How to Reward Your Employees
Keeping your team happy is crucial, so we are sharing a few tangible and intangible rewards you can use.
“A world without A’s, praise, gold stars, or incentives? No thank you, Mr. Kohn. Communism was tried, and it didn’t work.” — G. Bennett Stewart III
In 1993, Alfred Kohn released Why Incentive Plans Cannot Work, stating that employee rewards pervasive and only secure one thing: temporary compliance.
The Harvard Business Review consulted 9 experts from multiple fields on the role of rewards in the workplace, and they all sustain that “there are conditions under which rewards can increase involvement and creativity”.
So, wo rewards work? At Jobbatical we think they do, if done correctly. Truth is everyone likes to be appreciated so rewarding your employees for a job well done is crucial to keep them motivated.
Your team is an asset, and you should treat them as such. Making your most valuable employees feel appreciated will encourage loyalty and impact the quality of work you receive.
Below we’re sharing a few simple tangible and intangible rewards that you can use to express appreciation and reward your top performers.
Tangible rewards are physical rewards that your employee can touch, hold, spend, or use them in a meaningful way. They can be used for promotions, as bonuses, and as part of end-of-year performance review.
Use these ideas to create a tangible thank-you for work well done, targets met, and efficiency or good communication. They often involve bonuses, perks, and rewards designed for a specific person, based on their salary, work-hours, and life.
Cash is the fastest and easiest way to say thank you. Many employers are hesitant to offer raises, but even a small salary increase is a big deal to the receiver. More importantly, small salary increases offer a long-term incentive for employees to perform well, remain loyal, and to continue to invest in your company.
Salary increases are large commitments, because they are long-term and continuous, so save them for big rewards. Reward top performers during end-of-year reviews, create a skills-based promotional ladder alongside leadership, and allow employees to earn additional salary. The average performance-based raise is approximately 3%, but top performers should get more.
A one-time bonus is a cheaper but still rewarding way to give a monetary thank-you. Bonuses can be handed out at nearly any time of the year, but are usually connected to holidays or end-of-year reviews.
Wondering how much to give? A study by CNN Money showed that the median performance bonus is about 11% of annual pay, so an employee with a $44,000 base salary should receive about $4,500. At the same time, a median non-performance bonus is typically around $450,but this varies quite a bit depending on employee. A lower-level employee will usually receive a bonus of 2–10% while management typically receives 10–15%.
Stock options are declining in popularity, so if you choose to use these as an employee incentive, make it an option, not the only choice.
Stock options can be a valuable bonus, offering the opportunity to increase in value over time — employees actually see some of their hard work coming back to them. If the company succeeds, so do they.
Restricted stock and phantom stock, where employees receive a cash bonus as an alternative to company shares, or certain shares of stock based on performance and earnings, are popular alternatives.
Stock options come with one caveat. It is crucial that employees know how to use them. If you provide a stock option, consider offering a class or course in managing stock at the same time.
Employee benefits, ranging from company cars to gym subscriptions, are a popular and relatively affordable way to reward employees. Additional paid time off, extra perks, better insurance, nicer equipment, and other offerings are all very welcome for most employees.
How can you best utilize this? Make benefits a rewards option that employees can choose for themselves. Not everyone needs a company car or phone, and some will prefer perks like extra vacation time instead.
Offering tangible gifts, cash bonuses, and outings for employee birthdays is an easy and effective way to show you appreciate your team. Offering a gift or bonus for a birthday is often cheaper than a performance review, but provides individual attention, making the employee feel recognized and valued.
Healthy Food Options
Catered lunches and cafeteria solutions in the workplace can save employees considerable amounts of money while giving them better and healthier food options to choose from. Offering lunches in the workplace also saves your employee — and, by extension, you — time and effort. They won’t be leaving to go out to eat, worrying about packing a lunch, or spending time heating food up. Just be sure to cater to specific dietary needs, and use a questionnaire to determine food preferences and allergies in advance.
Whether you use fixed offices or flex-desks, office upgrades are a great way to show appreciation, while also improving work ethic. This may include a new desk, an ergonomic office chair, better equipment, a new computer, access to new software, or even something as small as a new mouse and keyboard. Making the workplace more comfortable is a tangible reward that will also pay off by keeping employees healthy and making them more productive.
Tangible rewards are physical, but that doesn’t necessarily mean intangible rewards will cost less. So, it’s important to consider the actual cost per employee when making decisions. However, intangible rewards offer a great deal in terms of payoff, employee appreciation, and return on value as well.
Intangible rewards allow you to easily offer rewards throughout the year, without necessarily tying them to performance or specific occasions. These range from small and easy ways to make employees feel individually appreciated throughout the year to bigger things that pay off by helping employees to develop themselves.
Simply saying “thanks” is a powerful but underutilized way to show appreciation. Having managers and leaders stop to vocally thank people, or call out top performers to thank them at the end of a meeting is an easy way to use praise to motivate. Employees who achieve big or important things can receive thanks from higher up, or even from the CEO. You can say thanks and offer praise in person, or use an email to say the same thing (although in person typically has more impact).
Time is one of the most rewarding and valuable things you can offer. For example, you can give your top performers an extra week of paid vacation, or flexible work schedules as a year-round bonus to all employees to make them feel more appreciated.
Keep in mind that time bonuses can cost you more than cash bonuses, so review costs carefully before offering time off. You can also offer the option to choose cash instead of vacation time if you’re unsure if employees want more flexible time (but normally, they will).
Offering development opportunities for employees is a great way to raise retention and help your team grow professionally. Lack of development opportunities and a clear path is one of the main reasons employees leave, so it’s important to provide mentorship and a good chance to succeed into leadership roles.
Motivate your top performers by discussing development options, moving them into training programs or giving them opportunities to learn for the job each week. Similarly, if you have a top employee in a role that is being phased out, an opportunity to move up or across into a new role is a significant reward and an easy way to say “you matter,” while reducing total costs for filling a new role.
Training, Learning, & Education
Invest in continuing education, whether through training and certification, learning, or higher education. You can achieve this in several ways.
For example, offer LinkedIn courses to your employees year-round. Send your top performers to gain new skills on a corporate Jobbatical, where they work and learn at a company in the same industry, but a different country. Participate in group learning and certification for entire teams, or single out and reward ambitious individuals with the opportunity to continue their learning to prepare them for future roles.
Each option has pros and cons, and each will achieve a different result. For example, by offering on-demand learning, you can determine which employees are self-motivated and ambitious. Group learning allows you to advance as a team, preparing for new technologies and new capabilities. Individual learning allows you to cut costs while preparing succession for leadership from the inside.
A Culture of Appreciation
Your goal as an employer should be to create a culture in which employees feel appreciated. This means creating and maintaining a workplace that enables everyone to do their best work: Providing high quality machines, tools including software and hardware, and a quality work environment.
In addition to investing in your office space, this also includes investing in your management and ensuring that everyone can work productively and efficiently. You can also respond to employee comments and questions, making upgrades or introducing new tools based on employee feedback.
Your employees want to contribute to a workplace where they and their output matter. You want happy and productive employees. Creating a great work space and investing in quality and comfort benefits both sides.
Employees who feel appreciated are more loyal, more likely to stay with your company, and often more productive. Investing in a happy and productive workforce is good business, and it will pay off.
This post is a part of Jobbatical’s hiring blog, designed to help hiring managers get their teams to the next level. To get our new articles straight to your inbox, please sign up for our hiring newsletter.