6 Best Practices for Employee Reward Programs

Strategic employee reward programs require careful thought — when mismanaged, employee reward programs can leak money (e.g., managers rewarding individuals or teams ad hoc to show appreciation without documenting it) or lack participation (we’ve all seen the employee reward programs that are only used between a handful of friends in organizations).

The six best practices below come from recent research and our studies of Kazoo customers’ success stories with their employee reward programs.


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1. Tie Employee Rewards to Spontaneous Recognition

Recognition is the employee engagement power tool. Unlike a trophy or pre-determined bonus – spontaneous recognition for great work isn’t something that an employee can anticipate. It sends a message to an employee that the work they’re doing is something that they should do more of. It builds a connection between the people giving and receiving recognition. It can build meaning and show an employee their impact.

Supporting that recognition with small employee rewards amplifies the power of both rewards and recognition.

2. Integrate Core Values

What should you recognize or reward? Behavior that supports your company core values.

Delta Airlines, for example, has a clearly communicated set of core values that includes “put yourself on the other side of the desk.” This encouragement to empathize with customers came in handy in January 2017 when the entire company had a computer malfunction that impacted every Delta flight for 24 hours. At the end, instead of a massive PR fail, customers left comments about how well Delta employees treated them.

By communicating the values, recognizing the employees who exhibited them, and then offering a small reward – Delta was reinforcing the behavior that brings them more customers.

3. Let Employees Choose the Reward that Matters

Variety is the spice of life – and of rewards. Dan Ariely – motivation guru – did a study of Israeli semiconductor workers where he offered different groups different rewards. One group got no performance reward, another got a cash bonus, a third got pizza and a fourth got lots of compliments for working hard. The end result – the pizza group performed best, with the complement group coming into a close second. The cash bonus group came in dead last – lower than nothing.

Does that mean you should never give employees a cash bonus? No. It means this group really liked pizza. Don’t second guess what matters most to your particular employees. Let them choose from a variety of rewards to pick those that are most meaningful (and motivational!) for them.

4. Encourage Employees to Reward Each Other

Peer-to-peer recognition and employee rewards have a powerful value. While everyone likes to get recognition and rewards from a manager – knowing your peers respect you is powerful. Plus – if managers know about the recognition and rewards – it helps them get extra information about what the team is doing well.

In one social science study, sets of employees were either given direct rewards or giving rewards to give to other teammates or a charitable organization. The group that got to give away the bonus substantially outperformed those that got the direct bonus. Encouraging employees to reward each other encourages higher performance.

5. Include Team Rewards

When two software companies got rid of individual commissions for salespeople, they found an interesting result: the whole team worked better towards a common sales goal. Their sales went up.

Science shows that including team rewards and team experiences in your rewards mix can make everyone more engaged and effective. The Journal of Business Research showed that rewarding a team boosted cooperation and performance. “Group evaluation and reward systems not only produce superior group performance [in most cases], they also produce the best performing individuals.”

Connection to the team is a big factor in how much employees engage with their jobs. Rewarding the team, or including team experiences as a reward option, can make your reward system more effective for the individual.

6. Make it Trackable

It’s impossible to optimize or evaluate what you can’t measure. It’s virtually impossible to measure the impact of a traditional, manual, or ad-hoc rewards program. After all, you give someone a gift card or take them for a thank-you lunch – and then there’s no way to measure outcomes like productivity, if others match the behavior, or even whether the employee can track the reward to a specific behavior.

A public recognition and rewards platform, however, offers tools for measuring your investment in rewards. If rewards and recognition are tied to skills or core values, you can track the number of times employees get recognized for a specific skill or value.

You can also track the relationship between the amount you spend on rewards and key metrics like engagement, retention, absenteeism, or productivity – to see if it’s having a before/after impact.

 

About Kazoo
Kazoo amplifies company culture through its award-winning employee experience platform that delivers engagement, retention, performance management, and improved business metrics. As a dominant force in the HCM market with an industry-leading retention rate, Kazoo partners with more than 400 global organizations to build high-performance cultures and engaged workforces. Founded in 2013, Kazoo continues to revolutionize the employee experience with its platform based on the science of motivation, rewards, and recognition. To request a demo, visit info.kazoohr.com/demo-request