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How to Run a Strategic Employee Rewards Program

5 min read

Quick hit: Your employee rewards program is a critical part of your employee experience. Here are 5 best practices for employee rewards programs:

  1. Give employees meaningful reward options
  2. Make your employee reward program trackable
  3. Tie employee rewards to real-time recognition
  4. Incorporate team rewards into employee rewards
  5. Let employees reward each other

Rewards are more than just service anniversaries, employee-of-the-month perks, or the extra day off. Done right, a strategic employee rewards program is a critical part of the overall employee experience.

How are you doing rewards? No matter the approach, there are a few key questions businesses need to ask: How are employees responding? Are rewards helping you meet KPIs? Do they have a good ROI?

Often, it’s hard to track the payback on your rewards program. But with a strategic approach, that can change.

This article covers:


5 best practices for employee rewards

1. Give employees meaningful reward options

Variety is the spice of life – and of rewards. Take it from motivation guru Dan Ariely, who conducted a study of Israeli semiconductor workers where he offered different groups different rewards:

  • No reward for Group 1 🚫 
  • A cash bonus for Group 2 💵
  • Free pizza for Group 3 🍕
  • Compliments for Group 4 👑 

The end result? The pizza group performed best, with the compliment group coming in a close second. The cash bonus group came in dead last — lower even than Group 1, who received nothing at all.

Does that mean you should never reward employees with a monetary award? No. It means this group really liked pizza!

The takeaway: Don’t 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.


Learn about Kazoo’s custom rewards catalog
Kazoo for Recognition and Rewards


2. Make your employee rewards program trackable

You can’t optimize what you can’t measure. And it’s nearly impossible to measure the impact of a traditional, manual, or ad-hoc rewards program. So think about it — if you give someone a gift card or a shout-out at a team meeting, how do you measure productivity, morale, or impact on your bottom line?

A public recognition and rewards platform, however, offers tools for measuring your investment in rewards. Plus, when recognition and rewards 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. This helps you see the before/after impact of your program.

The power of data and insights


3. Tie employee rewards to real-time recognition

Employee recognition is the employee engagement power tool. Unlike a pre-determined bonus, spontaneous recognition for great work isn’t something that an employee can anticipate. It reinforces positive behaviors in addition to driving great results. And, recognition connects the people giving and receiving praise.

Investing in employee recognition programs and rewards programs shows an employee their impact on a business over time, contributing to the meaningful impact pillar of the employee experience. So support recognition with small employee rewards. It only amplifies the power of both rewards and recognition.


4. Incorporate team rewards into employee rewards

Studies show that offering team rewards and experiences can produce more engaged, effective individuals. For example, the Journal of Business Research reported that rewarding a team boosted cooperation and performance.

“Group reward systems not only produce superior group performance – in most cases, they also produce the best performing individuals.”

So connection to the team is a big factor in how much employees engage with their jobs. Rewarding the team for good work, or including team experiences as a reward option, can boost team-building, and impact your organization in ways that rewarding individual team member accomplishments cannot.


5. Allow employees to reward each other

When combined, peer-to-peer recognition and employee rewards are incredibly powerful. While everyone likes to be rewarded by their manager, knowing co-workers respect you is equally motivating. Plus, if managers know about peer recognition and rewards, it grants them extra insight into what the team is doing well.

In one social science study, sets of employees were either given direct rewards, or given rewards to give to other teammates or a charitable organization. But here’s the twist: The group that got to give away the bonus substantially outperformed those that got the direct bonus.

So, the takeaway? Empowering employees to reward each other encourages higher performance.


Employee motivation (and the demotivation factor)

When done wrong, even the best employee recognition strategy acts as a surprising demotivator. And working for a reward itself (rather than the joy of a job, or based on a set of values) can cause serious harm to a company.

Take the old story of a Soviet Nail factory:

Leaders wanted to improve worker performance. So they started paying the workers based on the total weight of nails produced. After a while, the company noticed that nails were becoming bigger and bigger. So they decided to start paying employees based on the number of nails produced — at which point the nails became smaller and smaller.

The point? Offering rewards with a “tit-for-tat” approach can yield wasted effort and resources. Human behavior author and lecturer Alfie Kohn summed this idea up well when he said: “Do rewards motivate people? Absolutely. They motivate people to get the rewards.”


Learn more in our article:
Engage Employees Anywhere: A 5-Part Frameworkhow to engage employees framework


10 employee reward ideas (you can use anywhere!)

Now that you’ve got a high-level understanding of how to run an employee rewards program strategically, let’s take a look at some custom reward ideas you can use in your program.

1. Feature employees on your website or social media ☀️

Bring on the public recognition! This reward lets the recipient shine in the spotlight with a feature on your company’s website or social media. (And definitely let the employee approve any photos before you share them.)

2. Share a (virtual) meal with food delivery 🍔

Once, team lunches and happy hours were the way to bond. And with video chat and food delivery, they still can be! Reward a team by having food delivered to their homes for a virtual happy hour or lunch.

3. Make a custom Zoom background in their honor 💻

Custom Zoom backgrounds spiked in popularity in mid-2020 as a legion of newly remote workers learned to navigate digital culture. Reward employees by making a custom background just for them, and displaying it with pride.

4. Hand-write a note 💌

Lonely for the analog age? You’re not alone. In our digital age, hand-written letters signal an extra level of sincerity and intent. Send a personal thank-you to an employee, or (our favorite), a note singing their praises to their spouse or family.

5. Let them pick the playlist 🎧

Do you start your weekly stand-ups with music? This one’s simple but undeniably pleasing — let the reward recipient pick the song, valid for one week of their choosing.

6. Pay for a monthly fitness subscription 🏃‍♀️

For our physical, emotional, and mental health, there’s no stronger lift than regular exercise. Give the gift that keeps on giving with a gym or fitness gift subscription.

7. Deliver flowers to their significant other 💐

Here’s a real reward offered by a Kazoo customer— earn points on your employee’s behalf by delivering flowers to their partner in their name. (We love it, too! Learn more about how to offer custom rewards with Kazoo.)

8. Subscribe to a stress relief app 🧘‍♀️

These days, who doesn’t need one? This reward is valid for a subscription to a meditation, mindfulness, yoga, or other app.

9. Offer mentorship 🧠

Don’t underestimate the power of learning and development (L&D)! Growth is a key pillar of the employee experience. Offer mentorship opportunities with yourself or other leaders in your company. Then, watch your employees — and their engagement — grow.

10. Gift cards 💳

Look — love it or hate it, sometimes the most personal gift is the one the employee picks out for themself. Be sure your custom rewards catalog offers gift cards at various price points to a wide array of stores. Not sure what to offer besides Netflix and Amazon? Ask your employees in a brief, 2-question survey. That way, you’re sure to meet everyone’s needs!

25 remote employee reward ideas for working from home

For more ideas like these, check out our articles, 25 Reward Ideas for Remote Employees and 40 Out-of-the-Box Reward Ideas.


Managing an employee rewards program with technology

We hope this article gave you insight into how to go above and beyond the traditional employee rewards program, and start offering rewards that get results. Not sure how to start? We’ve got a solution.

Because at Kazoo, we’re passionate about bringing together all the tools you need to make work work better for everyone. That’s why the Kazoo Employee Experience Platform brings performance management and recognition and rewards — including Goals, Feedback, Conversations, Recognition, Incentives, and more — into one simple, easy-to-use platform.

If you’re ready to align, connect, and engage your workplace, check out our Kazoo overview. Or, schedule a personalized demo today.

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