The Benefits of Employee Rewards Programs

Long gone are the days when salary and pay raises alone ensured employee satisfaction and loyalty for a lifetime. Nowadays, with competitive labour markets, companies are lucky if workers stay with a company for more than four years. 

Such turnover is astonishingly disruptive and expensive, costing millions of dollars for companies with thousands of employees, according to Gallup and Workhuman research.

But you can do something about it with employee recognition programs that meaningfully reward your workforce. Whether your company employs a dozen people or thousands, one thing is likely: It would benefit from happier employees who feel genuinely valued, recognized, and rewarded.

What Happens If Employees Aren’t Feeling Valued?

• Profitability drops. Employees need to feel engaged and committed to their company. According to a Gallup study, businesses with high employee engagement see 21% higher profitability.

• Productivity tanks. Employees are less willing to work just for money; they want an employer that aligns with their personal values and life goals. If they feel unvalued and disenfranchised, they lack the motivation to produce their best work because they think companies use them as impersonal cogs merely to make profits. A survey by Glassdoor found that 80% of employees would choose additional benefits over a pay raise.

• Worker health worsens. Research has proven that when people undergo chronic stress in the workplace, their physical and mental health suffers profoundly. In fact, an astonishing 74% of American employees say their job is negatively affecting their mental health. The result? More missed workdays, difficulty meeting deadlines, lack of focus, and negative attitudes that pollute the work environment for others.

• It’s hard to retain and attract talent. When people are unhappy, they talk. Word gets around quickly, and once this cycle starts, it can be difficult to overcome that reputation, even if salary and benefits are excellent. A study by Achievers found that companies with effective recognition programs had 31% lower turnover rates compared to those without recognition programs.

How Can Good Employee Reward Programs Help?

• More loyalty, less turnover. It sounds obvious, but an employee who feels genuinely recognized is less likely to keep eyeing opportunities with other companies. Given the immense investment your workforce represents in terms of training, experience, and relationships, keeping a valuable employee is priceless.

• More positivity and better morale. Negativity is contagious, and workers with poor attitudes tend to spread that toxicity to others. A positive work environment helps everyone!

• Productivity goes up. Workplace negativity creates a vicious loop—more stress and burnout lead to deteriorating physical and mental well-being, which means more workers who are out on sick leave—or even quit. This results in more lost productivity, disruption, and greater strain on remaining employees. 

• What’s good for employees is truly good for the company. Happier, satisfied workers who feel genuinely connected to their companies are not only more motivated to do their best work, but they also inspire others to do the same, compounding the benefit. Salesforce knows this, and it pays off in spades.

What Makes a Reward Program Successful?

• Don’t be disingenuous. People can smell insincerity from a mile away; implementing superficial, short-term programs, flimsy policies, and cheesy slogans only reinforces more distrust and dissatisfaction.

• Employee reward and recognition must align with company culture. If company management sends mixed messages about its policies on workplace culture, this can be disastrous. According to Workhuman and Gallup polls, employees who report that their recognition program aligns with their company’s values are 4.9 times more likely to strongly know what’s expected of them than employees whose companies don’t.

• Even small rewards make people feel valued. Recognition doesn’t have to be reserved just for major innovation. In fact, 72 percent of employees who have great recognition experiences report that performance for “little things” is commonly recognized at their organization. Just look at what happened when Amazon tried to take away employees’ free coffee.

• Learn from past lessons. Where has your company succeeded the most? What’s held it back in the past? Examining and applying this history is crucial to not repeating mistakes and forging meaningful strategies.

• Stay flexible—one size doesn’t fit all. What works for one company won’t always be effective for another. Creating successful employee reward and recognition programs depends on the company’s particular sector and goals, workforce demographics, corporate culture, and decision-making processes, as well as how its employees communicate and work.

• Be creative and joyful! Let’s face it—we could all use more joy in our lives, and there can never be too much of it. Spontaneous surprise and delight are often the best rewards of all!

How Do You Implement a Reward Program That Actually Works?

• Keep your goals clear. Confusion causes chaos. Nothing irritates a workforce more than unclear company goals, values, and expectations.

• Never rely on just money rewards. Google tried this and it was a dismal failure. Now, it uses everything from peer-to-peer recognition to simple thank-you notes, and it is widely considered one of the best companies in the world to work for.

• Rewards need to be equitable and timely. If workers sense that managers are “playing favourites,” a rewards program will lose all meaning quicker than a drop of water on a hot desert day. When beer manufacturer Heineken realized this from conducting an employee survey, they took concrete steps to change it.

• Leadership needs to come from the very top. Nothing is more ineffective than a lack of buy-in from top management down through the ranks. Today’s savvy employees are especially sensitive to such misalignment, and they won’t stay long if they perceive the company is at odds with itself—and with them.

• Don’t be arrogant. Too often, companies make the mistake that they “know it all” when what’s best for their workers is usually exactly the opposite. After all, your employees are the ones doing the actual work, so ask for their input and opinions—and not just in a superficial, lip-service way. Genuine, sustained sincerity, caring, and transparency will always win trust and forge strength.

• Consistently follow through. A reward program that starts off strong but loses momentum and isn’t carried through long-term isn’t much better than not having one at all. Goals must be clear, managers must actively manage the program, and the program must exist long enough for desirable habits to take hold and the culture to become cohesive.

• Don’t assume the work is done once you implement a reward program. “Set it and forget it” isn’t an option. Employers may not realize how wide the gap is between how company leaders implement recognition programs and how employees experience them, according to Gallup. Management needs to continually gather data and test its reward strategies to see how they are performing and if they need to be calibrated to stay engaging and relevant. Don’t forget to ask your employees how they feel about the programs—then listen to them.