Types of Employee Reward Programs for Companies

Fostering and improving employee satisfaction and engagement are crucial for the success of any organization, especially given the ongoing challenges with high turnover and disengagement. Yet, organizations often overlook a key strategy that can help combat these troubling trends: implementing a robust employee reward program. When done right, a rewards program will celebrate all the moments that matter in the employee journey -- making employees feel valued, appreciated, and seen. 

What is an Employee Reward Program? 

An employee reward program is a strategic program designed to acknowledge and incentivize employees for their contributions and achievements. These programs come in various forms and encompass both monetary and non-monetary rewards. These programs -- often used to recognize different aspects of employee performance and behavior -- play an important role in motivating employees, fostering engagement, and enhancing the employee experience. 

Types of Employee Reward Programs

Rewards can be broken down into two main categories: monetary rewards and non-monetary rewards. While monetary incentives are commonly used, there is a wide array of rewards that can cater to diverse employee preferences and motivations.

Here are examples of rewards you can use for both categories.

Non-Monetary Rewards

• Verbal and Written Praise: Expressing appreciation through verbal and written praise can have a profound impact on employee morale and motivation. This includes sending digital messages, handwritten thank you notes, public praise, and private recognition.
• Awards and Certificates: Recognize outstanding performance and achievements with awards and certificates. These tangible tokens of appreciation are a traditional yet effective method for expressing gratitude and appreciation for employees contributions.
• Paid Time Off: Providing additional paid time off as a reward acknowledges employees’ commitment and dedication to their work. With a majority of employees seeking better work-life balance, this is a great option for employees that seek more flexibility and balance.

Monetary Rewards

• Bonus: If an employee has been going above and beyond at work, consider giving them a one-time monetary incentive to reward their hard work and dedication. Whether in the form of cash, profit-sharing incentives, or performance-based incentives, bonuses serve as tangible rewards that motivate employees.
• Gifts: Gifts such as merchandise, gift cards, or awarded experiences offer employees tangible rewards that they can enjoy and appreciate. Digital recognition and rewards platforms make it easy to manage and distribute these rewards.
• Points in a Recognition Platform: Recognition platforms often utilize a points-based system to reward employees for their milestones, achievements, and contributions. Employees earn points for various actions, which can then be redeemed for a variety of rewards.

How to Set Up a Reward Program for Employees

Creating an effective reward program for employees requires careful planning and consideration of various factors. Follow these step-by-step instructions to develop a comprehensive reward program that motivates and engages your workforce:

1. Define Objectives

Begin by clearly defining the objectives of your reward program. Determine what specific behaviors, achievements, or milestones you want to recognize and incentivize among your employees. These objectives should align with the overall goals and values of your organization.

2. Identify Types of Rewards

Next, consider the types of rewards you want to offer to employees. These can include monetary incentives such as bonuses or gift cards, as well as non-monetary rewards like extra vacation days, recognition certificates, or opportunities for professional development. Choose rewards that are meaningful and relevant to your employees' preferences and interests.

3. Establish a Budget

You will need to allocate a budget for your reward program based on the resources available to your organization. Of course, this amount will vary from company to company but the Society for Human Resources Management (SHRM) shares a good rule of thumb is about 1% of pay roll. Consider factors such as the number of employees, the frequency of rewards, and the types of rewards you plan to offer. It's important to strike a balance between offering attractive rewards and maintaining financial sustainability.

4. Design a Reward System

Develop a clear and transparent reward system that outlines the criteria for earning rewards and the process for receiving them. Define specific metrics or performance indicators that will be used to evaluate employee eligibility for rewards. Ensure that the reward system is fair, consistent, and easily understandable for all employees.

5. Communicate the Program

Communicate the details of your reward program to all employees to ensure awareness and understanding. Clearly explain the objectives, types of rewards, eligibility criteria, and how the program will be administered. Use multiple channels such as company meetings, email announcements, and posters in common areas to disseminate information effectively.

6. Implement and Monitor

Launch your reward program and monitor its implementation closely. Track employee participation, feedback, and the impact of rewards on performance and morale. Be prepared to make adjustments to the program based on feedback and evolving organizational needs.

7. Evaluate Effectiveness

Regularly evaluate the effectiveness of your reward program against the defined objectives. Analyze key metrics such as employee engagement, retention rates, and productivity levels to assess the program's impact. Solicit feedback from employees through surveys or focus groups to identify areas for improvement.

By following these step-by-step instructions, you can create a reward program that not only recognizes and incentivizes employee performance but also contributes to a positive and supportive work culture within your organization.

The Dos and Don’ts of a Rewards and Recognition Program

Things You Should Do:

1. Clearly Define Objectives: Clearly define the objectives of your rewards program. Determine what behaviors or achievements you want to incentivize and align them with your organization's goals and values.
2. Make it Inclusive: Ensure that your rewards program is inclusive and accessible to all employees. Recognize and celebrate diverse contributions and achievements across different departments and levels within the organization.
3. Offer Variety: Provide a variety of rewards to cater to different preferences and motivations. Consider offering a mix of monetary and non-monetary rewards, as well as opportunities for recognition and career development.
4. Communicate Effectively: Communicate the details of the rewards program clearly and consistently to all employees. Make sure they understand the eligibility criteria, how rewards are earned, and the overall purpose of the program.
5. Provide Timely Recognition: Recognize and reward employees in a timely manner to reinforce desired behaviors and achievements. Prompt recognition shows employees that their efforts are valued and appreciated.

Things You Shouldn't Do:

1. Focus Solely on Monetary Rewards: While monetary rewards can be effective, don't rely solely on them as the primary form of recognition. Non-monetary rewards, such as public praise or extra time off, can be equally meaningful and motivating.
2. Ignore Feedback: Don't overlook the importance of gathering feedback from employees regarding the rewards program. Solicit input on what types of rewards are most meaningful to them and be open to making adjustments based on their feedback.
3. Be Inconsistent: Avoid inconsistency in how rewards are administered or how criteria for eligibility are applied. Inconsistencies can lead to perceptions of unfairness and undermine the effectiveness of the rewards program.
4. Overlook Small Wins: Often times it’s easy to overlook the small wins and moments in an employees' experience. We recommend that you don't only focus on major achievements when rewarding employees. Recognize and celebrate small wins and incremental progress to maintain momentum and motivation over time. 
5. Set it and Forget it: Finally, don't set up a rewards program and then forget about it. Regularly evaluate the effectiveness of the program, gather feedback, and make adjustments as needed to ensure its continued success.

Summing It Up

Organizations can use both monetary and non-monetary employee reward programs to meaningfully recognize and reward employees' positive contributions and behaviors. Together, these two types of reward programs can be used to create a meaningful employee experience -- one that engages, motivates, and satisfies employees.

Create a Meaningful Reward Program with Inspirus

Looking for a way to streamline employee rewards, boost engagement, and foster a culture of appreciation? Inspirus, a leader in employee recognition and engagement solutions, offers an all-in-one digital recognition platform that can revolutionize your employee reward program.

With 130+ years of experience in the rewards and recognition space, our team of specialists can create a tailored recognition program to streamline your employee rewards and create a culture of appreciation that drives employee engagement and business results.

Talk with an Inspirus specialist today to see how we can help you!