Most business owners have specific goals for lowering costs while improving their employees' quality and sometimes the quantity of work. In a competitive business climate, careful considerations need to be made to get more out of your workforce.
Employee reward programs have grown 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 that had a culture where people were praised and thanked regularly for doing good work than for a company that paid 10% more but offered no praise or thanks. Also, A well-designed recognition and rewards program can boost average employee performance by 11.1 %.
Although some companies already understand the importance of rewarding their employees, 59% feel they are not being rewarded effectively. A survey found that 47% of employees want to receive a personalized reward spontaneously.
Even though the new ideas should not be overlooked, employee rewards are a tried-and-true strategy that can be implemented in small and large businesses.
Let's look at how employee rewards can motivate employees to change their work habits and everyday behaviors to benefit the company.
What is Employee Reward? Is it the Same with Recognition?
Although these terms are often used interchangeably, reward and recognition systems should be considered separately. Employee reward systems are programs established by a company to recognize and motivate employees on an individual and/or group basis.
They are normally considered separate from salary, but they may be monetary in nature or impact the company. While previously thought to be the domain of large corporations, small businesses have begun to use them as a tool to attract top employees in a competitive job market and to improve employee performance.
As previously stated, although employee recognition programs are frequently combined with reward programs, they serve a distinct purpose. They are meant to provide a psychological—as well as a financial—benefit.
Although many aspects of designing and maintaining reward and recognition systems are the same, it is crucial to keep this distinction in mind, particularly for small business owners interested in motivating employees while keeping costs low.
Why is it Important to Reward Your Employees?
Employee rewards are important in a company's culture, and rewarding employees for their efforts has some advantages for both parties. Showing your employees how much you appreciate them can boost productivity, encourage teamwork, and even help you attract talented recruits to your company.
So, can you afford not to express your appreciation? We'll go over why it's so important to reward your employees in more detail below.
Retention52% of employees are looking or would consider leaving their company because of compensation, 43% career advancement, and 19% lack rewards and recognition. In addition to attracting recruits, rewarding employees is critical if you want to keep your current employees.
Employee engagement is critical, especially given the current skills gap, making it even more important to retain talented employees. Employees who are recognized and praised for their efforts will be more satisfied with their jobs and, as a result, more loyal to the company. If you stop rewarding your employees, you risk losing them to another employer who values them.
Increasing ProductivityFinally, employees who enjoy their jobs and feel valued by their employers will be more productive. This applies to both big and small victories. Rewarding employees does not always have to be an expensive gesture; a simple thank you email can also go long. According to studies, a simple expression of gratitude from someone in authority increased productivity by 50%!
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.
Boosting MoraleEmployee 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 respectful treatment of employees at all levels is an essential contributor to their job satisfaction.
Attracting New RecruitsFollowing on from this, satisfied employees are more likely to recommend you as an employer. Finding and hiring new employees can be difficult, so do everything you can to make the process go as smoothly as possible. 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 be highly damaging.
Types of Employee Rewards
There are numerous ways to categorize rewards. We've chosen 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 far from mutually exclusive, but they all have one thing in common: they help maintain employee commitment.
- Extrinsic vs. Intrinsic Rewards
Intrinsic rewards are the feelings of fulfillment that come from doing one's job. These are self-motivated rewards, such as taking pride in one's work, feeling accomplished, or being a member of a work team. Employees can benefit from job enrichment by making their work seem more meaningful.
On the other hand, extrinsic rewards are external to the job and come from a third party, primarily management. Apple Computer, for example, provides each of its employees with a Personal Computer (P.C.). The P.C. becomes the employee's personal property after one year on the job.
As a result, if an employee feels a sense of accomplishment or personal growth, we would classify such rewards as intrinsic. If the employee receives a raise or a write-up in the company magazine, we will classify these as extrinsic rewards.
- Non Financial vs. Financial Rewards
Employees' financial well-being may or may not improve as a result of rewards. If they do, they can do so directly – through wages, bonuses, or profit-sharing, for example – or indirectly through employer-subsidized benefits such as pension plans, paid vacations, paid sick leave, and purchase discounts.
Non monetary rewards include a smorgasbord of desirable "extras" that may be available to the organization. Their common denominator is that they do not improve the employee's financial situation. Nonfinancial rewards emphasize making life on the job more appealing rather than enhancing the employee's finances.
- 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.
Membership-based rewards, on the other hand, include cost-of-living increases, benefits, and salary increases due to labor-market conditions, seniority or time in rank, credentials (such as a college diploma or a graduate diploma), or future potential (e.g., the recent MBA out of a prestigious university). The key point here is that membership-based rewards are generally extended regardless of an individual's performance in a group or organization.
The distinction between the two is not always clear. In practice, despite academic theories that high motivation is dependent on performance-based rewards, performance may be only a minor determinant of rewards.
It is clear that rewarding employees is more than just a way to boost an employee's ego; it also has 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 show your employees that you care, ranging from simple gift cards to humble thank you note and financial and non-financial rewards.
TADA assists companies in nurturing a culture of high performers through personalized rewards and engagements. Let's talk to our experts at TADA to design an exclusive personalized engagement program suitable for various businesses. Contact TADA to find out more.