When we are talking to prospective clients, we are often asked about the key benefits of having a reward programme for employees. It’s not that HR professionals do not instinctively know that it is a good thing for a company to do, it’s just that sometimes it’s hard to identify the key benefits. Hence, in this article, we have set out what we believe of the 5 key benefits to a business of giving rewards to your employees.
1. Drives motivation
Arguably the most important benefit of implementing a reward programme is that it drives employee motivation. Rewards can come in many different forms, but if they are given for the right reason, they are a recognition by the company for hard work and going above and beyond what is expected. If these rewards are valuable to the person receiving them, they can inspire and motivate that employee and their peers to work harder in the future.
In addition, as mentioned if the reward well thought out, it could add an extra special spring to an individual’s step. Conversely, if the reward does not meet expectations then it can have the reverse results. Michael Rose from Reward Consulting often uses the example of a senior manager at a financial organisation on £150K pa basic. If he/she received a reward gift voucher of £50 as a reward, given their salary, they would likely not be too impressed. However, if they received a £50 bottle of wine with a handwritten note from their boss, it could have a far more positive impact. Rewards, drive motivation, but it is also about the way they are given and the thought that goes into them.
2. Enforces a positive culture
In recent years, we are seeing a rise in the importance of company culture. As we implement more and more Reward and Recognition schemes, a reoccurring objective of these schemes is to enforce a certain behaviour, most commonly that or reward and recognition.
If a business can create a set of clear parameters for how and what it gives rewards for to its employees and it has a focus on culture and behaviour, then rewards can be a highly effective tool. For example, one company that we work with only offers rewards to its employees for demonstrating positive behaviour that reflects the company culture.
The upside of this is that rewards can enforce a positive culture but also demonstrate the businesses are serious and committed to the culture it wants to create.
3. Does not have to cost the business
Companies are becoming far more innovative in the way they reward their employees. This is great as it not only sets this business aside from its competition, but it also allows the business to be far more flexible with its employees. Some great examples of this are rewarding employees with extra vacation days, or a company car and parking at the office for a month or the ability to shadow the CEO for a week.
The big brands have certainly cottoned on to this. KMPG is amongst companies offering an extra day off on your birthday (and some for your child’s first day at school). The list also includes Shoosmiths, Virgin Media, Rackspace, Kantar, Go Compare, Dunelm, Awin. Other companies are offering sabbaticals as milestone rewards such as: Deloitte, PayPal, Vistaprint, Adobe Systems, Intel, Charles Schwab. Other organisations such as John Lewis, Penguin Random House, SurveyMonkey, and Tesco offer 2-weeks extra holiday when reaching 40 and 50 years. All these rewards do not cost the business directly but have a huge positive impact on the person receiving them.
4. Point of differentiation
One of the key objectives for HR and internal recruitment teams is to reduce the churn of employees and therefore the cost of acquiring new talent. A great way to do this is to differentiate the business in a way that sets it aside from its competitors.
Many businesses are already doing this and the Silicon Valley Giants are certainly leading the way. For example, Google offers its staff free Michelin star standard food and Barista training. Facebook and others have their own set of unique rewards for their staff. They do this not to be “cool” although it is a little! They do this as they have realised how competitive the market is to attract and keep the best talent.
5. It feels good
Not all businesses are about the bottom line. In fact, with the rise of the millennial and the recent impact of Covid-19, companies seem to have developed a sense of responsibility to their employees. And with this comes the phenomena that are strange to many business leaders – it feels good to do nice things for other people.
This sense of feeling good is best summed by Terry Matthews, one of the UK’s most successful businessmen and entrepreneurs. When asked what his biggest achievement in his career was, he responded “Ensuring the future financial security of some many of the amazing people I have worked with”. Yes, he is talking about money, but the fact that he put such a focus on rewarding those around him, made others want to work for and with him.
Having a culture of reward at your business can have several benefits on the business. But the key element is that you have a Reward (& Recognition) scheme that is tailored to your employees, is authentic and is part of the DNA of the business you want to run and work for.
If you’d like to find out how Xexec can help build and contribute towards your business’ tailored employee recognition, download our employee recognition e-Book.