

Employee engagement plays a pivotal role, especially given the current skills gap, underscoring the importance of retaining talented individuals.

When employees receive recognition and appreciation for their efforts, they tend to experience higher job satisfaction, resulting in increased loyalty to the company. If you neglect to reward your employees, you run the risk of losing them to employers who do value their contributions.

2. Increasing Productivity

Employees who derive job satisfaction and feel appreciated by their employers tend to be more productive, whether it's for major accomplishments or smaller achievements.

Employee rewards don't always have to be extravagant; even a simple thank-you email can have a significant impact. According to studies, a mere expression of gratitude from someone in authority led to a 50% increase in productivity!

It's a no-brainer! Recognize the hard work your employees are already putting in if you want to keep them operating at peak productivity.

3. Boosting Morale

Employee morale improves on an individual level when managers understand the true purpose of employee recognition. High morale leads to increased productivity, creativity, and overall happiness.

According to a recent SHRM survey, 65% of employees believe that treating employees respectfully at all levels is an essential contributor to their job satisfaction.

4. Attracting New Recruits

Furthermore, satisfied employees are more inclined to recommend your company as an employer. The process of finding and hiring new employees can be challenging, so it's crucial to take every possible step to ensure a seamless recruitment process.

Employer branding is becoming increasingly important in today's workforce. With anonymous review sites like Glassdoor allowing professionals to share their honest opinion about a company online, any negative reviews can have a highly detrimental impact.

The Most Common Employee Rewards

There are numerous ways to categorize employee rewards. We've selected three of the most common dichotomies: intrinsic versus extrinsic rewards, monetary versus non monetary rewards, and performance-based versus membership based rewards.

As you can see, these categories are not entirely mutually exclusive, but they all share a common goal: maintaining employee commitment.

1. Extrinsic vs. Intrinsic Rewards

Intrinsic rewards are the feelings of fulfillment that arise from one's job. These are self-motivated rewards, such as taking pride in one's work, feeling a sense of accomplishment, or being an integral part of a work team. Employees can enhance their job satisfaction through job enrichment, making their work feel more meaningful.

On the other hand, extrinsic rewards are external to the job and come from a third party, often management. Apple Computer, for example, provides each of its employees with a Personal Computer (P.C.), which becomes the employee's personal property after one year of employment.

Therefore, if an employee experiences a sense of accomplishment or personal growth, we classify such rewards as intrinsic. Conversely, if the employee receives a raise or earns recognition in the company magazine, these are categorized as extrinsic rewards.

2. Non Financial vs. Financial Rewards

Rewards may or may not contribute to employees' financial well-being. When they do, it can be either direct, such as through wages, bonuses, or profit-sharing, or indirect, via employer-subsidized benefits like pension plans, paid vacations, paid sick leave, and purchase discounts.

Non-monetary rewards encompass a variety of desirable "extras" that an organization may offer. The common factor among them is that they don't have a direct impact on the employee's financial situation. Nonfinancial rewards focus on making the work experience more appealing rather than directly affecting the employee's finances.

3. Membership-based vs. performance-based rewards

Commissions, piecework pay plans, incentive systems, group bonuses, merit pay, and other forms of pay-for-performance plans are examples of performance-based rewards. 

In contrast, membership-based rewards encompass cost-of-living increases, benefits, and salary adjustments due to labor-market conditions, seniority or time in rank, qualifications (such as a college diploma or graduate degree), or future potential (e.g., a recent MBA graduate from a prestigious university).

The key distinction here is that membership-based rewards are generally granted regardless of an individual's performance within a group or organization.

However, it's important to note that the line between these two types of rewards isn't always clear. In practice, despite academic theories emphasizing the importance of performance-based rewards for high motivation, performance may only play a minor role in determining the rewards received.

Wrap up!

It is clear that rewarding employees goes beyond boosting their ego; it also brings several significant benefits for employers.

No one wants to feel undervalued at work, so all employees must receive rewards for their efforts. There are numerous ways to demonstrate your appreciation to your employees, ranging from simple gift cards and heartfelt thank-you notes to both financial and non-financial rewards.

Tada specializes in assisting companies in cultivating a culture of high performance through personalized rewards and engagement initiatives.

Feel free to reach out to our experts at Tada to design an exclusive personalized employee engagement program tailored to your businesses. Request our demo now!

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Nida Amalia

SEO and Content Marketing Specialist who loves art, music, and movie.