Companies that religiously invest in effective employee recognition tend to see higher levels of engagement, loyalty, and job satisfaction from their team. For instance, a recent study by the University of Southern California claims that 79% of employed respondents see personal recognition at work as a top motivator.
At the same time, implementing an effective system is more than giving occasional shout-outs and gift cards – you need to have a structured plan that is thoughtful, balanced, and adapted to your company culture. And, as employee reward system specialists, we can definitely offer you some tips on how to devise than plan in this article. We’ll dig into common obstacles companies face when building these systems, as well as steps you can take to create a program that genuinely motivates your team.
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Why Companies Should Care About Rewarding Their Employees
Companies, quite naturally, often focus heavily on business results, be it driving profits or upscaling; however, the people driving those results also deserve the utmost attention and appreciation. This is what effective employee recognition programs are for – they make the team feel valued, reinforce positive behaviors, and create an environment where employees want to stay and grow.
What’s also natural is that employees who feel valued by their employer are more likely to remain with the company longer and work harder. Neglecting employee recognition, on the other hand, can lead to decreased productivity and total disengagement, since, in competitive markets, talented employees always have options. And companies that overlook this fact risk losing them to competitors that do make the effort.
Challenges in Implementing Effective Reward & Recognition System
Implementing an employee recognition program that will work in practice doesn’t come without its fair share of challenges:
Aligning with Company Values
One of the biggest challenges is making sure that your rewards system doesn’t feel disconnected from your company’s culture. If there’s a mismatch between what you stand for and what you offer as a reward, the system will feel arbitrary or confusing and may not resonate with employees.
So you should link your rewards directly to your core values – if sustainability is important to you, try to feature eco-friendly products like reusable water bottles or sustainable clothing. Employees will appreciate the thoughtfulness and relate to them way more than to generic swag.
Budget Constraints
Companies often struggle with the cost of maintaining a reward system, and there is sometimes a temptation to place some part of the financial burden on employees. However, for your rewards system to succeed, you can’t afford to do that.
Instead, you should budget for a system that genuinely recognizes hard work without any hidden costs – you might set aside a portion of your HR budget for gift cards, bonuses, or swag, for instance.
Creating Quick Wins vs. Long-Term Goals
Many companies fail to strike a healthy balance between short-term recognition and long-term rewards. If rewards feel too distant or difficult to attain, your team may lose interest; conversely, if they are easily achieved, they can feel superficial and meaningless.
That’s why effective employee recognition programs offer a mix of both: small, immediate rewards for day-to-day achievements and larger, aspirational rewards for long-term accomplishments.
Manager Engagement
Your managers being engaged is a factor that is often overlooked, yet it’s an absolute must-have – if they aren’t invested in using the system, the whole structure can fall apart. On top of that, they may even simply forget to use the system or find it a bit too complicated.
To avoid this, make sure to have regular check-ins with them and also use tools that can help track managerial activity and encourage your leaders to engage more with the platform.
How To Create an Effective Reward & Recognition System for Employees?
And now let’s take a look at exactly how to create a reward system for employees that will really work:
Step 1: Understand Your Employees’ Preferences
Before setting up your system, you must truly understand what motivates your employees – and remember that there’s no universal solution. While some might appreciate extra time off, others might prefer more tangible rewards like gift cards or salary bonuses. That’s why you need to first gather feedback and then choose the items that will prevent the rewards program from feeling generic.
Step 2: Align Rewards with Company Values
As indicated previously, for your recognition system to have maximum impact, it should reflect the core values of your organization. We’ve already talked about how you can align your rewards with your values, but now it’s also time to speak about the alignment of values and the type of behavior you want to encourage.
For example, instead of simply rewarding productivity or output, you can highlight qualities like teamwork, leadership, and creativity if your company is more about soft skills than hard ones.
Step 3: Design the Rewards Structure
Next, design a clear and simple reward structure. There are various ways to distribute recognition, including:
- Monetary rewards like salary bonuses or gift cards.
- Non-monetary rewards such as additional vacation days or achievement plaques.
- Point-based systems where employees can accumulate points to be redeemed in your company store (if you have one).
Additionally, make sure the system is easy to understand, as complicated processes or unclear criteria can easily frustrate your team, defeating the whole purpose of the program.
Step 4: Create Both Formal and Informal Recognition Channels
Make sure to include both formal and informal channels for your recognition program. Formal recognition might come in the form of structured performance reviews or yearly awards, while informal ways of encouragement could be as simple as a quick shout-out during a meeting or a thank-you email.
Step 5: Train Managers on the Recognition System
Managers are the ones who get to observe your team’s day-to-day contributions, and their efforts are most crucial for maintaining employee morale. However, as we discuss, not all managers are naturally inclined to make use of your recognition program.
That’s why you should invest in training managers on the importance of recognition, how to use the system, and how to personalize their acknowledgment for each employee.
Step 6: Encourage Peer-to-Peer Recognition
At the same time, while recognition from managers is important, peer-to-peer recognition shouldn’t be overlooked either. Employees often feel a unique sense of accomplishment when praised by their peers, who understand the day-to-day challenges they face.
So providing a dedicated platform where employees can easily give shout-outs or offer words of praise to colleagues definitely helps create a culture of mutual support. Not to mention, it also takes some of the pressure off managers by spreading the responsibility for recognition throughout the team.
Step 7: Track the Impact
To understand how well your system is working, you need to track various satisfaction-based metrics like employee retention, engagement survey results, or participation rates in the rewards program. Monitoring these will help you adjust your system over time – if you notice that a certain type of reward isn’t popular, it may be worth replacing it with something that employees find more meaningful.
Step 8: Review Feedback and Update
Lastly, no recognition system should be static – the preferences of your employees will inevitably change, and you should be aware of that. Collect feedback to understand what’s working and what’s not through surveys, focus groups, or one-on-one discussions – and always be willing to make changes.
Conclusion
A well-crafted employee reward system can only come from a very clear understanding of what your team wants, having your rewards aligned with your company values, and providing the right tools for your managers. This way, you will have an invaluable asset that will keep your team engaged, appreciated, and committed. If you want to complement your reward system with your own company merch store, it’s highly recommended that you partner up with an experienced company store setup team like Brandscape. We will provide expert assistance in making your internal shop one of the biggest positives in your employees’ corporate life experience.
