20 ways good reward management will transform your company
Reward management might seem like overcomplicating a preexisting structure. However, it isn't that hard. And, with the preferences of the workforce changing, good reward management can bring you big benefits. Here's how it can transform your business.
So, what is 'reward management'?
Gone are the days of ‘give me all your time and dedication and I’ll give you some money’. When it comes to successful employer-employee relations, benefits, perks, and rewards are becoming as important as pay. We are now in the ‘you scratch my back, and I’ll scratch yours’ era of reward management.
Simply, reward management is the implementation of strategies or policies to help reward everyone in the company, in a fair and consistent way. When you reward your employees for good work, they feel valued and more motivated – which can overall boost the productivity and success of your business.
The most successful reward management strategies give employees opportunities to enhance themselves – bringing about a mutually beneficial way of recognising good workers.
But, how is reward management important?
Rewards come in many forms. But what really matters is how you manage these rewards. When rewards are managed fairly and effectively, they add to employees' happiness. Employees stay loyal to your company and help to grow your talent pipeline.
Nowadays, for success in the working environment, you need a blend of work and rest. Rewards at work can become useful in a meaningful way away from the office and not just during working hours.
When you are thinking about reward management, you need to really think about what rewards your employees will actually appreciate, and which could actually benefit them. Whether these rewards benefit your employees financially, add to their lifestyle or improve their wellbeing, when employees know their employer is thinking about what rewards will improve their lives - they know that they are valued.
The modern generation of workers are more interested in self-enhancement and lifestyle rewards than simply financial incentives. An effective reward management strategy doesn’t just promote good work by dangling a carrot in front of employees, but by promoting a healthy work-life balance that allows the employee to feel their best and perform their best.
Benefits, perks, rewards: what’s the difference?
Is there a meaningful difference between these three lovely, shiny bonuses (what even is a bonus?). Perhaps the easiest way to remember what’s what is:
BenefitsBenefits are built into one’s salary. Traditionally, benefits were substantive yet non-financial aspects of one’s payment. Think pensions that people can claim after they’ve reached the appropriate age for retirement.
Perks are often thought of as additional little treats that make life at work more enjoyable. These range from beer Fridays, to dog Wednesdays, to frisbee Mondays. However, these auxiliary perks are now starting to count for more.
Many employees want to better themselves, and the best companies are realising this. So now, perks can include time allowances to learn a new language, join fitness classes, or cycle-to-work schemes.
As you may have noticed, many of these more substantive perks will be mutually beneficial, as a happier, healthier employee will contribute to a positive office culture. If you'd like a little more information on how Perkbox can help your employees lives better both in work and life, take a look here.
Rewards provide an opportunity to not only promote productivity but do so in a way that aligns with your company values.
So, this means instead of giving a cash prize for good work or a day’s holiday for a successful project, you should offer incentives that will promote teamwork, or consideration in the workplace, as well as those that encourage quality work. To see how Perkbox can help reward your employees for going the extra mile, check out our Recognition platform.
The who, how and why of giving back to employees
Unlike benefits and perks, a key aspect of successful reward management is recognising who to reward. How do you fairly tease apart who has acceptably contributed to a group goal, and who has shone? It can be tricky, but clear communication channels and knowing everyone’s goals is a start.
Reward management can contribute to a thriving company culture. If your employees are rewarded for going above and beyond, helping each other achieve, and meeting their own goals, you’ll foster a caring community and compassionate environment. Furthermore, this can be done to varying degrees, meaning that you won’t dilute the significance of rewards.
Perkbox’s Recognition hub helps you achieve this by offering easy to access rewards in a variety of contexts. Promote healthy competition to develop individuals, or recognise a team for their quality work. It’s a big step towards implementing the three crucial R’s in your workplace: recognise, reward, retain. If you do these well, you'll have won reward management.
So, now you know that rewarding can play a crucial role in company culture as well as employee retention, let’s look through the myriad benefits to your company that good reward management can have.
20 benefits of reward management
1. It will help you attract the top talent
Your employer brand needs to be well managed and presented by your talent acquisition team. This is because the top talent want to know that they will be getting what they're worth.
Are you looking for people who are fine with the employee benefits in the job description and trade that for their baseline time and effort? Or are you looking for team players that want to help you grow your company? With some extra incentives (and mentioning this in the job description) you can attract people who are ready to go the extra mile.
You can show them how they’ll get this by detailing your sophisticated reward management system and the compensation within job overviews during the recruitment stage.
2. It helps retain top talent
Retention is one of the three Rs for a reason to implement reward management. The importance of employee retention is hard to overstate. Keeping your best employees on board is vital for business success and if they don’t feel appreciated they may leave to join a competitor.
Moreover, having to replace them can cost you a lot of time and money. There are many ways to retain them, and reward management is integral. Reward management can be directly linked to lower staff turnover, and lower costs for having to hire new people. In other words: appreciate what you have.
3. It contributes to a strong, positive company culture
If you're looking to build a stronger, more positive company culture, don't forget rewards systems. The way people are appreciated and celebrated plays a huge role in the mood on the workplace. It influences how your employees talk to each other, and to people outside of the business.
A reward system with extra compensation for hard work, shows you're all about positive reinforcement for employees that go the extra mile.
4. It strengthens your Employee Value Proposition (EVP)
If you don’t know by now, EVP is big. If you can’t remember the letters, think ‘extra very important’. Sounds silly, but it’s crucial in helping all of the first three points in this list.
The EVP is the overall package you are offering to your employees, and good reward management is a big part of this. Your EVP is what will set you apart from competitors – so it's vital that you can shout about this if you want to attract top talent.
5. It contributes to employee wellbeing
It’s not hard to imagine scenarios where neglecting an employee’s hard work can leave them feeling disengaged and dejected. The opposite is also true. So, with employee wellbeing more important than ever, you can’t afford to risk forgetting about those who push your company to new heights.
6. It increases productivity
It’s simple but it needs to be said. Reward management can help productivity massively. From healthy competition to knowing that their hard work will be appreciated, employees are more likely to produce quality work if they know meaningful rewards lie around the corner. In other words, giving someone a higher compensation at the right moment, could have a high ROI.
7. It helps you build a good reputation
As with company culture, reputation influences many aspects of the business. One of the more important fields of influence is on clients. Notoriously bad employers can find it harder to convince a client to trust them if they know the company’s own employees don’t. Reward management, therefore, can be a key way to engage employees, contributing to a positive reputation.
8. It improves your performance management system
Very popular in modern business management is the process of performance management. This aims to continually improve and grow the performance of each employee. So this isn’t just about achieving your goals but pushing your business to the best it can be. Increasingly, reward management is being employed in such systems to keep employees engaged and growing.
9. It's great for increasing true loyalty
Similar yet distinct from retention and culture is loyalty. An effective reward management system ensures that your employees can form a meaningful bond with your business. This will improve many areas, such as how they speak about and sell the company to others, whether they be clients or potential job applicants.
10. It encourages a long-term outlook from employees
Instead of offering here-and-now rewards for single pieces of good work, a sophisticated reward management system will promote consistent good work over a period of time. That’s where the ‘management’ comes in. You don’t just fling freebies at your employees, but think how to best attach them to long-term goals, thus breeding a long-term outlook.
11. It increases engagement
Often, people talk about increasing profitability, higher productivity, or boosting motivation. These factors can not be tackled on their own. They're all part of something bigger: how engaged your employees are.
Employee engagement gets an instant boost from reward management. It can spark a passion and drive to bring the best version of yourself to work every day.
So, when you think that rewarding your employees is a waste of time and money, don't forget it can increase engagement. And since research shows that higher employee engagement levels can increase profitability by 22%, it could just the investment your business and employees have been waiting for.
12. It encourages a proactive spirit
Know what to reward for. Not only for a job well done, but also for great ideas that someone spontaneously brought to the table. If you include rewards for things like this, people will feel more motivated and supported to speak up when they see room for improvement.
This can all be related back to the Expectancy Theory. Basically, this theory states that the motivation of an employee is the outcome of Valence, Expectancy and Instrumentality. Here what that means:
- Valence: how much someone wants a reward
- Expectancy: their assessment of the likelihood that their effort will lead to expected performance
- Instrumentality: their belief that their performance will lead to reward
Simpler put: if people know for sure that there will be compensation for going the extra mile, their motivation will be higher, and they will be more likely to put in the extra effort.
13. Happier employees make for happier customers
We all know our mood directly affects other people. So, by making sure your employees are happy - with a reward system only being a part of the solution for that - you know your customers will be met with a smile and positive attitude.
How someone treats the customers they have to ''deal with'' often reflects how their managers are dealing with them, and what kind of work environment they work in. Make it a happy place for everyone, and positive experiences will become the standard for your organisation.
14. It helps lower stress levels, meaning less absenteeism
People spend a lot of time at work, which means it directly impacts their health. In an environment that is balanced, that is focussed on rewarding good work - and not only punishing for underperforming, people will feel less stressed.
When we come to work every day, we want to know that there are possibilities of pleasant surprises. Walking on eggshells or even seeing that other people around you have to do that can cause great stress. Not only does this have a negative impact on a person's mental and physical health, it will also affect your business. Burnt out people will not only underperform, at one point they will stop showing up altogether.
Stress will always be a part of an ambitious workplace, but try turning it into good stress with positive reinforcement and rewards.
15. It promotes teamwork and collaboration
Rewards don't just motivate individuals to do their best: they can also be a great tool to bring teams closer together and create a sense of team spirit. You don't necessarily need a team bonus in your reward system for that, although it does help. At the very least, all members of a team should know that they have an equal opportunity to be rewarded.
16. Having a reward strategy in place can prevent unintentional awkward moments
Having a structured reward system in place takes out the guesswork of what to do when you want to celebrate the success of an employee. The risk of not having that? If everyone gets a different type of reward, you're not showing your appreciation equally. That could leave employees feeling like others have gotten more recognition than they did, for equal successes.
Set up a reward system in which your management and employees know what they can expect, with a clear incentive scheme. Communicate when pay increases are on the table, what kind of compensation they can expect, and when it's ''just'' other benefits. With a reward structure like this, you make sure everyone can feel equally appreciated. To see how Perkbox can help with this, take a look at our Recognition platform.
17. Reward policies make it easier to spot top talent
Following up on having a structured reward system: it doesn't just manage expectations, it also helps management to measure employee performance. If you're looking for a fair way to identify the A players in your workplace, a reward system can help.
If certain milestones and employee productivity are linked to rewards, it will be easy to spot for managers who is reaching those goals fastest and most efficiently - simply by looking at who you're rewarding most.
Again, this takes out the guesswork and the need to follow your gut, something that often doesn't go down very well in a workplace. You can promote people based on evidence, rather than feelings and opinions.
18. Help employees focus on your company’s values
As alluded earlier, when you manage rewards effectively, you can link them to company goals and values. Getting everyone on the same page on how to work according to a specific value or vision can be hard.
Values can often feel abstract, and doing things ''your own way'' works just as fine. If you want to double down on having your employees aligned with your company values, include them in your reward program, and give specific examples of what working that way would look like.
19. Non-financial rewards can be just as effective in boosting morale
Looking for a cost-effective way to amp up motivation? Good news: you don’t need a company retreat to the Bahamas to give employees a motivation boost. If you build reward programs around what each individual employee wants, you can set up a relatively cheap system to motivate your staff.
For instance, employers like Google reward hard work with time or resources that employees can dedicate to their side project. Wouldn't that be distracting or counter-effective in the long run? No. Holding back your employees from chasing their dreams, would be, however.
Job satisfaction is not just about how ''fun'' your work is or getting cash bonuses. People also value having room for personal development and being able to work towards their future goals. As an employer, you should always be aware of the importance of that. With a reward system, you can highlight it even more.
20. It can help employees develop new skills
There’s never really a right time to start a new course. It’s busy enough as it is right now, right? Right, except for when you know that you’ll be rewarded for expanding your skill set. Sometimes someone needs a bigger incentive than ‘’it’ll look great on your resume’’.
Frequently asked questions about reward management
What are the types of reward management?
You can offer different types of rewards based on your company's values and the work that's being done. For instance, you can offer tangible rewards. These can be perks such as money or material objects. Alternatively, you can opt for intangible rewards: praising employees, giving them an award or public recognition.
What are intrinsic and extrinsic rewards?
Awards, praise, and public recognition fall under intrinsic rewards. They give you a sense of achievement but aren't materialistic. Extrinsic awards are something that's physically given to you which has value, such as a holiday or a big bonus.
Why is reward management important?
Often, companies have protocols in place for when an employee isn't hitting his targets, or isn't performing well. When there's nothing to balance this out with, it can create a negative atmosphere in a workplace, which will affect productivity, customer service, and employee turnover.
Let's make rewards a standard practice in good human resource management.
There are some lovely ways your reward management system can transform your business. We’re sure that, after implementing one like the rewards hub from Perkbox, you’ll continue to see these rewards for yourself.
With benefits, perks, and rewards firing on all cylinders, you’re giving yourself a fighting chance at nailing the recruitment through to retirement cycle of employee engagement and performance.