Corporate reward, recognition and incentive programs not only bring joy and create memories. They are powerful tools to motivate your teams, increase employee loyalty and engagement and drive specific actions and outcomes. Creating (or refining) an employee reward program doesn’t have to be hard. Read on in the first part of our three-part series about designing a winning employee reward program.
The first step in building a rewards program is understanding what an employee rewards program is, why you need one and how to structure one.
What are employee reward, recognition and incentive programs, and how are they different?
An employee recognition program is an organized way of acknowledging your team. Employee recognition programs can be designed for acknowledgement from management to employees, peer-to-peer or to celebrate milestones such as birthdays and anniversaries (but we’ll get there).
The purpose of a recognition program is simple: to acknowledge team members. Companies acknowledge employees on their websites, on internal Slack channels, with physical or digital cards or notes.
Recognition typically comes with a reward but not always. That’s where employee rewards programs come into the picture.
An employee rewards program provides employees with ongoing rewards for milestones, upon reaching specific goals or for displaying valued behaviors. Companies typically build employee recognition and reward programs to simultaneously recognize and reward their teams.
Finally, an employee incentive program incentivizes employees to reach quantifiable goals, usually within a specified amount of time. These programs are typically aligned with key business objectives and work well for sales teams with quarterly or holiday sales goals.
All three types of programs are similar, in that they provide a tangible reward to employees. The differences are primarily in when and how that reward is given. Think of it this way:
Employee Recognition programs: “Hi! We're happy you're here. Please accept this reward.”
Employee Reward programs: “Hi! We're happy you did such a great job on that project. Please accept this reward.”
Employee Incentive programs: “Hi! We'd love it if you could do x by y date. If you hit your goals, we'll give you this reward.”
For the sake of this blog series, we’ll use rewards programs interchangeably with recognition and incentive programs.
Why should you create an employee rewards program?
To improve employee engagement
Employee engagement measures “the level of enthusiasm and dedication a worker feels toward their job.” Engaged employees are more committed to a company, its mission, and its goals. How can you boost employee engagement? Recognition! It’s essential for an engaged (and high-performing) team.
That’s huge! But, according to Gallup's analysis, only one in three workers in the U.S. strongly agree that they received recognition or praise for doing good work in the past seven days. At any given company, it's not uncommon for employees to feel that their best efforts are routinely ignored. No surprise, then, that only 36% of employees are engaged.
Investing in a recognition program is a high-impact way an organization can demonstrate its commitment to its employees and inspire them to feel valued and connected to the company culture.
To lower employee turnover
44% of employees change jobs because of the lack of recognition. Disengaged employees might not just do sub-par work; they might do no work at all. Employees who do not feel adequately recognized are twice as likely to say they'll quit in the next year. But 68% of people surveyed in our 2022 Consumer Survey reported that a reward, like a great corporate gift, would make them more likely to stay with their current employer. Employee rewards are a huge component in employee retention. And you want employees to stay! It’s costly to replace employees. On average it costs a company 6 to 9 months of an employee's salary to replace them, according to The Society for Human Resource Management (SHRM).
To attract talent
High performing employees are searching for something more than just a high salary. Top candidates are looking for motivators, such as rewards, recognition, incentives, challenge work and growth opportunities. Attract top talent with a recognition program that proves your company appreciates and values its people. Brag about your best people on social media and your website so talented and sought-after job candidates can see how you celebrate employees’ milestones and achievements.
How to structure your employee rewards program
When developing an employee rewards program, consider what your company and employees value. Here are structural ideas to consider for your program:
Consider who gives recognition
Typical recognition programs are designed for management to praise individual contributors, but we encourage you to shake things up to allow recognition to flow in all directions! Your program can encourage recognition from:
Employees interact with each other on a regular basis and opportunities to acknowledge each other, their teams, and managers really can solidify company culture, improve morale and generate good feelings about each other and their job. It should be noted that, according to Gallup’s data, the most memorable recognition comes most often from an employee's manager (28%), followed by a high-level leader or CEO (24%), and then peers (9%).
Consider how to give recognition
An important decision in structuring your employee rewards program is deciding how you will recognize your team members – privately or publicly. Some people are introverted and run from the spotlight, while others have thank-you speeches drafted waiting for their moment! Keep that in mind.
Private recognition includes personalized notes or calls, praise during one-on-one meetings, or quality time with management. Private recognition can feel more genuine and intimate, because they can give employees a one-on-one interaction with a manager (or whoever’s acknowledging them).
Public recognition is basically shouting from the mountain tops how amazing your team members are! It can happen in a meeting, on your website, at an awards ceremony or through social media. Publicly recognizing someone not only inspires the recipient, it motivates all team members (and potential candidates) to work for a reward or shout out, too. Of course, it may also embarrass the recipient, so consider it carefully.
Whether public or private, it goes without saying that you should tailor feedback for each recipient. Personalized thanks go a long way towards a deeper, more-authentic connection.
Consider when to give recognition
Recognition programs can be spontaneous or timed-based. Time-based programs are typically annual, quarterly or monthly awards, while spontaneous programs recognize employees in real time. Both programs can include criteria for what events or behaviors are recognized, how recognition happens, and what rewards are given. A combination of both time-based recognition and spontaneous recognition will allow your company to celebrate its people in meaningful and timely ways.
Consider what to recognize
We’ll dive into the objectives of your employee rewards program in the next post. But, at this part of designing your program, ask yourself: what events will we reward and recognize? Here are some ideas that you may want to celebrate with your rewards program:
- Performance Milestones: Celebrate employees who reach performance goals. In fact, employee engagement, productivity and performance are 14% higher in organizations that have these programs than in organizations without! There’s even more reason to recognize wins.
- Employee Milestones: Celebrate employees beyond their performance by remembering and celebrating their birthdays and work anniversaries.
- Personal Milestones: Celebrate the big life events, such as graduation, buying a new home, and growing their family (fur babies included!)
- Behavioral Wins: Does someone on your team exemplify your company culture or values? Shout it out!
These are the first steps in building or taking your employee rewards programs to the next level. Check out the next blog for a step-by-step guide on how to roll out your program to ensure success.
Until then, schedule a demo to see how our powerful platform can help your organization to send the rewards to your team.