Understanding Rewards and Employee Engagement

Both rewards (which usually have a cost associated with them) and recognition (which is typically free or of minimal cost) are essential components of an effective employee engagement strategy.

If you have a child — or, for that matter, a dog — you know that positive reinforcement is key. It's not enough to simply tell said child (or dog) how you want him to behave; you must also recognize his good behavior with a kind word and perhaps even reward him with, say, a treat.

The same is true in business. It's not enough to simply communicate your business goals to your staff and measure their progress against them. You must also recognize and perhaps even reward them for achieving those goals.

What do rewards have to do with engagement? In and of themselves, rewards don't foster engagement, but they do help foster achievement, which drives engagement.

So, what constitutes a reward? Try closing your eyes and thinking of the word reward. What comes to mind? Maybe you thought of a cartoon bag with dollar signs on it, Scrooge McDuck style. Or maybe you envisioned a “Wanted, Dead or Alive” poster with the word REWARD emblazoned across the bottom. Either way, what came to mind was cold, hard cash.

It's no different in business. The vast majority of employers reinforce our perception that rewards are analogous to money, cash, coin, dough, bread, Benjamins, or whatever other term comes to mind when you think of bonuses, raises, and promotions.

What an opportunity lost! Rewards can be about so much more than giving cash. The fact is, you have any number of tools available to you when it comes to rewarding employees, with money being just one. Here are some more:

  • Base salary: Yes, this refers to money. Generally speaking, to maintain engagement, you should compensate employees at, slightly above, or slightly below the industry-standard midpoint. If you go too high, you risk your competitive position in the marketplace.

  • Incentive compensation: Offering employees a more significant share of the company's overall gains fosters engagement by reinforcing the company's and employee's mutual commitment. Not only does it say, “When we win, we win together,” but it also proves it.

  • Promotions: Companies with engaged cultures promote from within. Rewarding achievement with stretch assignments and promotions is critical to building a high-performing and engaged workforce.

  • Training and development: Sending deserving employees to offsite training programs, executive education programs, conferences, or seminars should be part of your total rewards strategy. Training represents a trust-building reciprocal commitment: How can we, as a company, help you, the employee? And how can you, the employee, help us?

  • Task team or committee involvement: Many organizations populate task teams or committees by selecting volunteers or on an “it's your turn” basis. Employers with an engaged culture, however, populate these teams with their top performers, creating a sort of golden aura over these groups. The result? Employees view their involvement in these groups as a reward for their performance.

  • Time off: More and more often, employers are offering employees time off in lieu of a paid bonus as a reward for their accomplishments. As work-life balance continues to be a growing theme in the workplace, you'll find that both Generation X and Generation Y often favor time off instead of cash bonuses.

  • Flextime: Rewarding top performers with increased flexibility is wise. They've earned the right for the added freedom. Besides, more often than not, they'll respond to this increase in flexibility with higher work output and engagement!

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