How Do You Know What and When To Reward

One of the questions I am often asked when it comes to rewards is what to reward people with as well as when are you supposed to give those rewards.

It’s important to remember that rewards can be tangible, monetary, or experiential in nature. This opens the door to all kinds of creative options and ideas for what to give to people or give them access to choose.

And broadly you give rewards to individuals or teams whenever they reach pre-set goals, a significant achievement, or a special service was performed.

Now let’s dig a little deeper so you can better understand these elements.

What do you reward?

You’ve seen how I identified rewards as something tangible, monetary, or even an experience.

Each organization has a specified budget allocated for the rewards you can use. There are also income tax implications for giving rewards and the employer will have to decide whether they top up the tax liability or have the employee pay this, which can leave a negative perception of rewards for employees.

Patricia A. Norberg, a marketing professor from Quinnipiac University, conducted research on Employee Incentive Programs: Recipient Behaviors in Points, Cash, and Gift Card Programs (2017) which is written up in Performance Improvement Quarterly, Volume 29 (4), pages 375-388.

What she learned across the use of these three reward types was the following perception by employees.

1. The type of reward matters in the degree to which recipient employees derive satisfaction from the rewards, plan for their use, and talk about them.

2. A significant portion of cash reward recipients used their reward to pay their bills, a more utilitarian choice that may deliver satisfaction but little enjoyment.

3. Point recipients appear much more likely to plan for the use of their rewards, which, in a further regression analysis performed by the researchers, was significantly related to satisfaction with the reward.

4. Points and gift card recipients are much more likely to talk about their rewards with others than are cash reward recipients. The degree of discussion about a reward also correlates with reward satisfaction, which can generate a wider interest in the reward program.

5. Surprisingly, gift card recipients reported significantly lower satisfaction with their reward even than cash. Almost three-quarters said in using their card, they had to add money of their own.

When Do You Reward Your Employees?

• Obviously, but this sometimes gets overlooked, you must reward employees as soon after the accomplishment or the target is reached. Timeliness in receiving the reward is a critical element with using rewards.
• Whenever an employee or team has achieved a pre-set goal. Comes back to the timeliness issue in order to have the maximum effect.
• When a person has achieved a significant achievement. Make sure the reward given reflects the level of achievement made. This is important to get right.
• Whenever an employee demonstrates good work done well and consistently over a long period of time, and aligned with living organizational values.

When You Don’t Reward Your Employees

• You don’t reward people for doing good work that is simply expected of them within their normal job demands and at typical standard levels of work performance.
• You don’t reward people for being creative. They should be paid already for those abilities and creative talents. Rewarding creative work inhibits intrinsic motivation, which in turn has been shown to reduce creativity.
• You don’t reward people if you can’t easily measure what they did as being above and beyond. This can help to eliminate favoritism getting in the way.

Aligning Rewards with Results

Steve Kerr, the former chief learning officer at General Electric and Goldman Sachs, devised a simple three-step process for successfully aligning your reward programs with your performance goals.

1. Define performance in actionable terms. The more specific and behavioral you can be in defining and describing the desired outcome the easier it will be to know if the goal was achieved that merits the specific reward. Give your managers a range of qualifying indicators to help them know the reward value they should give for various levels of results performed.

2. Measures the right things and uses the right measures. You have to ask yourself some serious questions about what you are measuring and how you are measuring it. Every behavior can be measured and so you need to agree on the metric you will use to determine positive results.

Is it safety reports with zero reported accidents? I saw that example where a power company rewarded everyone on the team with gift cards for safety reports with zero accidents. Yes, they gamed the reports submitted to make sure everyone got their $50 gift card. Or is it consistently demonstrating safe behaviors around using at risk equipment? That’s more like it. And, of course, you can drill down to greater specificity on the desired behaviors.

3. Reward the right things and use the right rewards. I have said it before that when you give recognition you don’t have to give a reward. But when you give a reward it must always be accompanied by recognition. Make the rewards visible and meaningful. Use rewards that have high levels of satisfaction that people like to talk about with others. Rewards should be something people are proud to obtain and would likely not quickly spend their own money on.

Using rewards is serious business and should be handled with great care, planning, and timeliness.

Recognition Reflection: Are you designing your reward programs to include the needed relational aspect of genuine recognition as well?

Roy is no longer writing new content for this site (he has retired!), but you can subscribe to Engage2Excel’s blog as Engage2Excel will be taking Roy’s place writing about similar topics on employee recognition and retention, leadership and strategy.