Why rewarding employees for their performance is important
Research by Deloitte found that companies recognizing employee performance are 12 times more likely to have positive business outcomes. This research also found that employees prefer recognition delivered privately or shared with only a few people. It reflects our psychological need for validation and appreciation.
Rewarding employees for their performance offers them validation and gives their work a sense of meaning.
It positively impacts your working environment, helping employees feel like they belong. The impact of a reward system on employee performance can be felt within every corner of your organization.
Increases employee retention
The corporate world is still recovering from the “great resignation” of 2021 when over 47 million Americans voluntarily quit their jobs. It’s a trend seen globally and continued to the summer of 2023.
While it’s been linked to the pandemic, the great resignation was the continuation of a decade-long trend with employees reconsidering the value of their work and how they were being treated. Almost 70% of HR managers recognize the role of employee performance rewards in increasing long-term retention. Boosting employee retention rates reduces hiring costs and maximizes productivity.
Improves employee morale
We all like to get a pat on the back and a “thank you” for a job well done. It reflects our psychological need for validation and appreciation, as was stated earlier.
Performance incentives help cultivate a positive attitude towards work amongst your employees by encouraging them to take pride in their accomplishments.
It can help prevent burnout and improve employee engagement.
Encourages healthy competition
A little competition can be just what your employees need to push themselves the extra mile. When they compete with their peers or other departments, employees will continue to work to boost their performance and productivity.
You can fester this competitive streak into something positive by offering a tangible reward for hitting performance milestones. Competition promotes innovation and creativity while encouraging collaboration and knowledge sharing.
Enhance productivity level
Productivity and recognition go hand-in-hand. The best way to keep your employees motivated is by recognizing their achievements and making them feel supported.
Over 80% of employees consider recognition as a vital part of their well-being and happiness at work.
Recognition through employee reward schemes enhances productivity levels by encouraging employees to take pride in their work and accomplishments.
How to select the right incentives to drive employee performance
Deloitte’s research found that cash isn’t king when recognizing employee performance. New growth opportunities were identified as the preferred incentive across age groups and industries. The right incentives will positively change employee behavior and boost motivation levels.
Your company should consider individual employee preferences and how it can implement its reward program.
Matching rewards to performance
Incentives should be closely tied to performance goals, such as sales targets and meeting short-term KPIs. The right incentives will encourage employees to go the extra mile to meet these targets.
The employee performance rewards you choose should recognize the effort and work required to achieve them. Smaller achievements can be acknowledged with gift cards or mentoring sessions, while large-scale achievements can unlock incentives like individual travel and conference opportunities.
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Personalized and specific incentives
Not every incentive will be attractive to your employees. Offering to upgrade office equipment might fall on deaf ears if you have employees who use their own equipment or run only basic software. Specifying the incentive sets the right expectations for your employees.
Collaborate with managers and employees to establish what will motivate them most. Involve your employees in the decision-making process before establishing your employee performance reward.
Reflect on your company culture
The incentives and employee rewards you choose should reflect the company culture you’re establishing.
Offering remote work promotes the image of a forward-thinking company that prioritizes work/life balance.
Incentives like individual travel and professional development encourage personal growth. Commission-based bonuses and cash rewards are great incentives for companies seeking to meet their sales targets.
Group and individual employee rewards
Your employee rewards scheme should include incentives aimed at both individuals and groups to maximize performance and recognize collaborative efforts.
Team incentives can encourage departments to work more collectively to achieve KPIs, while individual incentives motivate employees personally and as part of their department. Upgrading office equipment and hosting company events are great incentives for departmental and group recognition.
Performance incentives you can offer employees
Offering a range of incentives enables your organization to tailor rewards to motivate individual employees and teams. Your reward system should recognize the range of incentives that will be attractive to your employees, from development opportunities to at-work benefits and one-off rewards.
You should choose incentives that reflect the company culture you want to develop.
Create a tangible reward system that makes your employees feel valued and encourages them to continue their careers within your organization.
Remote work and extra time off
Non-cash incentives are often the most attractive for employees, especially for those with young families or who want added flexibility. You can offer remote working, flexible working hours, and additional time off as an incentive for employees striving for a better work/life balance.
An employee reward scheme can help transition your company to a more remote or hybrid set-up. It builds trust with employees and establishes a standard of performance before being rewarded with extra flexibility.
Sponsor travel opportunities
You can recognize your best talent by sponsoring travel opportunities. Data from the Incentive Research Foundation found that individual travel was a top incentive for employees. Potential employee performance rewards include attending international conferences or paid vacation to a tropical destination.
Roundtrip streamlines the corporate booking process, keeping your records in order with individual employee profiles that are automated to manage travel bookings efficiently.
You can use Roundtrip to book hotels, airline tickets, and transfers using whatever payment method works for your organization.
Recognition schemes
SMEs and scaling companies can implement employee performance rewards without spending additional capital. Recognition is at the heart of these incentives, and such reward schemes reinforce a positive work culture, encouraging high performance.
An “Employee of the month” scheme will highlight exceptional talent within your team, providing public recognition of their work. One of the most impactful rewards is a handwritten note or personalized message from senior leadership recognizing the employee’s achievement.
Professional development
Continued professional development (CPD) is one of the top priorities for employees in highly competitive industries. The focus on life-long learning has promoted a shift to retraining and taking part in regular professional development courses to help climb the career ladder.
Companies that offer training as a reward incentive see a 30-50% increase in employee retention, encouraging them to continue their career at your organization.
Monetary rewards
Almost 60% of employees have said they would choose performance recognition with monetary rewards. These incentives can be broken down into performance-based bonuses, commission structures, profit sharing, and salary increases.
Tangible benefits can be tailored to the goals of your company and how you operate. Commission-based rewards are an ideal incentive for recognizing employees who meet or exceed their sales targets.
Gift cards
Your employee recognition scheme should include incentives that are easier to achieve regularly.
Gift cards are an ideal way to recognize short-term performance without the higher price tag of travel rewards or training programs.
Team building activities
Group incentives should recognize departmental achievements and encourage collaboration between employees. Offering team building activities as a performance reward is a win-win, recognizing achievements and providing opportunities to strengthen relationships and promote team building.
You can plan off-site retreats and group trips with the help of Roundtrip with 24/7 support and easy-to-use tools to manage bookings and expenses efficiently.
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