Top 10 Mistakes in Designing a Rewards Program

Setting up and implementing a rewards program doesn’t necessarily lead to instant success unless it’s done the right way.

Below are the Top 10 Mistakes leaders, recognition administrators and practitioners can sometimes make when designing and implementing the various employee rewards programs in their companies.

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Mistake #1: Ignoring your history

Don’t create a rewards program without knowing your company’s past history with rewards. Rewards can be misused and misdirected, and if a negative view is held, you need to correct that image. Ignoring what has happened in the past can cripple your future. Using your history well can enhance what you achieve tomorrow.

Mistake #2: Neglecting to measure before you apply

Do not select the financial/tangible rewards or incentives without first identifying the appropriate behaviors to be rewarded. Make sure you are using the right measuring stick to prescribe the right rewards. Some results are more suited to financial or tangible rewards while simply using social reinforcement can influence other behaviors. Don’t forget to throw in qualitative measures too to offset the gamers out there.

Mistake #3: Basing KPIs on assumptions

Don’t presume you know what behaviors should be rewarded to produce the desired business results. Observe and speak with the frontline manager and employees and observe their performance to identify the behaviors you need to address. If you don’t understand someone’s job role properly you can end up rewarding behaviors that are simply expected versus going above and beyond.

Mistake #4: Ignoring objective metrics

Know both the objectives of your rewards program and how you will measure them. Make sure you look at objective metrics, as well as subjective measures of effectiveness. American Statistician W. Edwards Deming famously said: “In God we trust, all others must bring data.” No one is quite sure if it was Peter Drucker or Deming who said, “If you can’t measure it you can’t manage it.” Either way I say without good objectives and measures you sure won’t be able to reward it!

Mistake #5: Rewarding the wrong behaviors

Don’t reward the wrong things. Is it safe practices you want, or on-time safety reports with reduced accidents? What you reward is what you’ll get. I have seen this scenario where submission of zero-accident reports got rewarded while proper safe practices were ignored leaving a company vulnerable to accidents and even serious injuries.

Mistake #6: Not getting feedback from employees

Reward programs work best when they incorporate employee and manager input. Find out if the reward makes an impact with the employees. Ask the recipients what is or is not working and apply these key principles to correct for the future. Don’t ignore the frontline workers. They can tell you what works and what doesn’t. And more importantly they can probably tell you why.

Mistake #7: Not paying attention to results

Don’t create a problematic reward system. If you are not getting the behaviors you want then you are not using the right rewards or awarding them in the right way. Make sure the performance results you want are being obtained the right way too. You do not want to set up unethical practices by rewarding people for results obtained in a dishonest way.

Mistake #8: Not connecting the dots

Provide individuals who earn rewards for exceptional performance with the specific reasons for the rewards. Knowing why you received a reward encourages future positive behavior. Provide access to performance metrics and leader boards to know how the department or company is doing. Give people the big picture so they know how they have contributed to something bigger than themselves.

Mistake #9: Not giving recognition uplift

Don’t forget to provide meaningful, sincere recognition along with the rewards. Tell the recipient specifically what they did and how that made a difference. Never give a reward without expressing appreciation for the work done and how it was done. By acknowledging the person as well as rewarding them you have just multiplied the perceived value of the reward given to a person.

Mistake #10: Not presenting rewards well

Don’t just make rewards a transaction. Yes, they are often administered in a transactional, cold manner. But you can do something before the reward is sent and you can certainly do something after the fact as well. More often than not you will see the performance results before the reward is given. So say or do something. Take the time to honor the recipient publicly or privately, in person, to build positive relationships.

Question: How have you been able to develop a successful rewards program?

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.