A short guide to rewarding employees: Rewarding employees is one of the most successful methods of motivating and retaining employees
Leading companies pay special attention to a good relationship with employees because they are recognized as the most important resource that ensures the company’s successful operations.
They devised effective methods of motivating and rewarding in order to keep them in their fold as long as possible. They systematically and consistently reward their people for great effort and exceptional results. The contribution of team members is evaluated based on productivity, quality of work, innovation, and commitment.
It has been proven that awards and recognitions: improve organizational values, increase employee and client satisfaction because they motivate employees to change their behavior, and increase their engagement in performing work tasks.
Employee rewards and recognition are just as necessary in large corporations as they are in small businesses.
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Why is the company’s reputation important?
If it wants to attract the best staff, the company needs to profile itself on the labor market as an organization that values the work of its employees. Do you know that on average about 60% of the company’s costs are related to the costs of rewarding employees?
The word about generous companies spreads very quickly. In such organizations, there is a great rush to one workplace. There are a lot of quality candidates among the numerous applications for the job advertisement, so such companies have sweet selection concerns.
On the other hand, the reputation of “stingy” companies also spreads quickly, and they usually have far fewer applicants. The best shot bypasses them in a big arc. That is why they have a problem with frequent turnover of employees and poor staff in their ranks.
Rewarding employees thus plays an important role, not only in retaining old employees but also in attracting new ones.
Employee reward and motivation system
In order to encourage motivation, which is a key factor in employee efficiency, the task of human resources managers is to design an adequate employee reward system. Employee motivation is determined by many factors, and according to the group of authors Tafra, Graovac, and Šoško, these are satisfaction of material needs, interpersonal relationships, the relationship between superiors, benefits, working hours, independence in decision-making, the possibility of advancement, reward policy within the company, etc.
Each company, according to its capabilities and potential, arranges its own reward and employee motivation system. You can be inspired by someone else’s value system, but you should remember that every company is a unique organism and it would be best to create an original reward system that applies to the entire company, and then further elaborate the reward system for each department.
It is crucial that the reward system is fair so that none of the employees feel left out. Recognitions and awards must be appropriate to the specific achievement so as not to cause a feeling of injustice.
How to implement ethical remuneration of employees?
Randy Richards, Ivona Škreblin Kirbiš, and Mirna Koričan recommend that when creating a reward and motivation system for employees, we strictly adhere to three ethical principles:
Publicly announced remuneration rules that clearly and precisely inform employees how the company in question is rewarded.
Transparent and consistent implementation of the reward system.
Unbiased reward system with equal rules and reward policy for all employees.
Managers should give the same award or recognition for their work to employees who have similar knowledge and skills and perform the same or similar jobs. If two people with similar competencies and the same salary work in the company, it is not good for one of them to receive an additional incentive and the other nothing, or for both to receive different rewards or benefits. It is difficult to equate the financial value of various awards such as company car, business trip, business education …
It should be avoided at all costs that a good employee begins to feel neglected or deprived.
How does rewarding employees motivate greater engagement at work?
Since motivation is not a character trait, we can influence it relatively easily. The goal of a quality motivation and reward system is to encourage employees to contribute more in the workplace.
With increased engagement, they contribute to the company’s business success, which is the ultimate goal of the tool we call the employee reward and motivation system.
Hrvoje Tadin says that motivating employees is a way to get employees to do what they really can and want to do. He differentiates 2 types of motivation:
- motivating attitudes – having the self-confidence to do something concrete
- motivating by rewarding after the completed task
There are 3 categories of employees:
- Engaged employees love and do their work with dedication. They lead the company towards progress.
- Disengaged employees are physically present at work, but not in spirit. They invest their time, not fully and not in a sufficiently high-quality way. A 2018 Gallup survey says that about 51% of employees in the US are not engaged.
- Actively disengaged employees do not contribute to success at all and publicly express their dissatisfaction, undermining the achievements of the collective. According to Gallup data, there were about 13% of such employees in the USA.
The fact is that employee motivation directly affects productivity. Sometimes she needs a little wind at her back – a good reward system.
Rewarding employees must be consistent
Practice has shown that consistency in rewards can activate even the largest percentage of employees, those who are disengaged – 51% of them.
Consistency in rewarding achieves the following results:
- increased motivation = increased productivity
- greater employee satisfaction
- better customer experience
- loyalty of clients and employees
- higher financial performance
- faster and better business results
- quality teamwork
- stress-free work
- fewer absences from work
2 reward systems
According to psychologist Fikreta Bahtijarević-Šiber, as stated in her book “Strategic Management of Human Resources – Contemporary Trends and Challenges”, there are two reward systems:
- remuneration according to knowledge and skills – employees increase their income thanks to the acquisition of knowledge, skills, and competencies and their implementation in work
- rewarding based on work performance – employees are rewarded based on exceptional work results and high productivity
Rewarding employees
Rewarding employees is a consideration for work done. Rewards can be material or non-material in nature. Marin Buble defines compensation as compensation in money, goods, and various forms of material and non-material assistance.
Movements in the labor market have been showing the same trend for many years: employees who do not feel appreciated enough, on average, leave the company within a year.
Rewarding employees is the key to motivating the work team, which results in higher productivity and progress of the company. The success of a company depends on the motivation of employees, and rewards are only a means to direct the employee’s attention and motivation to achieve the goal.
Awards and recognition – an important difference
Rewards are concrete and tangible and increase the engagement of external motivation. Acknowledgments increase the engagement of internal motivation, which is even more valuable because it is more long-lasting. Employees who do their work with dedication and passion react more emotionally to recognition and perceive it as a more personal reward than a salary increase or bonus. While awards imply monetary and financial benefits, recognition is a psychological reward.
Modern companies that listen to any employee realize the importance of non-material rewards and give them more and more importance, greater than material rewards. Dale Carnegie, the famous management training guru, says that people work for money, but work much harder for recognition, praise, and rewards.
Intangible rewards are much more difficult to classify than tangible ones. Why? Because any activity that positively affects the intellectual, physical, or emotional state of the employee can be considered an intangible reward.
The best approach is a combination of rewards and recognition in equal proportion in the reward system.
Prize money
Money is one of the oldest motivators for work, and in the business world we distinguish between two types of financial compensation:
direct financial compensation – salary, bonuses, incentives, and other variable parts of the salary indirect material compensation – privileges, praise, recognition, status, greater authority, in-house, internal, or external education.
Companies award:
- awards based on merit
- the most deserving individuals receive a salary increase by a pre-agreed percentage based on work performance rewards according to quantity
- the possibility of direct evaluation of the work done through the number of completed units bonuses
- allowance for achievement above the norm
Feeling appreciated
Material and monetary rewards are great motivators, but other types of recognition can have the same effect, and sometimes even more, especially for intrinsically motivated employees. dr. Ashley Whillans from Harvard Business School emphasizes the feeling of appreciation as an important factor in employee satisfaction and advises managers to show employees how much they are appreciated. Appreciation is an important human need, both in the private and business worlds.
According to a recent study by Officevibe, the biggest reason most people leave their jobs is because they don’t feel valued.
An employee who feels appreciated expresses his satisfaction, is motivated, and is more productive at his workplace.
Recognition as rewarding employees
As many as 90% of employees claim that the recognition and recognition program for their work has a positive effect on engagement and motivation. Patricia Odell says that money is no longer the ultimate motivator.
Officevibe, an online employee pulse survey platform designed to boost engagement in companies, sends employees a question once a week to assess their mood. Based on the collected feedback, it aggregates the answers. We can say that the survey is objective because it is filled out anonymously, so employees are more honest in giving their answers.
One of the questions was – what is better, to praise an employee or to give him something as a gift? As many as 82% answered that it is better to praise someone than to give them something as a gift.
It is interesting that every third worker confirms that they received some form of recognition or praise at work in the last week.
In a survey conducted by Psychometrics, they asked employees what their leaders could do to improve team engagement. 58% of them answered that they should give recognition.
Human resources expert Susan M. Heathfield explains that recognition is not a scarce resource because it simply cannot be used up.
The greatest effect of recognizing deserving employees is additional motivation and employee loyalty.
Employee recognition methods
In the rest of the text, we guide you through effective methods of recognizing a good employee.
Recognition and recognition of employees through social networks and other media. For example, you can choose an “employee of the month” and publish his photo on social networks or the company’s bulletin board. This method has been proven to increase employee engagement because everyone would like their photo to appear in the “Employee of the Month” column one day.
Peer to Peer recognition is 35.7% more likely to have a positive impact on financial results than manager recognition alone, according to research from the Society for Human Resource Management (SHRM). Empowering employees to recognize the achievements of others creates a sense of freedom in (re)evaluating performance and responsibility that they readily assume.
A business lunch is a great way to get to know your employees better and a sign that you appreciate what they do.
Giving a small gift such as a gift certificate, gift card, etc. will be a small expense for the company and a great motivator for the employees.
Free time also has great motivational potential. A worker who arrives before everyone else and stays longer deserves to get his free time as well.
How to implement an employee reward program well?
Creating rewards and benefits for employees should be a well-developed tactic, not spontaneous and random decision-making. Studying professional literature and attending business training for managers can greatly facilitate this job.
It is important to identify business goals and know what we want from employees. An appropriate reward should be determined for achieving the goal. Once we have set goals and rewards, the next step is to communicate the rewards program fairly and consistently.
Every successful system of rewarding and motivating employees affects two basic types of activities: performing business tasks and behavior.
It will be much easier to evaluate success in the execution of business tasks because the fulfillment of the goal shows us that the job is well done, but evaluating and rewarding the behavior that contributed to the company’s success represents a slightly greater challenge for human resources management. That is why it is very important that we strictly define what types of employee behavior deserve a reward: overtime voluntary work, early arrival to work, and innovative proposals. ..
It is important to time the rewards of employees well. Do not wait for good employees to unpleasantly surprise you by resigning because of a higher salary, benefits, and other benefits of a competing company. The departure of a valuable employee who is not adequately paid or appreciated for his knowledge, work, and dedication can cause problems until he is replaced by an equally good staff, which takes time. And, in the business world, time is money!
How much does employee recognition cost you? The cost of employee recognition is significantly lower than the cost of losing a valuable team member.
If you need advice on creating a fair and high-quality reward system and motivating employees, the experts from LQ are at your disposal.