How to create a reward strategy that motivates staff
Implementing an effective employee reward strategy is a tried and tested method of increasing motivation and engagement among your workforce. Learn more about the core elements of a reward strategy and how to implement one in your organisation.
Reward strategies that focus on employee recognition can lead to big benefits, including making employees feel happier, valued and loyal. It can also help to attract new talent, positioning you as an employer of choice with an appealing employee value proposition.
Here we explain what reward strategies are, how they can be effective motivators and how you can create reward strategies to motivate your employees, enhance talent attraction and contribute to long term success in your organisation.
What is a reward strategy?
A reward strategy is a system or package employers create to motivate employees to meet their goals and objectives. For example, if an individual or a team excels during a client pitch and scoop up a new account, they get a reward. Rewards and recognition are a tangible way to show appreciation, helping high performing employees feel a sense of achievement.
While some rewards can be financial (one-off bonuses, for example) there are other rewards employers can offer, such as extra days of annual leave. Research shows that benefits such as flexible hours are so highly prized that two fifths of workers would be happy to skip a pay rise for them.
The benefits of a reward strategy
Everyone wants to feel valued at work, and setting out a clear reward strategy shows you are committed to recognising and rewarding the contribution of your workforce and investing in their wellbeing. A happier workforce can be 20 times more productive than an unhappy workforce, so it makes sense to invest in a rewards programme to boost employee engagement.
Foster a positive culture
A lot of people are feeling the strain of the cost-of-living crisis, so having a workplace that offers perks and supports wellbeing can make all the difference. Rewards, such as high street discounts for groceries and clothes, can increase staff spending power without businesses having to significantly increase salaries.
Improve collaboration
A joint incentive – such as a day’s extra annual leave – can do wonders for teamwork. It’s well known that employees who are motivated to reach targets are more inclined to work well together. Once a reward has been achieved, there’s a feel-good factor and people are motivated to work together again,
Reduce turnover
According to research, 84 per cent of employees say receiving a reward increases their loyalty. Initiatives that get employees to stay in their roles longer help increase stability, as long-serving staff members can develop and better understand their roles. Furthermore, when staff stay in their roles for longer, you can save on recruitment and training costs in the long run.
Sometimes, all it takes is the feeling of being valued. Research shows that the most meaningful recognition comes from an employee’s manager. However, nearly one quarter of employees say the most memorable recognition comes from a high-level leader or CEO.
Attract talent
Comprehensive reward strategies can help employers round out their offering and hire high quality candidates as it helps them differentiate themselves from their competitors. So, it’s crucial to communicate these rewards.
Our recent Hiring Trends Index found that only a third (34%) of businesses advertise specific salary and bonus information, and just 35% include detailed company benefits on job adverts. To attract more candidates, you should consider being transparent about salary and benefits packages.
Different types of reward
There are various types of rewards and incentives employers can offer. We’ve outlined some of the most popular categories below.
Financial
With almost three-fifths (57%) of jobseekers looking for higher salaries, financial rewards are more attractive than ever. Aside from salary hikes, the main financial rewards include a performance bonus, often linked to an individual or team achievement, enhanced pension contributions, employer loans and salary sacrifice schemes, such as childcare vouchers.
Educational
We found that as many as 9 in 10 employees want their company to offer more training courses, and filling in education gaps or upskilling your workforce is a win- win. Rewards can include online courses, internal training and/or time off for career development.
Work-life balance
Rewards can make a real difference to people’s lives, health, and happiness. As a result, promoting a healthy work/life balance is key to motivating staff to work harder, with our analysis showing that flexible working hours is the most sought-after benefit for 44% of UK workers.
Health & wellbeing
Employees are more likely to thrive if an employer looks after their health and wellbeing. Popular health-related benefits include critical illness cover, private healthcare (which could help an employee avoid long NHS waiting times) and vouchers for eye care. Setting a wellness budget – for yoga classes, financial coaching, gym membership and so on, also scores highly.
General perks
Perks slot into the ‘nice to have’ category and can have a big impact on company culture for a low (or no) cost. Examples include a casual dress code, loyalty awards, discounts on high street retailers and free food and drink.
Devising a comprehensive reward strategy
Rewarding employees doesn’t have to be overly expensive or complicated. However, it does require careful thought to achieve the desired results.
Follow the steps below to start creating your strategy.
Involve employees
One way to find out what would motivate your employees is to ask them! Involving employees in the process encourages communication and ensures everyone is on board. Ideally, this can be a positive exercise – with a poll to vote on the most popular rewards, for example.
Create a system
Your employee reward system should be clear and fair. It needs to contain rewards for meeting milestones and targets and be something that all employees can strive for. It also needs to be swiftly followed through once a goal has been reached.
Communicate your strategy
An enviable rewards system is something to shout about. For it to work, employers need to communicate the rewards and how they can be earned. When employees understand what is expected of them, they will be more focused on achieving performance standards.
Encourage feedback
The rewards employees want are changing. Who knew a few years ago how in demand working from home would become? To keep on top of what motivates employees, employers should regularly gather feedback. This may include surveys or analysing data on things like how many gym memberships have been taken up.