The Point of Points-Based Rewards Systems

The Point of Points-Based Rewards Systems

Table of Contents

79% of employees who leave their jobs claim lack of appreciation as a primary reason for leaving. It’s a shame because a sound employee reward system is one of the most cost-effective drivers of employee engagement and retention. And a points-based rewards system taps into employee motivation to take you further.

So, how can your organization implement employee recognition and rewards programs that really work?

In this article, we’ll discuss points-based rewards systems: what they are, when to use them, and how they impact your business for the better.

4 common models for employee recognition and rewards systems

There are four common models for employee recognition and rewards:

  1. Top-down, private praise
  2. Public praise with no associated reward or bonus
  3. Public praise with generic rewards
  4. Public praise with points and robust, meaningful rewards

Each model has pros and cons. Systems and processes vary from one organization to the next based on company size, culture, and other factors. But at the end of the day, your employee recognition and rewards program should promote a culture of recognition to motivate, engage, and retain high-performing employees.

This graphic shows a winners podium for the 4 common models for employee reward systems. In first, public praise with associated points and robust rewards. Second place: Public praise with generic rewards. Third place: Public praise with no rewards. Fourth place: Top-down, private praise.

Top-down, private praise

Who gives the recognition? Supervisor or leadership
How do they give it? Private recognition
Is there a reward?  Sometimes, but they are ad hoc and generally untracked

In this model, a supervisor privately recognizes a direct report. The gratitude can be conveyed verbally or through writing. But it takes place between the manager and the employee only. According to Gallup, employees most appreciate this model of praise from high-level leaders and CEOs.

Does it work? Everyone appreciates recognition. But top-down, private praise is far weaker than public. Want proof? This Gallup poll ranks public recognition higher than private recognition, as well as promotions and salary increases.

Public praise with no associated reward or bonus

Who gives recognition? Supervisor, leadership, or peer
How do they give it? Through a digital activity feed, such as one embedded in a company intranet or social channel
Is there a reward? No

In this model, public praise is the reward. Often called “zero-point recognition,” this model leans into digital activity feeds or social channels to enable shout-outs with company-wide visibility. This system is even better if it allows for amplification, like peer “likes,” high fives, or comments.

Does it work? As researchers at O.C. Tanner and elsewhere conclude, public recognition is much more effective than private recognition or monetary rewards. With public praise, employee engagement, satisfaction, and productivity soar. Because who doesn’t love being celebrated?

Public praise with generic reward

Who gives recognition? Supervisor, leadership, or peers
How do they give it? Through a digital activity feed, such as one embedded in a company intranet or social channel
Is there a reward? Yes, but generic (e.g., plaque, certificate, company swag)

This model builds on the foundation of public praise by adding a reward or bonus to make the recognition more impactful. Rewards increase employee recognition’s perceived value, so this is a step in the right direction! These rewards are generic, meaning they’re the same for every employee.

Does it work? Yes and no. Public praise with generic rewards demonstrates that a company is putting its money where its mouth is. And employees notice! But generic rewards miss a crucial opportunity to tap into your employees’ intrinsic motivation.

Public praise with points and robust, meaningful rewards

Who gives recognition? Supervisor, leadership, or peers
How do they give it? Through a digital activity feed, such as one embedded in a company intranet or social channel
Is there a reward? Yes, and it is personally meaningful to the recipient

In this model, recognition is public and socially shared. It also comes from all directions — from and to employees, supervisors, leadership, peers, and cross-functionally. So, combine that recognition with a point reward system. Doing so lets employees rack up points like consumers do through customer loyalty programs. (Which, by the way, have a fantastic track record for boosting customer loyalty and retention. So why shouldn’t employee recognition programs resemble them?)

A major bonus of these systems is the flexibility and customization they allow in employee rewards. As reported by Alight Solutions, employees who feel their rewards meet their needs are 7x more likely to be engaged with work than employees who don’t feel that way. So, some team members may opt for a waffle maker. Others may use rewards for experiences like kayak trips. Still, others may use points to make charitable donations. And all of them will be more engaged.

Does it work? The first three recognition models are steps in the right direction. But as SHRM notes, recognition is most meaningful when employees have a choice in what they receive. This type of points model enables custom rewards that speak to each employee. For one, it makes your company’s recognition culture more inclusive. All while contributing impactfully to employee engagement, satisfaction, and retention.

What are the benefits of points-based reward systems for employees?

Still need proof that public praise with points works? Let’s dig into the 7 potential benefits this model has to offer.

  1. Points allow employees to earn rewards they care about
  2. Point-based systems increase reward frequency
  3. Points-based systems facilitate incentivized behavior
  4. Points add impact and value to recognition
  5. Points-based rewards systems generate measurable data
  6. Points systems allow for team-based recognition
  7. Points-based rewards systems save time

Points allow employees to earn rewards they care about

It’s an old truism in the fashion industry: “One-size-fits-all” fits nobody well. Give your employees the chance to earn rewards that serve them.

In a points-based recognition and reward system, your employees use their points to choose rewards they’re excited about. Rewards with personal meaning tap into our intrinsic motivation — letting you offer powerful rewards to each employee without having to do any guesswork.

Points-based systems increase reward frequency

This is a biggie for two reasons: motivation and employee engagement.

First, as psychologist Kendra Cherry notes, positive reinforcement is most effective when it immediately follows the behavior you want to reinforce. If Employee X does an incredible job owning his first solo account — or reflecting your company values, providing outstanding support, or any behavior that helps your company — recognize and reward that behavior now! Don’t wait until the next quarterly meeting. The distance between the behavior and the reward will diminish its reinforcing power.

Second, when maximizing the power of motivation by recognizing and rewarding behavior in real-time, we call that a culture of recognition. That culture is vital to boosting employee engagement, morale, and retention. (In fact, Gallup points out that employees who don’t feel recognized often enough are twice as likely to quit than their more appreciated peers.)

Points-based systems facilitate incentivized behavior

A points-based employee reward system makes it easy to incentivize desired behaviors and values that matter to your organization. Assign a different number of points to various types of rewards so everyone is on the same page about what matters most. The results are organizational alignment, team unity, and a culture where everyone is celebrated.

Points add impact and value to recognition

What about recognition alone? It’s better than nothing — everyone likes a “thank you.” In fact, 81% of people say they’d be motivated to work harder if their boss showed appreciation. But adding points to that appreciation helps recognition go the extra mile. Think of it as the extrinsic motivation equivalent of putting your money where your mouth is.

Points-based rewards systems generate measurable data

…and that data gives you insight into:

  1. What’s working. Are you spending your reward budget money efficiently and well?
  2. Who’s getting rewarded the most. These are your superstars for performance and soft skills — keep your eye on them!
  3. Who’s not giving or getting rewards points. Survey says these folks aren’t just low performers — they’re likely disengaged. Take this opportunity to meet with them and see what you (or they) could be doing better.

Points systems allow for team-based recognition

Team-based recognition and rewards are also referred to as points pooling. Point pooling is when a team of coworkers combines their points for a shared big-ticket reward—maybe a fun meal together or donating to their favorite local charity. Team-based recognition is multi-purposed. In addition to showing appreciation, it also drives connection and camaraderie.

Points-based rewards systems save time

If your program design requires a full-time manager, you’re doing it wrong. Rewards systems should be easy to manage! No more tallying up points, shopping for gifts, and then spending hours distributing them. Points-based reward systems are low maintenance. Store points, scores, and rewards in the same place, then automate each part of the process. Now, you can just sit back, relax, and enjoy the smiles.

Examples of points-based employee recognition and rewards

Here’s how points-based recognition and rewards could work at your company:

Example 1: Basic points-based recognition

A screenshot of a recognition sent to Jordon Monopoly using WorkTango's Employee Recognition & Rewards Platform. The recognition has received 5 high fives and one comment cheering on Jordan.

In this example, Jordan helped his coworker battle through some technical difficulties before a big meeting. Before the day was out, his coworker sent a meaningful, specific recognition with 350 points. As a bonus, other team members saw, commented, and gave “high fives” to boost Jordan’s points! Now, Jordan can take his points and get a reward he’s excited about from his company’s rewards marketplace. This leaves Jordan feeling seen for his effort, which makes him happy. And he’s more likely to help again next time.

Example 2: Team-based recognition with points

Screenshot of a recognition sent from Mavis to her team using WorkTango's Employee Recognition & Rewards Platform.

In this example, Mavis wanted to recognize her entire team for a strong presentation. (Group recognitions, offered in the WorkTango platform, build camaraderie by celebrating team wins!) Mavis gives each team member 50 points, awarding 250 points in total.

Example 3: Milestone award with points

Screenshot of a milestone award sent via WorkTango's Employee Recognition & Rewards Platform.

Some traditions are irreplaceable. Your new culture of recognition doesn’t (and shouldn’t) mean you forget traditional reward mainstays like years-of-service awards. In fact, it’s easy to make those part of your points-based system, too. Here, Ariana’s employer has recognized her for her 5th service anniversary. In the WorkTango platform, milestone awards are set-it-and-forget-it for admins. This lets you easily set up and automate anniversary, birthday, and other milestone awards.

Driving employee motivation with points-based reward systems

A points-based reward system can be a powerful tool for driving employee motivation and engagement. By incentivizing positive behaviors and celebrating team wins, organizations can build a culture of recognition that fosters a sense of camaraderie and achievement.