How to create a reward strategy that motivates staff

Reward strategies that focus on employee recognition can make employees feel happier, valued and loyal, thereby helping employers attract and retain the talent they need for success.

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In this article, we’re looking at how you can create successful reward strategies that enhance talent attraction efforts and contribute to long-term organisational success.

What is a reward strategy?

A reward strategy is a system or package employers create to motivate employees to meet their goals and objectives, with rewards and recognition offering a tangible way of showing appreciation and helping high performers feel a sense of achievement.

For example, if an individual or a team excels during a client pitch and secures a new account, they might receive a reward from their employer, reinforcing the behaviours and outcomes the organisation wants to encourage.

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 while investing in their wellbeing. 

Let’s dig into the various ways reward strategies can benefit employers.

Improve engagement

Employee engagement is crucial to driving performance at work.

If an employee doesn’t feel rewarded for their efforts, they are less likely to be engaged, as they may not see the benefit. Conversely, workers who know their efforts will be recognised are far more likely to stay engaged, motivated by the rewards on offer.

Introducing a reward strategy can therefore be a powerful driver of improved engagement and retention.

Create a positive culture

Many people are feeling the strain of rising living costs, so having a workplace that offers perks and supports wellbeing can make a meaningful difference.

Rewards such as high-street discounts for essentials can increase staff spending power without employers needing to significantly raise salaries.

This can positively impact day-to-day life for employees, reinforcing the sense that their employer cares about them and pays attention to the details that matter.

Better collaboration

Team building and collaboration are crucial to any organisation that wants to succeed.

A joint incentive, such as an extra day of annual leave, can be exactly what teams need for a morale boost. Employees motivated to reach shared targets are naturally more inclined to collaborate effectively.

Once a reward has been achieved, there’s a feel-good factor that encourages people to work together again, and they become more willing to support one another to achieve future team goals.

Reduced turnover

It’s currently difficult for many organisations to source the talent they need, so holding onto existing employees becomes even more important.

Employees who stay longer help increase stability, as long-serving staff develop deeper expertise. Retention also reduces recruitment and training costs over time.

To boost your retention rate, consider initiatives that encourage employees to stay for the long term. Sometimes, simply feeling valued is enough, while recognition from managers and senior leaders can also play a significant role in helping employees feel seen and appreciated.

Talent attraction

Comprehensive reward strategies can help employers strengthen their offering and attract better candidates, as they differentiate the organisation from competitors.

With employers competing for top talent in a tight hiring market, attraction is far from easy. This makes it essential to clearly communicate rewards to jobseekers.

Being transparent about salary, benefits, and recognition programmes can significantly improve the quality and volume of applicants.

Types of rewards for employees

There are various types of rewards and incentives employers can offer, and these can be mixed and matched to create a total reward package. We’ve outlined some of the most popular categories below to help you get started, ensuring your approach appeals to a wide range of employee needs and motivations.

1. Financial

Financial rewards remain a powerful motivator for many employees.

Beyond salary increases, performance bonuses linked to individual or team achievements can help reinforce high performance. These incentives are particularly valuable in roles where targets are central to success.

Other financial rewards include:

• Commission-based bonuses
• Enhanced pension contributions
• Employer loans
• Salary-sacrifice schemes

2. Educational

Learning and development incentives are increasingly important, with 46% of workers saying they wouldn’t apply for a role without opportunities for growth.

Educational rewards for employees can include:

• Online courses
• Internal training
• Time off for career development

Providing these types of incentives demonstrates long-term investment in your people and helps close skills gaps across the organisation.

3. Work-life balance

Rewards can make a real difference to people’s lives, health and happiness.

And this is what really matters to workers with our research, showing that flexible working hours are the most desired benefit among UK workers (41%). As a result, promoting and facilitating a healthy work-life balance is key to motivating staff.

There are numerous work-life rewards you can offer employees, including things like the chance to win an additional day of annual leave on top of their contractual allowance.

4. Health and wellbeing

Employees are far more likely to thrive when an employer actively supports their health and wellbeing.

Popular health-related benefits that protect physical and mental health include:

• Critical illness cover
• Private healthcare
• Vouchers for eye care

Setting a wellness budget, for things like yoga classes, financial coaching or gym membership, shows a genuine commitment to employee wellbeing.

5. General perks

Perks fall into the ‘nice to have’ category but can significantly influence organisational culture at a low (or no) cost.

Popular examples include:

• A casual dress code
• Loyalty awards
• Discounts on high-street retailers
• Free food and drink

These small but meaningful perks help create a more enjoyable workplace and reinforce a positive employee experience.

Creating 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.

We’ve put together the steps below to help you start building your own reward strategy, ensuring it feels fair, motivating and aligned with what your workforce values most.

Involve employees

One great way to find out what would motivate your employees is to ask them directly.

Involving employees in the process encourages communication, gives them a voice, and ensures everyone feels included.

This can be a positive exercise. For example, running a poll to vote on the most popular rewards or gathering quick feedback through pulse surveys.

Create a system

A good employee reward system should be clear and fair.

Make sure your offering includes rewards for meeting milestones and targets and is something all employees can strive for. Rewards should also be delivered promptly once a goal has been reached.

Aim to balance the system so any employee, whether a top performer or not, has a realistic chance of earning a reward by improving their performance.

Communicate your reward strategy

An enviable rewards system is something worth shouting about.

For it to work, employers need to clearly communicate the rewards available and how they can be earned. When employees understand what is expected of them, they are more focused on achieving performance standards.

If you’re looking to attract strong candidates, make sure your rewards are highlighted in job postings too. Top talent actively look for perks and bonuses when deciding whether to apply.

Encourage feedback

The rewards employees want are constantly evolving, and employers that don’t keep up might see their talent attraction and retention efforts suffer as a result. 

To stay aligned with what motivates the workforce, employers should regularly gather feedback. 

This may include surveys or analysing data on the uptake of benefits. For example, how many wellbeing perks or development opportunities have been used.

Building a reward strategy that drives real results

A strong reward strategy does more than recognise great work. It helps fuel engagement while strengthening your culture in a way that helps you stand out in a competitive hiring landscape. By listening to your people, communicating clearly, and combining financial incentives with meaningful non-financial rewards like flexibility and development, you create a system that inspires today and builds loyalty for the future.

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