Can employee rewards really influence employee performance?
All will be revealed in this blog. Along with the reasons why employers choose to reward employees, and the best types of employee rewards to boost motivation, performance, and loyalty.
Let’s get started.
Reasons to reward employees
There are many reasons why you might want to reward staff members with a special ‘thank you’. Some of the most popular examples include thanking employees for their hard work or high performance.
In a Blackhawk Network study, we asked employees what they expected to be rewarded for. The top answer was ‘for the ongoing effort I put in at work’, which suggests that it’s important to recognise those who complete their duties as expected and not just those who go the extra mile.
The benefits of rewarding employees
A number of studies highlight the powerful relationship between rewards and employee performance.
For example, 77% of employees report that they would work harder if they felt better recognised and 68% of employees said they would remain loyal to their employer if they were regularly thanked for their efforts.
When we asked employees for their thoughts on employee rewards and recognition, three out of four respondents said that reward programmes make them feel ‘valued’ and that ‘the company cares about me.’
So, it’s no surprise that driving positive feelings with a rewards programme can lead to a 44% increase in employee performance.
In fact, feeling valued is so important to today’s workforce that 60% of employees would choose a job that offered lower pay but better benefits.
Rewarding employees can also boost productivity. One study found that 50% of companies that gave employees Christmas rewards saw an improvement in productivity levels in the new year. As a result, companies offering an incentive programme with the right type of reward enjoy a 79% success rate in achieving their business goals.
With that in mind, let’s look at the ‘right type’ of employee rewards.
What are the best employee rewards?
Our research into the type of rewards employees want from their employer’s rewards programmes highlighted the desire for choice-based rewards.
That’s why one of the top three preferred rewards was ‘a gift card to use at a variety of retailers’, with popular interests including food and drink (64%), entertainment and events (57%), and sport (39%). Employees like to have the flexibility to choose the right gift for them.
In an age where nearly everyone owns a smartphone – 96% of 16-24-year-olds in the UK own a smartphone – it’s no surprise that digital rewards, such as eGift codes, are becoming increasingly popular with employees. They’re instant, they’re flexible, and they put the employee in control.
As for how often to reward employees, our research found that two-thirds of the UK workforce would be happy with a monthly or quarterly reward. This suggests that a successful employee rewards programme is one that recognises staff little and often.
Our employee rewards range
Want to foster the relationship between rewards and employee performance within your business?
We are the leading provider of employee rewards and work with businesses across the UK to help them engage with and inspire their staff.
As well as gift cards, eGift codes, and experience vouchers, we also specialise in multi-brand choice-based rewards to drive desired behaviours.
Get in touch today to find out more.
Employees are undoubtedly the most valuable and important assets for any organization. In today’s competitive world, the most challenging part for any employer is to retain his employees and keep them satisfied. As a business owner, one is looking for ways to improve the quality of his net outcome while reducing costs. So while owners need to get more from their employees, their employees are looking for more out of them. Competitive reward systems have a major impact on an organization’s ability to acquire, retain and motivate high potential employees and ultimately getting the higher levels of performance. Performance of employees may include quality of work, quantity of work, presence at work and timeliness of the output. In competitive reward system, there are a limited number of rewards and not every employee that meets performance standards receives a reward; only the highest performers receive the reward. A meta-analysis of employee reward programs found that competitive reward programs produced a 27% gain in employee performance.
The reward system may include both financial and non-financial rewards, which are also called as Extrinsic and Intrinsic rewards. Financial rewards may include salary increase, bonus system and perquisite. On the other hand, there are non-financial rewards which are; authority and responsibility, promotion and title, recognition, education, appreciation and praise, certificate and plague, participation to decisions, vacation time, feedback, social activities, comfort at workplace, design of work, flexible working hours and social rights etc. These rewards have an impact on the morale and performance of the employees. Many organizations have found that far from complementing the stated aims of the business, their performance and rewards systems actually drive the counter-productive behavior of the employees. A winning system recognizes and rewards two types of employee activity- performance and behavior. Performance is the easiest to address because of the direct link between the initial goals a company sets for its employees and the ultimate outcomes. Whereas, rewarding specific behaviors that made a difference to the company is more challenging than rewarding performance.
The ‘path-goal model’ absolutely explains the relationship between the reward system and employee performance. This model states that if a worker sees high productivity as a path leading to the attainment of one or more of his personal goals, he will tend to be a high producer. Conversely, if he sees low productivity as a path to the achievement of his goals, he will tend to be a low producer. In other words, the employee would be motivated to expand a greater amount of effort in his work if he felt his previous effort had resulted in his receiving rewards.
According to several researches, intellectuals have derived that performance is directly proportional to motivation of an employee. The more motivated and satisfied an employee is at the workplace, the better his performance will be. To determine the motivational and de-motivational factors at the workplace that cause satisfaction and dissatisfaction for the employees, Fredrick Herzberg carried out studies. He published a book in 1959 titled ‘The Motivation to Work’. Herzberg discovered that the factors causing job satisfaction were different from the factors causing job dissatisfaction. He developed the ‘motivation-hygiene theory’ to explain the results. He called the satisfiers motivators and the dissatisfiers hygiene factors, using the term ‘hygiene’in the sense that they are considered maintenance factors that are necessary to avoid dissatisfaction but that by themselves do not provide satisfaction.
According to Herzberg, there are two distinct human needs depicted. First, there are physiological requirements that can be met with money, such as purchasing food and shelter. Second, the psychological need to accomplish and grow is there, and this need is met by activities that cause one to grow. In order to apply Herzberg's perspective on motivation in the workplace, one must use a two-stage process. Firstly, one needs to eliminate the dissatisfactions employees are facing and secondly he needs to help the employees find their satisfaction. Performance is guaranteed when these are successfully done.
Effects of financial and non-financial rewards on employee performance:
- Employees from lower social class families tend to be motivated more by financial rewards than non-financial rewards
- Employees with extended family members tend to be motivated more by financial rewards than non-financial rewards.
- Highly skilled workers in developing countries are likely to be motivated more by both financial and non-financial rewards.
- Non- skilled/low skilled employees in developing countries are likely to be motivated by financial rewards more than non-financial rewards.
- Employees from less-developing countries tend to be motivated more by financial rewards than non-financial rewards.
Ways to increase employee performance/motivation using rewards
Following are some tips for the managers to elevate performance and motivation of their workforce by using rewards:
- Always link rewards to performance
The rewards must be directly linked to the desired behavior in order to have the most impact on influencing employee performance. Managers should tie praise, recognition, non- cash rewards and cash rewards to specific results. When employees understand the connection between their performance and their rewards, they will be motivated to perform optimally in the future.
- Recognize small and large accomplishments:
Employees should be rewarded when they meet small goals as well as larger milestones. This will ensure that they receive recognition for their progress and that their behavior will be consistent with company’s expectations.
- Make sure employees view the reward system as fair
Employees will be more engaged in attempting to obtain the reward if they believe the system is fair. Reward distribution should be consistent and based on predetermined policies. Never cut corners or engage in favoritism, as it will have a detrimental impact on the employee performance.
- Make sure employees understand how to earn the rewards
Employees should be able to earn rewards in a clear and concise manner, according to their managers. Employees will be more capable of meeting performance standards if they have a thorough understanding of what is expected of them.
- Involve all employees in the development, implementation and revision of rewards programs
Involving all employees will encourage communication between employees and management about the reward process. It will also ensure that both employees and the upper management are onboard with the reward system.
- Ensure that employees view the rewards as worth the efforts
Employees’ input should be valued by managers and rewards should be chosen accordingly. Employees who believe the rewards are worthwhile will be more motivated to put in the effort required to obtain them.
- Set reasonable and transparent performance standards for rewards:
Employees must believe that the rewards are attainable in order to put forth the effort required to obtain them. Managers should check in with employees to see if they think the rewards are within their grasp.
- Base reward determinations on objective performance data
Employees are more likely to view the process as fair when rewards are distributed based on objective data, and they are also more likely to have a clear understanding of what is expected of them. This will motivate them to achieve the desired performance outcomes.
- Reward teamwork and cooperation
Individual incentives were found to be less effective than team-based incentives in increasing performance. Team-based incentives should be included in the company's strategy if they aren't already.
- Never take a good performance for granted
In order to keep top talent on the team, it is necessary that the company continues to acknowledge and reward an excellent performance.
- Provide rewards immediately after the employee achieves the desired behavior
The longer it takes to give the reward after the employee has accomplished something, the less impact it has on subsequent behavior. Managers should immediately reward the behavior that meets the performance standard.
- Match the rewards to the employee
Managers should give employees the option of choosing their own reward or deciding what rewards they should receive under certain circumstances. This will increase their motivation to earn the reward by performing the required behavior. This process relies heavily on understanding the needs of employees.
- Offer financial rewards, non-monetary rewards and recognition
Employee performance is boosted the most by reward systems that include a mix of monetary and non-monetary incentives, as well as social awards (such as recognition and praise). To maximize the impact of cash bonuses, company should pay them in one lump sum. Money only motivates when it is a significant amount.
- Do not disclose the cash value of non-monetary tangible rewards
Employees who are not aware of the exact monetary value of non-monetary incentives are more motivated. Unless absolutely necessary, the company should not reveal the amount.
- When employees learn an unfamiliar task, distribute rewards based on a continuous reinforcement schedule
The most effective way to encourage employees to learn a new task is to reinforce their behavior on a regular basis. When done by a manager, this can take a lot of time and effort; however, using an employee reward software program is a more feasible and cost-effective solution.
- Once behavior becomes a habit, distribute rewards based on a variable ratio or variable interval schedule
Once a behavior has become a habit, variable ratio and variable interval reinforcement schedules produce the most significant behavior change. This shift in behavior is also less susceptible to deterioration. Therefore, after the behavior has become a habit, one of these reinforcement schedules should dictate the reward distribution process.
- Use long-term reward programs
Employee performance is boosted the most by long-term reward programs, and the benefits last longer.
- Balance competitive reward programs with non-competitive reward programs
In terms of improving performance, competitive reward programs are just as effective as non-competitive reward programs. Both should be included in a successful rewards strategy.
- Make rewards an integral part of the company’s strategy
Employee behavior can be aligned with the organization's business strategy with the help of rewards. Company should ascertain that rewarded behavior is consistent with the company's standards, goals, and strategy.
- Change the rewards frequently
Employees will be more surprised and the process will be more exciting if the reward system is changed frequently. Employees will work harder to achieve rewards if they are excited about them.
Length of a Reward Program:
The length of a Rewards Program has a great impact on the employee performance. According to a recent meta-analysis, the longer an incentive program is in place, the greater the performance gains.
- Long-term incentive programs (last longer than 6 months) increased employee performance by 44%
- Intermediate length incentive programs (last 1-6 months) increased employee performance by 30%
- Short-term incentive programs (last less than 1 month) increased employee performance by 20%
Long-term rewards programs may have such a strong impact because they act to continuously shape employee behavior to make it more aligned with the organizational culture and preferences. As a result, work performance is more in line with company standards, and ultimately, the company gains more value. As a result, when deciding on the length of an employee rewards program, managers should think long term (more than 6 months) to achieve the best results.
Rewards and benefits at SAMSUNG
A perfect example of a reward strategy is the one used by SAMSUNG. The company implemented a reward system based on results, which has distinctiveness in benefits and promotion for the workers according to execution outcomes. Nonetheless, most workers at Samsung do not complain concerning differences which are generated by the outcomes from a worker’s efforts on responsibilities and duties. This is because they believe that these differences will encourage job execution, such as a desire to complete a specific task, as well as increase productivity. Moreover, workers are also given clear objectives and opportunities to achieve these objectives. A significant incentive range, as well as other rewards, are an important part of a person's total wage at SAMSUNG.
Tess Smillie, vice president of human resources at Samsung, says: “We could have the best benefits in the world but if it is not what employees want, then it doesn’t really matter. We have a diverse workforce so wanted to offer something they wanted, something that helps retain [staff] and gets them engaged and using their benefits.” Smillie adds, “Employers ask a lot from their employees, and people work hard. At Samsung, benefits is all part of our chairman’s famous quote ‘A company is its people’ and that thread runs through our organization straight through to the benefits we offer.”
Following are some rewards and benefits that Samsung offers its employees in order to beat the competitive market:
- Pension
- Dental insurance –flexible benefit
- Employee assistance program –core benefit
- Eye tests –core benefit
- GymFlex, a discounted gym membership and on-site gyms – flexible benefit
- Health assessments for employees and partners – core, depending on grade package or part of flex and voluntary benefits
- Private medical insurance –core, depending on grade package or part of flex and voluntary benefits.
- Health cash plan –core, depending on grade package or part of flex and voluntary benefits
- Partner critical illness cover -flex
- Group income protection –core benefit and flex options
- Group life assurance for employees and partners – flexible benefit
- Critical illness cover for employees and partners – flexible benefit
- Independent financial advice service – voluntary benefit
- Independent mortgage advice – voluntary benefit
- Pension one-off contribution – voluntary benefit
- Personal accident insurance – flexible benefit
- Annuity service – core benefit
- Pension services – voluntary benefit
- Car allowance – core as per grade package, with a minimum of £5,000 and a maximum of £10,000
- Childcare vouchers – voluntary benefit
- Bikes for work –flexible benefit
- Holiday buy and sell (up to five additional days) – flexible benefit
- Microsoft home usage package – voluntary benefit
- Payroll giving – voluntary benefit
- Season ticket loan – voluntary benefit
- Tastecard – flexible benefit
- Travel insurance – flexible benefit
- 25 days a year plus bank holidays as standard
- After 10 years of service, employees get an extra day’s holiday for that year.
- Long-service awards for 5, 10, 20 and above years of service
- Subsidized canteens, in which employees can pay £2 a day to receive a three course western or Korean meal.
- Birthday vouchers
- Staff discount on Samsung products
Conclusion and Recommendation
A good reward system provides a positive assurance for fulfilling the needs and wants of employees in the workplace. It is generally given to have a good advantage to satisfy the psychological requirements of employees. As mentioned earlier, the elements of the reward system include pay raises, bonuses, company automobiles, jobs with higher responsibilities, vacation benefits, well-furnished offices, recognition, sense of worth, health insurance plan, child care support, club privilege, job autonomy, incentive plans, profit sharing, golden handshakes, wall plaques, developmental feedbacks and so on. Such rewards are spur or zeal in the employees for better performance. Each company must decide if increased performance or satisfactory performance is to be remunerated by employees’ salaries alone or if additional financial rewards are to be considered. The ultimate goal is to increase performance by reinforcing specific behavior through the available reward system. Most companies are continually challenged with achieving the aims and objectives of organizational desirable goals and objectives. Companies need to attract, motivate and retain their employees. This is the greatest guarantee for organization’s success and performance.
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