Enhance Employee Engagement with Robust Employee Reward Systems

The past few years have been characterized by economic uncertainty, mass layoffs, and drastic workplace changes. These negative changes have left employees feeling less secure, satisfied, and motivated by their jobs -- leading to higher disengagement and burnout.

Fortunately, there are tools and strategies readily available that can help organizations reverse these negative trends, one of which is an employee reward system.

In this blog post, we'll explore the different types of employee reward systems, their importance, how to implement one, and provide examples of effective reward strategies.

What is an employee rewards system? 

An employee rewards system is a structured program that recognizes and incentivizes employees for their contributions and achievements. These systems are designed to enhance the employee experience and support organizational goals, such as increasing employee satisfaction, improving employee engagement, and reducing turnover. Often, these systems will incorporate monetary and non-monetary incentives to create a robust program that motivates and rewards employees for desired behaviors and achievements.

Types of Reward Systems

Employee reward systems can be broadly categorized into two main types: monetary and non-monetary. While monetary reward systems involve financial incentives, non-monetary reward systems primarily focus on acknowledging employees' efforts through means other than monetary compensation. 

Organizations can strategically leverage a combination of these two types of reward systems to create a well-rounded and satisfying employee experience that motivates and engages workers.

Non-Monetary Reward Systems

Non-monetary reward systems involve acknowledging employees' efforts through means other than financial compensation. These systems enable organizations to frequently recognize their employees and play a significant role in elevating employee morale and reinforcing positive contributions. There are two key components of non-monetary reward systems: verbal and written praise and tokens of appreciation.

Verbal and Written Praise

Verbal and written praise are two forms of recognition that involve positive acknowledgment and appreciation expressed towards someone for their achievements, actions, or qualities. These two types of praise are powerful tools for recognizing employees' achievements and providing encouragement. Whether it's a heartfelt "thank you" from a supervisor or a thoughtful note of appreciation, these gestures can have a lasting impact on employee motivation and engagement.

Tokens of Appreciation 

A token of appreciation, on the other hand, is a tangible reward that does not directly impact financial compensation. It can have many forms, such as awards, catered lunches, work flexibility, and employee spotlights. These gestures are a perfect way to add an additional meaningful touchpoint in your employees' journey -- elevating their employee experience and making them feel more valued.

Monetary Reward Systems

Monetary reward systems involve providing financial incentives to employees based on their performance or achievements. These systems are often tied to specific goals or milestones, motivating employees to strive for excellence. By providing monetary incentives, organizations can motivate their employees to excel and reinforce desired behaviors, ultimately driving performance and success.

When to Use Monetary Rewards

Monetary rewards are particularly effective for rewarding employee milestones, value-aligned behaviors, and special occasion. This can include:

• Performance-based incentives
• Company celebrations (i.e. company rebrand, going public, etc.)
• Service anniversary and employee milestone rewards
• Special occasions (i.e. holidays, Employee Appreciation Day, etc.)

Using Technology to Streamline Employee Reward Systems

Thanks to modern-day technology, implementing an employee reward system has never been easier. A digital recognition platform like Inspirus Connects can cut down the time it takes to launch a reward program by automating the process. With such technology, organizations can effortlessly distribute employee rewards, send personalized recognition experiences, offer diverse rewards, and foster peer-to-peer recognition -- making it easier to scale rewards and recognition programs.

This can help companies reduce the amount of time and resources it takes to celebrate and reward their employees while maximizing the impact of recognition efforts across the entire organization. Fill out this calculator to discover how much time and money your organization can save with an employee rewards and recognition platform.

Importance of Employee Reward Systems

Employee reward systems play a pivotal role in shaping organizational culture and driving employee satisfaction and performance. They are instrumental in fostering a positive workplace environment and enhancing the overall employee experience. By recognizing and rewarding employees for their contributions, organizations can cultivate a culture of appreciation where employees feel valued and appreciated for their efforts – creating a more enriching and satisfying employee experience for staff.

Fosters a Positive Workplace Culture

Rewarding employees for their contributions helps cultivate a culture of appreciation and recognition. When employees feel valued and appreciated for their efforts, it fosters a sense of belonging and camaraderie among team members. This can help promote collaboration, teamwork, and mutual support, leading to higher morale and a more cohesive work environment.

Enhances the Employee Experience

Employee reward systems contribute significantly to enhancing the overall employee experience. By providing meaningful recognition and rewards, organizations cultivate a supportive work environment where employees feel motivated, engaged, and satisfied. This positive experience extends beyond day-to-day tasks and interactions, shaping employees' perceptions of their workplace and their sense of fulfillment in their roles.

Improves Job Satisfaction

One of the key benefits of employee reward systems is their ability to improve job satisfaction. When employees are recognized and rewarded for their hard work and achievements, it validates their efforts and contributions to the organization. This recognition instills a sense of pride and accomplishment, leading to higher levels of job satisfaction and lower turnover rates.

Boosts Engagement & Productivity

Employee reward systems are powerful tools for motivating employees and improving employee engagement and productivity. When employees are motivated by the prospect of earning rewards and recognition, they are more likely to be fully engaged in their work and committed to achieving organizational goals. This increased engagement translates into higher levels of productivity, as employees are driven to perform at their best to attain rewards and recognition. 

How to Create an Employee Reward System

Creating an effective employee reward system involves careful planning and consideration of various factors. Here is how you can set up an employee reward system within your organization.

1. Define objectives and goals

A good place to start is clearly outlining what goals and objectives you want to achieve with your rewards system, such as improving performance, boosting engagement, fostering employee connection, improving morale, or increasing retention. Set specific, measurable, achievable, relevant, and time-bound (SMART) goals to guide the program and align them with the organization's overall mission, values, and strategic priorities.

2. Determine rewards & establish a budget

Once you've outlined the objectives and goals for your reward system, you will need to determine which reward method would be best and establish a budget. Start by assessing the types of rewards and recognition initiatives that best align with your objectives and goals. Consider a mix of both monetary and non-monetary rewards to cater to different employee preferences and budget constraints.

For example, you can celebrate and reward your employees for the following:

• Retirement and service milestones
• Spot programs such as sales incentives or safety programs
• Annual programs such as holidays, Employee Appreciation Day, birthdays, and onboarding.

If you are unsure which rewards would be most impactful, utilize data and feedback from employees to prioritize areas where recognition is most impactful or talk with an Inspirus specialist for best practices.

Next, you will need to determine your budget. As a good rule of thumb, the Society for Human Resources Management (SHRM) suggests using a rewards budget of 1% or more of total payroll to see the most success. However, it's important to note that your budget will vary depending on the number of employees you have and the individual programs you want to implement.

Need some help? Try out our rewards and recognition budgeting calculator to get a general idea of how much you will need to allocate towards your rewards system.

3. Launch & communicate the program

After you've outlined your strategy and determined a budget, you will need to develop a clear plan for launching the program(s). Prior to launching, outline clear and concise communication materials to explain the purpose, rules, and benefits of the reward system to employees. 

Then, on the launch day, use multiple channels to communicate the program, such as email, company intranet, team meetings, and posters in common areas. Encourage open dialogue and feedback to address any questions, concerns, or misconceptions about the program(s).

5. Evaluate and adjust as needed

Once the program has launched, continuously monitor the effectiveness of the reward system by tracking relevant metrics, such as employee engagement levels, performance outcomes, and turnover rates. Solicit feedback from employees through surveys to gather insights on their experience with the reward system. Regularly review the program to identify areas for improvement or adjustment based on feedback, changing business needs, or emerging best practices.

By following these steps, you can create a dynamic and impactful employee reward system that motivates employees, drives performance, and enhances overall workplace satisfaction.

Examples of Employee Rewards Systems

As mentioned, there are numerous strategies and methods you can use to reward and recognize your staff. For instance, employee reward systems can range from performance-based programs to employee milestones and anniversaries to initiatives aimed at improving the overall employee experience. Which method(s) you choose to implement will ultimately depend on your program's goals and objectives.

For example, two standout examples of reward systems include White Castle's performance-based reward program and ATCC's Employee Appreciation Day (EAD) initiative. 

• White Castle's reward program focuses on recognizing and incentivizing sales performance through a tailored rewards system. By aligning their program with sales achievements, White Castle was able to drive tangible results: they experienced an 89% increase in sales within 90 days of implementation, 100% quality scores, and a 75% increase in program participation.
• American Type Culture Collection’s (ATCC) implemented a formal reward and recognition system on Employee Appreciation Day to reduce its higher-than-industry-average turnover rate. With its new program in place, ATCC was able to achieve a 10% increase in retention within one year of launch, reducing its budget-busting recruiting and training costs.  

These examples showcase the power of strategic reward programs in driving employee engagement, boosting morale, and ultimately contributing to organizational success.

10 Employee Reward System Ideas

#1 Implement a Points-Based Reward System

A points-based reward system is a great option for fostering a culture of recognition and encouraging employee connection. This type of system allows employees to send and accumulate points based on their performance, behavior, or achievements. These points can then be redeemed for various rewards such as gift cards, merchandise, or experiences. 

By implementing such a system, organizations provide employees with tangible incentives to strive for excellence and consistently perform at their best.

#2 Send Thank You Gifts on Employee Appreciation Day

Employee Appreciation Day is an annual event dedicated to honoring and celebrating an organization's most important resource -- its employees. This annual event, which takes place in March, gives employers a perfect opportunity to express gratitude and recognition for their employees' hard work and dedication. Consider sending thank-you gifts, such as personalized notes, gift baskets, or company-branded merchandise, to show employees they are valued and appreciated.

#3 Host Company Superlatives

Company superlatives are awards or recognitions given to employees for their unique talents, qualities, or contributions. For example, the superlatives could include "Most Creative," "Best Team Player," or "Most Innovative Idea." Hosting company superlatives is a great way to involve employees in a reward program by allowing them to nominate their colleagues for each award category. This type of program can encourage a positive and supportive work culture by acknowledging employees' individual strengths and promoting a sense of pride and belonging within the organization.

#4 Employee of the Month and Employee of the Year Awards

Employee of the Month and Employee of the Year awards recognize outstanding performance and dedication among employees. These awards typically involve selecting one or more employees each month or year based on criteria such as productivity, teamwork, leadership, or customer satisfaction. By publicly acknowledging and rewarding exemplary employees, organizations can motivate others to emulate their success and reinforce desired behaviors and values.

#5 Cater Lunch for Your Staff

Catering lunch for employees is a simple yet effective way to show appreciation and boost morale in the workplace. Whether it's a monthly team lunch, a special occasion celebration, or just a casual Friday treat, catering a fun lunch for employees creates opportunities for socializing and bonding outside of regular work tasks.

#6 Provide Bonuses at the End of the Year

Providing year-end bonuses to top performers is a popular method of recognizing and rewarding employees for their exceptional contributions throughout the year. These bonuses may be based on individual performance, team achievements, or company-wide success metrics. By tying bonuses to performance outcomes, organizations can incentivize employees to consistently strive for excellence.

#7 Send Employees Swag During Major Company Events

Sending employees company-branded swag during significant events such as a company rebrand or product launch is a creative way to engage and involve employees in the organization's milestones and successes. Swag items may include branded apparel, accessories, or promotional items related to the event, serving as tangible reminders of their participation and contribution to the company's growth and evolution.

#8 Give Service Anniversary Rewards

Service anniversary rewards recognize and celebrate employees' loyalty and dedication to the organization over time. These rewards may include personalized gifts, certificates, or milestone plaques commemorating the employee's years of service. Organizations can use this type of program to demonstrate appreciation for employees' years of service and long-term commitment.

#9 Presidents Club

A President's Club is an exclusive recognition program that honors top-performing employees or sales representatives who have achieved outstanding results and exceeded performance targets. Typically, elected employees will receive special perks, incentives, or rewards as a token of appreciation for their achievements.

#10 Wall of Fame

Set up a dedicated space within your office to recognize and celebrate employees for their outstanding achievements and contributions. In this space, you can feature photos of employees along with descriptions of their accomplishments, highlighting their successes and milestones for all to see.

Tying It Together

Employee reward systems are essential for creating a motivated and engaged workforce. By implementing a robust reward system, organizations can foster a positive workplace culture, enhance the employee experience, and ultimately drive business success. With the right approach and strategies, organizations can deliver best-in-class employee rewards that elevate the employee experience and contribute to long-term success.

Build a Robust Reward System with Inspirus

Ready to build a robust employee reward system at your organization? We can help!

Inspirus is a leading employee recognition and engagement provider that delivers best-in-class employee rewards. With a focus on recognition and engagement, we create tailored employee reward programs aligned with organization's unique goals and values, empowering them to improve employee engagement, reduce turnover, optimize organizational culture, and more.

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