As employees, we all want to work in an environment where we’re recognised, motivated and where we feel that we truly make a difference in the organisation. Moreover, we also need leaders who develop and encourage their employees and have strong systems that recognise employee achievements and success. This is called Reward Management. Such organisations are always strong performing and have the competitive advantage of being the top performing company as compared to their key competitors.
Acknowledgement of employees is one of the most powerful tools HR can use. It motivates, inspires, and makes use of an employee’s qualities. But the real question is:
“How do you craft and implement a reward system?”
The answer is quite simply: Strategically!
Strategic Reward Management
A reward management system should always be strategically focused. It should also be implemented on a consistent, organisation-wide basis with clear written goals and objectives. It should also be performance based, and rooted in employee data. Creative ideas should also be used to devise the reward strategy. A good reward strategy should have a well balanced approach and should include financial and non-financial incentives.
Financial and Non-Financial Rewards
- Financial incentives include bonuses, referral programs, allowances, and commissions.
- Non-financial incentives include health, flexible working, work-life balance, appreciation, and training opportunities.
- Non-financial incentives can often be more motivating than the financial incentives being offered to the employees.
- According to research in The Management Agenda by McCartney and Holbeche, non-financial recognition was cited by 65% of managers as a popular motivator, while job enjoyment, challenge and personal drive were also mentioned.
- This research also showed that lack of recognition was the biggest demotivator at work.
Making Reward Management Strategic
HR specialists can engage employees and enquire as to what incentives they would like and use those pointers as a starting point to develop the reward strategy. These insights can be gathered through HR Surveys, employee wellbeing questionnaires, and through discussion of the employee’s performance with their line managers. These methods take the opinions of the employees into account, and this is the secret to building an effective reward strategy.
Renowned companies like GE focus on reward management strategies which are based on employee recognition and efforts:
“GE Healthcare realised that continued engagement would be key to sustaining the impact of organisational change. That’s why, after the company restructured its manufacturing site between 2010 and 2014, it doubled down on its engagement and recognition efforts.”
Organisations that craft a reward strategy based on employee needs, engagement and efforts are always winning the game. The flipside of ignoring the employee needs can result in creating disengaged and demotivated workers, eventually resulting in high staff turnover.
The Benefits of Strong Reward Management:
There are all kinds of benefits of implementing a strategic reward management system, some of which are:
- The right reward strategy helps achieve the trust of your employees.
- You can use benefits, bonuses and increased pay to encourage employee loyalty.
- Research has shown that motivated staff will always go that extra mile to contribute towards organisational success and better personal results.
- A successful environment will definitely attract new talent, make existing employees feel rewarded, and help you to retain your top talent.
- A reward strategy that reflects the culture of your organisation can help you attain organisational strategy and objectives.
- Extensive research shows that having a well-defined reward strategy helps organisations attain better financial results than those who don’t implement strategic reward management.
- Strategic employee reward and recognition programs can help employees to become the organisation’s growth partners.
- Making clear policies for reward management means you can provide equal opportunity for each employee to work harder for positive rewards.
In short, rewards and recognition are great investments for organisations of every size. This is why your organisation’s reward system needs to be robust and based on strategy and data.
