Strategic Employee Rewards Programs

How Are You Doing Employee Rewards Today?

Virtually every company uses employee rewards. It may be informal: a drawer full of gift cards in a manager’s desk, quarterly lunches, or a free t-shirt for performance. Or it may be formal: the annual bonus, an employee of the month reward, or sales incentive.

Whatever the approach – there’s a few key questions businesses need to ask themselves: What are these rewards getting you today? Are they helping you meet KPI’s? Are they giving a good ROI?

Often, it’s hard to track the payback on an employee rewards program. With a strategic approach, that can change.

employee rewards motivate employees

Employee Rewards – the Demotivation Factor

Done wrong – an employee rewards program acts as a complete demotivator. Done right, employee rewards are empowering. Studies show that the value of a given reward as a motivator goes down over time. Eventually, employees come to expect that reward as their just due – and they quit wanting to work for it. Plus, remove the reward – remove the motivated behavior.

On top of that, working for the reward itself (rather than joy of a job, or working based on a set of values) can cause serious harm to a company. Take Wells Fargo for example. They created employee rewards to incentivize employees to open more checking accounts – without creating accountability to customers. The resulting swarm of opening accounts without customer permission has cost Wells Fargo billions in fines and lawsuits, and capped their growth for years.

Despite the demotivation factor, Employee Rewards, done correctly, can still be extremely motivating.

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employee reward ideas

Best Practices for Effective Employee Rewards Programs

How do you make rewards effective? Instead of using them as a motivator to work towards – use them to build the four pillars of a great employee experience: connection, meaning, impact and appreciation. Kazoo has done extensive research into the science of motivation and employee rewards to come up with six best practices for experience-enhancing employee rewards:

  1. Tie it to Spontaneous Recognition
  2. Tie Rewards to Values
  3. Let Employees Choose the Reward that Matters
  4. Let Employees Reward Each Other
  5. Include Team Rewards
  6. Make it Trackable

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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.

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.

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.

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.

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.

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.

Pulling it All Together

Kazoo’s Employee Experience platform pulls together rewards, recognition and actionable insights under one powerful umbrella. Our ROI Report showed that every company surveyed had a boost in engagement after implementing Kazoo, the cost of employee rewards programs decreased by an average of 30%, and it saved an average of five hours per month in HR program management.