A rewards system documents an individual or a team’s efficiencies, helping to motivate exemplary employee performance using a standard procedure. Every workplace has a unique, institutionalized motivation culture depending on many factors such as size. If HR follows the principles evaluated below while making reward policy decisions, it becomes easy to monitor employee performance.
A well-thought rewards system promotes desirable organizational behavior, drives business success, and strongly reinforces a company’s culture among the workers. In order that the program becomes effective, involve employees during design and streamline it with the organization’s strategic business goals.
The Key Principles of a Successful Rewards System
The following are the key principles to consider while designing and implementing an effective rewards system.
Principle #1: Studies conducted on employees across various sectors show that recognition (intrinsic rewards) is superior to extrinsic, monetary rewards.
Principle #2: Over and above, always base the reward system on core company values, goals, and aspired employee performance.
Principle #3: Keep things simple, unique, spontaneous (unexpected and non-routine), and consistent to draw maximum impact from the rewards.
Principle #4: Always observe the cardinal reward philosophy: It’s not what you give, but how you give it. Be genuine.
Principle #5: Add a personal touch to every reward, even when you recognize teamwork. This motivates employees on an individual level.
Principle #6: Be transparent and fair while rewarding. Ensure employee engagement throughout the design process.
It is important to underline the two most important principles of a successful rewards system, namely;
- Transparency and fairness, which helps build trust in the reward process.
- Make sure motivation is consistent and equitable. This fosters worker contentment and dedication to outperform the organizational goals.
Relevance of Reward Management Principles to Employee Performance and Organizational Culture
1. Provides employers with the ability to meet and exceed productivity targets.
2. Organizations can better retain valued talent, attract the highest quality of employees, and significantly decrease turnover rates while saving on training costs.
3. Creating a culture of recognition further motivates employee performance.
4. Rewards are directly proportional to employee confidence, engagement and commitment.
5. A principled reward strategy leads to job satisfaction among workers, thus creating internal role models for other employees in the organization.
6. It creates a culture of on-going improvements and individual development opportunities, maximizing organizational performance.
Wrapping Up
Set and communicate clear objectives to motivate employees. A positive workplace leads to employee satisfaction and happiness, positively impacting on the employer brand. Successful HR managers critically evaluate the principles of reward and its importance to organizational culture and performance management while strategizing.
Further Reading
Reward Schemes for Employees and Management
Performance Management and Rewards System (PDF)
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