Employee Rewards System
An organization should always have defined goals and objectives. A successful
organization will ensure that its employees’ personal goals and career goals are attuned to the
organization’s goals so that a synergy is achieved and employees are motivated to further the
organization’s goals and objectives. Having a proper Employee Rewards System or Incentive
Plan is a tool that Management can use as an external motivation to keep employees focused
on the important issues. “A well-designed employee incentive compensation plan will make
each department or individual focus on things they can control. The best plans encourage the
behaviors that create successful results.” (Schoeffler, 2005). The Employee Rewards System
should be effective and achieve the desired results thus leading towards organizational
success.
Employee Rewards System should reward outstanding performance that achieves
results beyond expectations. Rewarding for expected work activities are counter-productive
and only work that is over and beyond the assigned duties or exceptionally well performed
should be rewarded. “A good incentive plan must be quantified, must be a predictable result
to the employee and must be directly related to measurable performance beyond the norm.”
(Normand). Employee should be clearly aware of the link between their efforts and the
rewards they receive. Performance management programs should be put in place that will
help the organization to plan employee performance, monitor performance through
measurement and feedback, assess performance against established goals, determine
employee development needs, and recognize and reward goal achievement. Rewards should
be used to strengthen good behavior and productivity. Rewards Systems should be used as a
way to reinforce positive behavior.
Aspects of work that may be rewarded are working beyond the call of duty, taking
initiative, helping others in various areas, reliability, exceptional attendance record,
outstanding customer reports, completing a project before time, exceptional team-work and
productivity etc. A points system may be designed to quantify all these aspects on a scale of 1
to 10, with 1 being the lowest and 10 the highest. The points system must be very well brain-
stormed and planned in such a way that all points scales for the various aspects are as
uniform as possible. These point scales can then be used to calculate the points earned by
different employees and rewards may be given accordingly. For professionals working in
customer relations, using customer reports is a good way to reward outstanding performance
of employees.
Usually Employee Rewards Systems that reward individual employees and teams are
more successful that profit-sharing plans. Profit-sharing plans are a way of rewarding all
employees for overall success of the organization and profit-sharing does not recognize
outstanding performance of individual employees. As such, employees who perform
excellently may feel deprived of any tangible rewards for their exceptional performance.
Thus employees will not have the urge to perform beyond expectations. An Employee
Reward System that focuses on rewarding individual employees and teams will work as a
driving force for employees to perform far better and thus work towards achieving the
organization’s goals and objectives. On the other hand, profit sharing plans have been known
to enhance employees’ commitment to organizational goals and improve employee focus on
profitability hence profit sharing plans can also be included in the rewards package as a long-
term measure.
A good Employee Rewards System should have three components : immediate, short-
term and long-term. “The typical employee incentive plan should include a three-tier
approach of immediate recognition for a job well done, short-term rewards for performance
over a month or quarter, and long-term rewards for being a loyal employee over the years.”
(Schoeffler, 2005)
Immediate rewards : Employees should immediately see the effect of their
outstanding performance. These immediate rewards could be in the form of praise,
announcement of a special award and announcement of a cash bonus to the employee or
group of employees. When an employee is praised, the senior manager should make sure that
it is in the hearing of other employees so as to give a “feel-good” feeling to the employee
with outstanding performance.
Short-term Rewards : Short-term rewards could be in the form of monthly or
quarterly rewards based on performance. Such rewards could be lump sum cash benefits,
monthly or quarterly awards for the best performance in different fields, special gifts for
exceptional performance etc. While planning rewards it should be kept in mind that not only
individual employees but also teams should be rewarded for outstanding team performance.
In some areas like service and administration, team performance is crucial and hence teams
that perform excellently should also be the recipients of rewards. Incentive gifts also help to
strengthen the relationship between employers and employees. “Aside from being a cost-
effective means of recognizing success, incentive gifts also serve to enhance the bond
between employers and staff members.” (Yokoyama). Incentives gifts are usually given to
boost employee morale, improve customer service by encouraging employees to give their
best, enhance productivity and foster teamwork.
Long-term Rewards work like a golden handcuff. An employee who has been
performing well and has accumulated a treasure chest of long-term rewards will think twice
of leaving his current job for another job elsewhere. Long-term rewards could be in the form
of offering incremental stock options or cash benefits that can only be redeemed after many
years or at retirement. Such rewards work well to retain good employees.
A good Employee Rewards System that is properly implemented will always help an
organization to achieve its goals and objectives. A poor Employee Rewards System is a waste
of time, effort and money. Organizations should realize the benefits of an effective Employee
Rewards System. Appropriate rewards plans should be developed for all lines of business
within the organization. Organizations should carefully define the critical steps necessary
towards achieving their goals. Organizational goals could be sales increase, revenue increase,
client retention, service satisfaction, improving productivity etc. “The critical steps for each
of these goals need to be mapped out.” (Schoeffler, 2005). Employee Rewards Systems
should be geared towards improving performance in these critical steps. The goals for the
employees should be attainable and realistic and the Rewards System should fit into the
organization’s overall business strategy and thereby improve its profitability. Thus a properly
implemented and well-designed Employee Rewards System will go a long way in achieving
the organization’s goals and objectives and improving productivity in the long run.
References :
Normand, Bob. How to Design a Good Incentive Plan. Business Performance. Retrieved on
Apr 3, 2008, from
http://www.businessperform.com/articles/incentive_plan_design.html
Schoeffler, Bill. (April 18, 2005). Employee Incentive Plans: Make Them Worthwhile.
Insurance Journal. Retrieved on Apr 3, 2008, from
http://www.insurancejournal.com/magazines/west/2005/04/18/features/54614.htm
Yokoyama, Mark. When to Use Employee Incentive Gifts. Ezine Articles. Retrieved on Apr
3, 2008, from http://ezinearticles.com/?When-To-Use-Employee-Incentive-
Gifts&id=647448