3 different ways you can reward your employees.

Reward and recognition are common place in top organisations across Australia. In the employee-driven job market, great companies know that the most talented and passionate group of employees will thrive if the employee culture is thriving. Aside from considerations like remuneration, flexibility, opportunities to grow, support for further education, etc. a great employee culture will also help to bring great employees to the company. Recognition, a social economy of appreciation, will contribute significantly to the employee culture being a positive one that brings the right people to you and helps them prosper with you.

There are multiple elements to take into account if you are implementing or re-vamping your recognition program. How recognition will flow, how deeply it will be embedded into your HR processes, how leaders will be involved in recognising employees, the impact of a company-wide social recognition program, how to get the best impact with rewards.

This last consideration, different ways to reward your employees and which is best, is one of those questions we are frequently asked by companies who are introducing or reviewing an employee recognition program.

What are three different ways to reward employees? What are the top ways to reward employees? What is the differences in reward types and the impact they will have? How much should we spend on rewarding our employees? How do we know what will work? All common questions that we hear every week as we are talking to business leaders.

Companies who want to reward their people are increasingly looking for rewards that are meaningful and valuable. They don’t want to hand out more electronic items, more gift cards, more ‘things’, more ‘things’ that employee already have or can buy themselves. The more you give, the more is expected and this is not always something that is sustainable.

So, what are the top 3 ways to reward your employees?

Rewards should set you apart from the competition, draw the best in the industry to work with you and fall in line with your corporate values.

Rewards can be divided into three main categories – cash (or gift cards  - pretty much the same as cash), non-cash (or material rewards) and non-material rewards.

Cash or gift cards.

Your employees will tell you they want cash as a reward and will probably have a smile on their faces as you hand it over. The problem comes with what happens next – or more importantly, what doesn’t happen next.

Picture this – you do a great job, are rewarded by your manager with a $250 David Jones voucher which you are excited to spend on yourself when your son needs some new school shoes, or the washing machine breaks down. There goes the voucher and there goes your hard-earned reward. What didn’t happen to the reward? You didn’t spend it on yourself, you didn’t get to enjoy the reward. Sure, you spent $250 less on the new washing machine but does that really spark joy?

Whether the reward is cash or a gift cards, employees typically people won’t spend their reward on things that are really rewarding. The ‘reward’ often goes to household expenses or an item for someone else – not a great reward for their hard efforts. When you use cash as a reward, there is also an expectation that this reward will be given again and again, with or without the behaviour that earned the reward in the first place. When you give cash, your employees mentally account for it as ‘earnings’ and expect it again next year as part of their package. Mentally, we disregard the fact that it was earned for an extraordinary achievement and expect we will get it anyway.

So while employees ask for cash, it does not necessarily give you the best ROI. Rewards encourage behaviour change but if the reward is not actually rewarding, you may not enjoy the uplift from the changed behaviour.

Material rewards.

Second on our list of the top 3 ways to reward is with material rewards. Material rewards are the things that you probably think of instantly when you think about employee rewards – Gold Class movie tickets, a fitness tracker, bunches of flowers, the latest headphones, iPads. Physical items that you give to your employee in return for their achievements.

Material rewards are a great way to reward your team with one caveat. It is important that you choose appropriate material rewards that are meaningful to the employee. While some people think that the old ‘gold pen for ten years’ reward is antiquated (and given that we are writing less and less….or in some cases, are completely paperless), maybe they are partially right. There is still, however, incredible value in meaningful rewards that the employee actually wants. If a reward is sociable, luxurious and gives the employee pleasure, it will likely have the right impact. An employee will enjoy the impact of that gold pen over and over if they use it on the daily, can tell their friends and family where it came from and is something they would not usually buy for themselves.

So how do you know what is meaningful for your employees? How do you know what they really want? Let them choose their own rewards. By rewarding employees with points that they can redeem from a range of carefully curated items, you are allowing them to choose something that is valuable to them, something they really want and the effect will be amplified.

Non-material rewards.

Last, but in no way least, on our list of 3 ways to reward your employees is non-material rewards. Non-material rewards are time and activity-based rewards – the afternoon off to pick up the kids, face time with the CEO, writing a post for the company blog, a head start on holidays to go home and pack, pilates at lunch time, coffee brought to their desk for a week, an hour to sit in the sun and think, a license to leave loudly on Friday afternoon – the options are endless.

Non-material rewards work for a couple of reasons. They are highly personalised so employees feel like the reward has been chosen especially for them. Non-material rewards can give your employees something we are all short on in today’s world – time. Time to spend with the family, time to catch up on life admin, time to sit and contemplate.

When you look at the ideals for a great reward – sociable, pleasurable and luxurious – they are all three. Time off to catch up with life is something you can rave to your friends about (raving about a $500 cash reward? Not so socially acceptable). Time to hang in the sun and think is an absolute luxury for most of us. Getting to the airport early - and super-relaxed - for that overseas holiday is pleasurable and kicks off the holiday in the right way.

The other consideration when it comes to non-material rewards is that they do not have to cost a lot, or anything at all. Depending on the rewards you give, they can be low or no cost  so you can reward without being concerned about blowing the budget. This is a great way to reward if you have no budget at all. Just design your non-material rewards around things you can give – job swaps, movie at your desk, shadow a business leader, things that you can easily deliver in-house at no cost.

There is no right or wrong way to reward, only the right way for you. Hopefully this list of 3 ways to reward your employees will help you to define what will work best. Start with what feels right and if it is not working, introduce something new to see if you can impact performance with a different carrot.