Date Published: December 12, 2023 - Last Updated 74 Days, 18 Hours, 21 Minutes ago
How do I better motivate my team and retain top talent? Do I include performance or merit pay? Should I offer a flexible workplace schedule? How do rewards like stock option schemes, professional development schemes, extra vacation days, and flex days impact employee engagement and team success?
Reward management, a complicated task, becomes more daunting for transformational leaders who are committed to fostering a deep connection with each team member and providing personalized experiences. A team of ten individuals can derive motivation and feel appreciated in ten different ways. So, in a diverse team, where motivations vary, how do I create a compelling rewards system that resonates on an individual level?
Strategic reward management focuses on the policies that guide employee rewards with the aim of celebrating performance, motivating employees, increasing productivity, and retaining top talent. A one-size-fits-all approach to rewards management falls short. Instead, an effective reward system aligns with your team, culture, and organizational goals. In addition, an effective rewards system is adaptable and constantly evolving alongside employee needs and company objectives.
Here are some strategies for creating a compelling reward system.
If your reward system does not produce results, it may be because it is not significant to your team members. Receiving input from your team members is crucial for the effectiveness of your reward system. Gathering their insights on personal motivating factors and valuable rewards will reveal commonalities among team members. This helps facilitate the identification of rewards that will be suitable across the team. This collaborative approach also ensures your reward system is comprehensive enough to be tailored to individual preferences.
Your reward system is a pivotal force in shaping your culture because it sends a clear message about what behaviors and results are valued. According to the Human Capital Hub, an effective rewards management system can instill a sense of purpose among employees by rewarding behaviors and outcomes crucial to achieving strategic goals. Lastly, aligning rewards with your company vision, mission, core values, and strategic objectives is instrumental to increasing employee engagement, thereby improving productivity and retention.
A practical tip is to highlight the connection between your organizational objectives and values within the reward system. This ensures that you avoid the common pitfall of rewarding A while hoping for B. For example, offering a commission on achieving $100,000 within a month in a loan company might inadvertently lead agents to focus on higher loan amounts, neglecting other customers with lower requests due to a perceived insufficient effort-to-gain ratio.
It's Tangible and Intangible
A comprehensive rewards system strikes a balance between tangible and intangible incentives. Tangible rewards provide visible and quantifiable value and can be financial or non-financial in nature. Examples in this category include cash bonuses, gift cards or baskets, pay raises, gifts or free merchandise, and gym membership. On the other hand, intangible rewards are invisible, yet highly meaningful in value. Examples here include verbal praise from a manager, a thoughtful thank you note, awards or company-wide recognition, access to free professional development training, and a flexible workplace schedule.
Because individuals are motivated differently, it is important to have a blend of tangible and intangible rewards within your rewards system. If possible, provide flexibility, where team members can choose their preferred reward. This adds a further personal touch, ensuring a more tailored and motivating experience.
It Serves the Short Term and Long Term
These types of rewards focus on motivating performance over a period of time. Short-term rewards target the immediate or recent performance period, for instance, monthly or quarterly basis. They are usually based on the immediate review period, involve one-time payments, and are known in advance by the employee. Performance pay, such as a sales agent earning a commission after exceeding his monthly sales target, is an example of a short-term reward.
A long-term reward is designed to sustain motivation over a longer duration. An example is stock ownership. Profit sharing could also fall under a long-term reward as it is dependent on the organization achieving profitability. These rewards help foster a personal investment in the organization’s success and help nurture a lasting commitment from the employee.
It Includes Both Results and Behaviors
An effective reward management system includes a mix of results (what an employee does) and behaviors (how the employee accomplishes the results). This approach helps to discourage employees from adopting a “by any means necessary” mindset and prevents undesirable practices, like cutting corners or committing fraud to achieve their targets. For instance, a reward management strategy for a sales agent would include a sales target, customer satisfaction score, and quality assurance score. This highlights both the results and behaviors that are important for customer loyalty and retention.
The final success factor is that your reward system is fair and transparent. Your team members must believe that there is no favoritism, and they have an equal opportunity to receive rewards. Without fairness and transparency, your reward system becomes ineffective, failing to achieve its purpose of inspiring, motivating, and retaining your top talent.