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 The Best Ways to Reward Employees
Having an effective reward program in place can help solve
many of your HR issues.
Every
company needs a strategic reward system for employees that
addresses these four areas: compensation, benefits, recognition
and appreciation. The problem with reward systems in many
businesses today is twofold: They're missing one or more
of these elements (usually recognition and/or appreciation),
and the elements that are addressed aren't properly aligned
with the company's other corporate strategies.
A winning system
should recognize and reward two types of employee activity—performance
and behavior. Performance is the easiest to address because
of the direct link between
the initial goals you set for your employees and the final
outcomes that result. For example, you could implement an
incentive plan or recognize your top salespeople for attaining
periodic goals.
Rewarding specific
behaviors that made a difference to your company is more
challenging than rewarding performance, but
you can overcome that obstacle by asking, "What am I
compensating my employees for?" and "What are the
behaviors I want to reward?" For example, are you compensating
employees for coming in as early as possible and staying
late, or for coming up with new ideas on how to complete
their work more efficiently and effectively? In other words,
are you compensating someone for innovation or for the amount
of time they're sitting at a desk? There's obviously a big
difference between the two.
The first step, of course, is to identify the behaviors
that are important to your company. Those activities might
include enhancing customer relationships, fine-tuning critical
processes or helping employees expand their managerial skills.
When business owners think of reward systems, they typically
put compensation at the top of the list. There's nothing
wrong with that, since few people are willing or able to
work for free. But the right strategy should also include
an incentive compensation plan that's directly linked to
the goals of your company for that period. You might want
to include some type of longer-term rewards for key individuals
in your organization. Historically, this has often included
some form of equity ownership.
Benefits are another type of reward in a strategic reward
system, and your employees are definitely going to notice
the types of benefits you provide. Companies that don't match
or exceed the benefit levels of their competitors will have
difficulty attracting and retaining top workers. This is
one reason an increasing number of businesses are turning
to professional employer organizations like Administaff to
gain access to a broader array of company benefits.
However, you can't diminish the importance of recognition
and appreciation as integral components of a winning strategic
reward system. These two elements rarely receive the attention
they deserve from business owners, which is amazing because
they're the low-cost/high-return ingredients. Employees like
to know whether they're doing good, bad or average, so it's
important that you tell them.
Recognition means acknowledging someone before their peers
for specific accomplishments achieved, actions taken or attitudes
exemplified through their behavior. Appreciation, meanwhile,
centers on expressing gratitude to someone for his or her
actions. Showing appreciation to your employees by acknowledging
excellent performance and the kind of behavior you want to
encourage is best done through simple expressions and statements.
For example, you might send a personal note or stop by the
employee's desk to convey your appreciation. Another approach
is to combine recognition and appreciation in the form of
a public statement of thanks in front of the employee's co-workers
or team, citing specific examples of what they've done that
has positively impacted the organization.
Now that you know what it should include, it's time to review
your strategic reward system. Does it address compensation,
benefits, recognition and appreciation? Is it aligned with
your remaining business strategies? Is it driving the right
behaviors for your company, as well as your performance goals?
If it needs fixing, don't wait. It can mean the difference
between your business' success and failure.
Originally published January 10, 2005 by Entreprenuer.com
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