How to create a reward strategy that motivates staff
Learn how you can implement an employee reward strategy that increases motivation and engagement amongst your workforce.
Reward strategies that focus on employee recognition can result in significant benefits for employers. This includes helping employees feel happier, valued, and more loyal to your organisation.
It can also help attract top talent, positioning you as an employer of choice with an employee value proposition that appeals to top candidates.
In this article, we’re taking a look at how you can create successful reward strategies that motivate employees, enhance talent attraction and contribute to 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 representing 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 scoops up a new account, they might get a reward from their employer.
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.
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 in their work, as they may not see the benefit. On the other hand, workers who know their efforts will be rewarded are much more likely to be engaged in their work, as they seek the rewards on offer.
Bringing in a reward strategy can therefore be key to improving employee engagement and retention.
Create 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.
This can go a long way to making a positive difference in day-to-day spending for employees, creating the impression that their employer cares about them and is focused on the details.
Better collaboration
Team building and collaboration are crucial to any organisation that wants to succeed. So a joint incentive – such as a day’s extra annual leave – could be just what your teams need for that team-building boost.
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. They will also be more inclined to support each other to help to achieve the team goal.
Reduced turnover
It’s currently hard for many organisations to source the talent they need, so holding onto the talent they have becomes even more important.
According to research, 84 per cent of employees say receiving a reward increases their loyalty. Employees that 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. So to boost your employee retention rate, think of initiatives that will encourage employees to stay for the long term.
Sometimes, all it takes is the feeling of being valued. Research shows that the most meaningful recognition comes from an employee’s manager and nearly one-quarter of employees say the most memorable recognition comes from a high-level leader or CEO.
Talent attraction
Comprehensive reward strategies can help employers round out their offering and attract better candidates, as it helps them differentiate themselves from their competitors.
With organisations competing for top candidates in a tight hiring market, attracting talent is not easy. As a result, it’s crucial to clearly and effectively communicate these rewards to jobseekers.
Our research shows only a third (34%) of businesses advertise specific salary and bonus information, and just 35% include detailed company benefits on job adverts.
So, in order to attract more candidates, consider being transparent about salary and benefits packages and make sure you’re not omitting anything in your job adverts.
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.
1. Financial
With almost three-fifths (57%) of job seekers looking for higher salaries, financial rewards are more attractive than ever.
Aside from salary hikes, the main financial reward you might consider is a performance bonus, which will often be linked to an individual or team achievement. These are vital in certain industries and job roles – such as sales for example – as they set clear targets for employees, and give them a good reason to hit the target.
Other financial rewards include commission-based bonuses, enhanced pension contributions, employer loans and salary sacrifice schemes, such as childcare vouchers.
2. 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
- Time off for career development
Just 12% of the benefit types advertised by employers fall within education and training, so providing these types of incentives can be a great way to stand out as an employer.
3. 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.
Another work-life reward that you can offer to staff based on performance could be the chance to win a day’s annual leave on top of their contractual allowance.
4. Health and wellbeing
It’s a fact that employees are more likely to thrive if an employer looks after their health and wellbeing.
Popular health-related benefits employers can offer staff to protect their physical and mental health include:
- Critical illness cover
- Private healthcare (which could help an employee avoid long NHS waiting times)
- Vouchers for eye care
Setting a wellness budget, for things like yoga classes, financial coaching, gym membership and so on, also scores highly.
5. 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.
Popular examples of these include:
- A casual dress code
- Loyalty awards
- Discounts on high street retailers
- Free food and drink
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.
Involve employees
One great way to find out what would motivate your employees is to ask them!
Involving employees in the process encourages communication, gives employees a voice, 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
A good employee reward system should be clear and fair.
So, ensure that your offering contains rewards for meeting milestones and targets and is something that all employees can strive for. It should also be swiftly followed through once a goal has been reached.
Try to balance the system so that any employee – whether they are a top performer or not – has a chance of getting a reward by boosting their own performance.
Communicate your reward 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.
If you’re thinking about how to attract quality candidates to open roles you have, make sure you communicate your rewards in any job postings too. Strong candidates will be on the lookout for perks and bonuses when deciding whether to apply for a role.
Encourage feedback
The rewards employees want are changing.
For example, 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.