How to Implement Performance Rewards Systems
Once you’ve got an effective system in place for measuring and evaluating employee performance, you need to suitably reward the employees who consistently perform well.
Depending on individual circumstances, your performance rewards can include one or more of the following:
- Benefits and perks
Rewards should be scaled to the accomplishments and consistently applied across the company. You wouldn’t give someone a 10% raise just for showing up on time. But a top performer who comes up with a way to save the company 10% in production costs might merit a bonus and prominent recognition among her peers. The main goal behind rewards is to give employees tangible reasons to continue to improve their performance and help the company grow.
Here are a few things to keep in mind as you design your reward system:
- Get employees involved. If you ask employees to help design the system, you’ll get some good ideas plus employees will feel vested in the rewards when they are handed out. Everyone will know exactly what’s needed to earn specific rewards. This also ensures that your reward system will match your employee demographics. Millennials may respond better to real time feedback and public recognition rewards like a badge on a worker’s profile (similar to online gaming rewards), while forty-somethings may enjoy perks like dinner at a local restaurant or a spa retreat. Get to know what your employee population values.
- Tie rewards to company goals. Only reward performance and behavior that directly impacts the company’s strategic goals or bottom line. If you reward fuzzy intangibles like “innovation,” or “initiative,” employees may chalk up a co-worker’s reward as favoritism, and they won’t have a concrete sense of what it takes to “win.”
- Be specific and consistent. Instead of holding a sales contest and announcing a single winner, which, by definition, leaves most employees feeling like “losers,” get specific with individual goals and criteria and then reward all who make the grade. This way, even a lower achiever can be rewarded for reaching a personal milestone, which, by comparison, might be business-as-usual for a high performer.
- Reward behaviors. Rewarding tangible results, like sales goals or customer retentions, is relatively straightforward and something that top performers strive for. But recognition rewards for small behavioral adjustments, such as being on time, collaborating on a team, or minimizing mistakes, can encourage average performers to improve.
- Reward teams. Teamwork is critical to success. So when a team performs well, reward the whole team to help foster cooperation. If it’s clear that some members of the team did much more work than others, consider a tiered team/individual reward system to help prevent any resentment among higher achieving team members.