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Does your business have an employee rewards and recognition program?
There are numerous ways you can go about motivating employees in your startup. You’ve got the old adage of carrot vs stick, for example. But in 2022, it’s clear that positive reinforcement (i.e. the carrot) is more effective than negative reinforcement (punishment, the “stick”).
That means the best way to get the most out of your staff is to recognize and reward great work. There are many types of employee rewards and recognition, and how you can use these tools to motivate your employees. That’s what we’ll look at in this post – helping you set up an employee reward system that works.
We touched on the idea that you should recognize employees who produce good work for the business.
This is playing to the fundamental human need, which we all have, for feeling valued and for having a sense of meaning in what we do.
When someone comes to work every day, toils away without recognition, and this need is not met, it can be damaging to morale.
This negative energy spreads throughout the business, and hurts your overall company culture.
On the contrary, when employees feel valued, they’re motivated to keep going and produce more. According to SHRM, 78% of employees say that recognition makes them more productive.
In addition, the same source finds that over two-thirds of employees feel more emotionally connected to their co-workers, and happier at home, when appreciation is given in the workplace.
And that’s what a positive company culture is all about. It’s about building a team that’s intrinsically motivated to work together, and which people actually enjoy working in.
You’ll find it’s much easier to build a team like this when you make a habit of recognizing employees and rewarding them for their contributions.
There are a number of ways you can put employee recognition to work for your team, and reward an employee’s contribution towards the team.
There are also many different reasons to reward employees, which we’ll go into a little later.
But to the different types of employee rewards and recognition. You’ve got intrinsic rewards and extrinsic rewards. Intrinsic rewards are those that come from within, and don’t physically exist. While extrinsic rewards are physical, tangible rewards, something you give to employees that they can actually use.
You’ve got many financial rewards and non-financial rewards. Different ways to display appreciation, either publicly or privately. And rewards that go hand-in-hand with putting the right people in the right leadership positions in your team.
Here are seven ways to recognize and reward your employees.
1) Monetary Rewards
2) Non-Monetary Benefits
3) Written Praise
4) Verbal Praise
5) Peer to Peer Recognition
6) Promotions & Career Growth
7) Autonomy & Deference
The first type of reward that is likely to come to mind would be a monetary reward, or financial reward.
Annual bonuses, performance-based bonuses, a raise, stock options are all examples of financial rewards. So is everything that you can put a concrete dollar value on.
Monetary rewards are almost always an effective motivation tool. After all, that’s the reason people come to work in the first place. Extra money is a great way to incentivize employees to reach higher and produce a higher standard of work.
Monetary rewards work fine. But an IMA study found that 65% of employees surveyed actually preferred non-financial rewards.
So a bonus or salary raise isn’t the only way to motivate and reward employees. You can also dangle benefits that don’t have a direct monetary value. This could include additional paid time off, gifts, lifestyle and wellness benefits, personal development programs, insurance and healthcare.
These things all have value, sure, but they often feel more meaningful than just “here’s some more money”. These non-financial rewards may already be part of your standard benefits package, but you can find creative ways to also incorporate non-standard benefits as part of an additional employee recognition program.
Financial and non-financial rewards are very much extrinsic rewards. They’re physical, tangible things you can offer employees, which the employee can use.
On the other side, there’s praise, which is an intrinsic reward. For the most part, it’s not a physical thing you can give to an employee, which they can see, feel and use. Instead, an intrinsic reward triggers positive feelings for the employee, such as feelings of accomplishment, pride and being valued.
Written praise is one example, which comes at varying scales. It could simply be a “thank you, great work” in an email or Slack message – or it could be a company-wide announcement praising the employees efforts.
“Employee of the month” awards could come under this category. These awards may be accompanied with a financial or non-financial reward too, but the recognition and the intrinsic value of praise in this case is often more powerful.
The other side of praise is verbal praise.
Again, it can vary in scale, from a quick word or two, to something on a bigger stage. However, verbal praise is generally more informal than written praise, and more often done in a 1-on-1 setting.
While you might think that tangible rewards are always best, don’t ignore the value of intangible, intrinsic rewards like praise. A lot of the time, these end up being more meaningful and more powerful to the employee. And best of all, they cost you nothing to give.
Written and verbal praise is usually a manager-employee thing. But peer to peer recognition is another type of intrinsic reward, which is also great for motivation.
Getting recognized by our peers for doing great work feels more organic, and as a result, more meaningful. There’s a transaction involved in the manager-employee relationship, whereas when a co-worker offers praise, you get the sense that it’s more personal.
Peer to peer recognition programs could be a Slack channel set up to acknowledge and shout out people who do good work. There are a number of software tools that work on this idea, such as Heytaco and Bonusly, both of which push employees to praise their peers, with virtual reward points (which can generally be converted into tangible rewards as well).
Along with making more money, and working in a positive environment with good people, a fundamental desire for many people is to have some direction and personal growth at work.
It’s the difference between a dead-end job and a fulfilling career. We get a sense of accomplishment from moving up the career ladder and taking on more responsibility.
Of course, promotions also (in almost all cases) come with higher pay as well, but it’s often the good feeling inside – the intrinsic reward part of it – that’s more powerful and a bigger motivating factor for people to reach for the promotion.
The final type of reward we’re going to include is an interesting one. It’s very much an intrinsic reward, and a little more vague than the other types.
To reward great work, you can give employees more autonomy at work. Another term you can use for this is “deference”, which means respect given to their knowledge, ability and opinion.
This is essentially the opposite of micromanaging. Instead of trying to control every little thing someone does, you trust that they know what they’re doing, and leave them to it.
It’s not a structured reward in the same sense as a bonus or a promotion is, but giving employees more autonomy when they earn it can do great things for morale.
Aside from the types of employee rewards, it’s important how you use them. You want to incentivize the actions, performance, or company values you want to see through rewards and recognition.
You need to be careful not to incentivize the wrong things, or to give out rewards too freely, to where they lose their perceived value.
When and how you distribute rewards is up to you. Here are some recognition program examples to use as inspiration.
Most successful employee rewards and recognition programs are based on performance. It’s a great way to incentivize employees to exceed expectations, or hit certain performance benchmarks.
The key here is to set the right expectations – high enough for the rewards to be worth it, but not so high that they seem out of reach.
You might also reward the completion of a big project. This could be something like a new feature shipped for your software product. Rewarding the employee or team when it gets done will spur them on, as well as getting people excited about future projects.
It’s common to provide year end bonuses, gifts, or other types of recognition. This is not so much achievement-driven, but a way to say “thank you” to the people who worked hard for the business all year.
It’s also common to recognize time spent with the company. A reward for an employee spending 1 year, 2 years, 5 years with the company, etc. This is a great token of appreciation for their loyalty, and incentivizes higher employee retention rates – something you should want in your business.
Finally, you might also provide employee rewards and recognition for milestones or holidays.
A few examples:
One final note – you don’t even need a specific benchmark or milestone at all to offer recognition to your employees.
While random cash bonuses might not make sense, a random “thank you” or minor token of appreciation is always worthwhile. Sometimes it can have a lot more meaning if you give someone a reward out of the blue, rather than at a structured time, like the end of the year or after a performance review.
These random tokens of appreciation just feel genuine, and have huge benefits for company culture, employee engagement and job satisfaction.
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It’s important to recognize the good work that employees do for you, and reward that work. People are at the heart of just about every business. Keep them happy, engaged and motivated, and you’ll find your business will be able to reach new heights.
The types of employee rewards you utilize, as well as when you give them out, can vary from business to business. There’s no blueprint that works in every case. One company or team might give quarterly bonuses, while another prefers a less structured approach.
You can combine tangible and intangible (or extrinsic and intrinsic) rewards. A mix of the two is a good idea. There’s only so long you can get by with only telling your employees “thank you”. But don’t discount the value of a heartfelt piece of verbal or written praise, especially when it comes at an unexpected time.