Compensation and Benefits: 7 Key Factors to Consider When Developing Employee Rewards Programs
The job market today is intensely competitive. Companies all over the world are competing to recruit and retain talented, hardworking individuals. Employees are the backbone to any business and therefore, it’s vitally important that any organization consistently bolsters employee motivation and job satisfaction to enhance overall productivity.
Planning an effective employee rewards program is an essential strategy for nurturing a culture of recognition and appreciation in your company. If implemented strategically and methodologically, rewards programs contribute towards employee retention. This ensures that your company can maintain its momentum in working towards long-term goals.
In this article, we will discuss seven factors you need to take into consideration when creating a program that will reward your employees.
Align Rewards with Objectives
It’s important for every company, no matter what the size or sector of operation, to adequately recognize hard work and loyalty. That said, recognition must align with company objectives in order to incentivize the achievement of overarching goals and priorities. If rewards have arbitrary metrics that don’t align with an employee’s contribution they become tokenistic and unproductive formalities.
Matching rewards to shared goals is an excellent strategy for motivating employees to work towards meeting—and hopefully exceeding—targets. This moves the company one step closer to achieving larger goals. By utilizing the psychological power of rewards programs, you can align employees’ intrinsic motivation with company-wide priorities.
Create Meaningful Rewards
Ensuring that your company’s rewards program is actually meaningful to employees is one of the most important factors to consider when designing this initiative. If you don’t get this right, then your rewards program is likely to be ineffective. In fact, an ill-designed rewards program can actually demotivate employees, which may lead to long-term underperformance.
Naturally, every employee will have their own preferences when it comes to varying types of rewards. Some individuals prefer career-oriented incentives that afford them the opportunity to advance within the company. Others will prefer extrinsic rewards such as gifts, perks, or an increased salary.
In order to determine which rewards employees value most, it’s important to conduct a thorough needs analysis. At the end of the day, rewards programs should bolster productivity. But they also exist as a channel for employee recognition. In order to show the people in your company that you do genuinely value their efforts, it’s important to ensure that your rewards are meaningful.
Make Rewards Accessible to All
One of the most common shortcomings of rewards programs is that they only target individuals already operating near the top of the ladder. Your rewards program should offer equal opportunities for participation; regardless of title or pay grade. In fact, well-developed rewards programs should encourage a leveling-out of the playing field.
This ensures that all employees are continuously incentivized to work hard. Additionally, it eliminates the passivity that can sometimes take hold once an employee has achieved their personal goals and desired status within a company.
While rewards should be accessible to all, unique rewards will be attached to distinct achievements for different departments and ‘levels’ within the company. Designing rewards for varying segments may be time consuming. However, it’s a crucial consideration in the development of any effective rewards program.
Ensure Rewards are Visible
Many companies will design a comprehensive rewards program and fail to adequately market it to their employees. Ensuring that your rewards program is visible is a crucial component of company-wide motivation.
Furthermore, while you should clearly display the structure of the rewards program, your company should also celebrate those actually achieving the promised rewards. This ensures that rewards feel realistic and tangible for all.
There are several ways that you can make rewards more visible. You may opt to publicize reward-related news in a company-wide email or through the distribution of celebratory posters. Some companies choose to utilize their digital platforms or meetings to announce rewards. Whichever way you choose to go about it, make your rewards public to maintain company-wide motivation.
Internal review processes ensure that rewards are granted when appropriate. If your review process is disorganized, then reward opportunities will likely go unnoticed. Furthermore, if reviews are infrequent, then it’s challenging to grant rewards timeously.
When rewards get delayed, or worse, wholly unrecognized, the attractiveness of the program gets undermined. Unfortunately, this creates a sense of diminished achievement. This means that the program becomes less effective at encouraging motivation and productivity.
Take the time to strategically schedule frequent employee appraisals. This ensures that employees remain consistently motivated to work towards their targets. Ultimately, this contributes to a collective company momentum.
Consider a Total Rewards Approach
As mentioned in point two, every employee has their own set of unique preferences when it comes to rewards. While the scale of achievement will inform the type of reward, it’s worth considering a more holistic and hybridized model. The total rewards strategy encompasses a range of rewards including career advancement opportunities, material benefits, and work-life balance initiatives.
This approach prioritizes an employee’s sense of fulfillment. It aims to enhance a sense of purpose for every employee—regardless of their position within a company. Instead of awarding different types of rewards for different achievements, the total rewards approach essentially offers a diverse set of rewards as if they were one reward.
As this approach is more resource intensive and requires a greater degree of internal capacity, it’s designed for companies comfortable having a rewards program that targets goals that are more long-term than most.
Ensure Rewards are Measurable
At the end of the day, your company needs to be able to justify their rewards program and the way that it shows appreciation for employees. You need to validate the financial cost thereof in yearly expenditure reports while ensuring company-wide managerial buy-in to secure the longevity of the initiative.
You can conduct a comprehensive productivity analysis, or you may choose to adopt a more qualitative evaluation approach. This can be done by conducting employee interviews and surveys to understand the impact of the rewards program.
When implemented correctly, rewards programs truly are an excellent mechanism for ensuring employee fulfillment and bolstering motivation and productivity. Companies that implement these types of programs enjoy better retention rates, greater productivity, and increased morale. In turn, this creates an excellent company culture and drives bottom lines upward.
Developing an employee rewards program benefits everyone and any business that’s striving for longevity should implement one.
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