Carla Sutherland
As our teams assist clients with building recognition programs that work for their business and employees, we have seen the interest in and expectation for employee rewards rise in the last few years. Interest in rewards doesn’t always align with budget for rewards. We also know that one reward won’t suit all needs.
This guide is intended to help you consider which rewards will work best for the needs of your employees and your business.
The 6 types of employee reward systems
1. Intrinsic employee rewards
Examples: Skill mastery, recognition from peers, job satisfaction
These are rewards – often very personalized – that can happen naturally as part of their week to make an employee feel fulfilled. For example – the satisfaction of clean, compelling text is an intrinsic reward for a copyeditor; in this case, the obvious evidence of a job well done is its own reward. It is important to work with managers to have conversations with their people, so they are clear about the types of intrinsic rewards that motivate each given team member. As someone who loves learning, my manager can partner with me to ensure I have time to hone my skills and increase my confidence, for example. And there is a real human impact in highlighting the story of what someone has done and the results – no additional reward necessarily required.
2. Extrinsic employee rewards
Examples: Increased PTO, promotions, team outings
These rewards can be intentionally provided to employees and are supported by the existing systems and processes of the business. This is an important type of reward to consider as they often don’t require additional budget or building a new program, but are more about making existing opportunities available to employees. We have a learning and development budget, for example, that many employees may forget to apply for. Savvy managers will make sure that employees take advantage of these opportunities so they feel appreciated.
3. Monetary employee rewards
Examples: Bonuses, salary increases, stock options
This is often the first idea managers have when they want to rewards employees – what is something I can give them? Our clients love giving a regular budget to managers through an existing formal recognition program. This allows for responsive reward giving, and using our Reward Marketplace means employees can redeem their rewards for exactly what they most want. This saves managers time in getting gift cards and gives employees the choice they most want.
4. Non-monetary employee rewards
Examples: Experiential rewards, flexible schedules, employee of the month awards
I love hearing about the rewards our clients give that don’t impact formal budgets. These types of rewards involve some creative thinking and are very much appreciated by employees. Some of our clients have made rewards like this more explicit by building them into their program. Employee of the month nominations, but also “leave early this week” eCards or “set up a career coaching meeting” eCards that invite employees to head out for personal time or set up time to talk about their career advancement and skill building with a manager.
5. Performance-based employee rewards
Examples: Commissions, profit sharing, performance-based pay increases
While timely rewards have been found to make a stronger difference in short-term motivation, you also should make sure that employees get credit when they hit important goals. Are your compensation systems designed to reward great work consistently? Rewards like this take pressure off of managers to notice when milestones are achieved and make sure they happen as promised.
6. Employee benefit incentives
Examples: Wellbeing programs, transportation benefits, employee discounts
When we asked employees how they wanted to be appreciated by their employer, 57% said by receiving benefits that support their needs. Are you focused on a return-to-work plan? Commuter incentives will reinforce this goal and reward those that are committed to helping you achieve it. Do you wish you could increase pay, but it isn’t in the cards? Discount programs can put money back in the pockets of employees and show you care about their families' finances.
How to make different types of rewards for employees effective
Make rewards personal
Managers should have conversations to understand which types of rewards provide value to their employees and rewards strategies should be flexible enough to allow managers to easily and quickly provide varied rewards.
Set clear and achievable goals
Is your goal to reduce turnover? Or get more managers to use their full reward budget? Make that goal explicit and share it with the organization.
Make recognition timely
Make sure the reward program you implement is fast and easy for managers to use so employees know their work is valued at the time of the action, not weeks later.
Ensure fairness
Set up guides for providing rewards and offer training to managers so they are confident they are using them in the way that was expected. Track metrics so you know if one part of the organization is using the plan and which parts need reminding.
Provide a balance of reward types
Always offering the same type of reward will get tired. Even someone who loves coffee won’t feel the same thrill when they get their fourth coffee gift card in a row (and not everyone drinks coffee!). Make sure that higher impact actions are able to get higher impact rewards by giving managers and employees choices.
Get employee feedback
Feeling overwhelmed by your choices? Take the pressure off by putting a phased plan in place and building in time for feedback from employees. Start small and build on that success! We have also seen that this phased approach may allow for a larger long-term budget as the program gains momentum with managers and employees.
Boost employee motivation with Reward Gateway | Edenred’s employee reward system
We love helping our clients build out simple but flexible recognition programs. Whether you want to give rewards on a schedule (e.g. monthly or quarterly customer or safety rewards, or birthday or anniversary gifts) or whether you want to provide managers with a budget for performance-based rewards, our platform can help. We especially recommend our Reward Marketplace that allows employees to redeem their rewards at hundreds of retailers.
Learn more about how Reward Gateway | Edenred can help you make your corner of the world a better place to work.
