Rewarding Employee Performance

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How to Reward Employee Performance
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How to Reward Employee Performance

© Copyright Carter McNamara, MBA, PhD

Major Myths About Rewarding Employees

Myth #1: “Money is the best reward.”

No. Research shows that money does not constitute a strong, ongoing reward in and of itself. It is like having a nice office; it can give a temporary boost in morale and energy. The key roles for money and nice offices are that they can stop people from feeling worse.

Myth #2: “Employees are professionals. They should just ‘suck it up’ and do their jobs.”

That view is outdated. Times have changed dramatically. Workers can no longer be treated like machines. They come at a high price and can cost as much to replace. Workers expect to be valued as human beings. Today, the rewarding of workers is done as a partnership between the supervisors and their workers.

Myth #3: “If I reward every time they do something useful, I will have to reward all the time.”

Employees are mature adults. They do not need to be, and do not expect to be, rewarded for every useful thing they do in the workplace. One of the most important outcomes from regularly rewarding workers is that they believe that their supervisors fully acknowledge their value to the workplace.

Myth #4: “We’re working to address critical problems, not to make our workers happy.”

That is like saying, “This is a wood saw. It should be able to saw wood all the time. It should not ever have to be sharpened!”

Guiding Principles of Effective Reward Systems

There are a variety of ways to reward people for the quality of the work they do in the workplace. For example, rewards can be in the form of money, benefits, time off from work, acknowledgement for work well done, affiliation with other workers or a sense of accomplishment from finishing a major task.

Rewards should support behaviors directly aligned with accomplishing strategic goals.

This principle may seem so obvious as to sound trite. However, the goal of carefully tying employees’ behaviors to strategic goals has only become important over the past decade or so. Recently, the term “performance” is being used to designate behaviors that really contribute to the “bottom line.” An employee can be working as hard as anyone else, but if his/her behaviors are not tied directly to achieving strategic goals, then the employee might be engaged only in busy-work.

Rewards should be tied to passion and purpose, not to pressure and fear.

Fear is a powerful motivator, but only for a short time and then it dissipates. For example, if you have initially motivated employees by warning them of a major shortage of funds unless they do a better job, then they will likely be very motivated to work even harder. That approach might work once or twice, but workers soon will realize that the cause of the organization’s problems is not because they are not working hard enough. They might soon even resent management’s resorting to the use of fear. If, instead, management motivates by reminding workers of their passion for the mission, the motivation will be much more sustainable.

Workers should be able to clearly associate the reward to their accomplishments.

Imagine if someone told you “Thank you” and did not say what for. One of the purposes of a reward is to reinforce the positive behaviors that earned the reward in the first place. If employees understand what behaviors they are being rewarded for, they are more likely to repeat those behaviors.

Rewards should occur shortly after the behaviors they are intended to reinforce.

The closer the occurrence of the reward to the occurrence of the desired behavior in the workplace, the easier it is for the employee to realize why he/she is being rewarded. The easier it is for him/her to understand what behaviors are being appreciated.

Importance of Sense of Purpose and Feeling Appreciated

Finding and training new employees is a substantial cost, no matter the size of the organization. One of the best ways to retain employees is to reward them for their work. One of the primary rewards for working adults is to feel a sense of meaning or purpose in their work. If employees feel that they are serving a useful purpose, they are much more likely to stay at their current job.

A common complaint from employees in small- to medium-sized organizations is that they feel burned out. A common symptom of burnout is to feel unappreciated. One of the best ways to address burnout, and retain employees, is to ensure that they feel appreciated for their work.

Thus, it is critical that organizations give careful consideration as to how they reward their employees. Organizations do not need huge sums of money in order to reward them (besides, the belief that money is the major reward is just a myth). Guidelines in this section will help you to think about what might be the best rewards for your employees and to take steps to ensure that you are providing those rewards.

Guidelines to Rewarding Employees

There is not a set of standard rewards to be used for employees everywhere. Instead, each person has his/her own nature and needs. The following guidelines will help you to determine what might be the best ways to reward your employees.

  1. Reward employees by letting them hear positive comments from customers about how the employees’ activities benefited the customer.
  2. Occasionally have a Board member come to an employee meeting to thank them. This usually means a lot to employees, almost as much as having customers provide positive feedback about the employees’ activities.
  3. Understand what motivates each of your employees. You can do this by applying the “Checklist of Categories of Typical Motivators” in the previous subsection about supporting employee motivation on page 199. A major benefit of this approach is that each employee is afforded the opportunity to explain what motivates him or her.
  4. In each monthly staff meeting, take a few minutes to open the meeting by mentioning major accomplishments of various employees.
  5. Present gift certificates to employees who have made major accomplishments. Guidelines for determining who gets this reward should be clearly explained in your personnel policies in order to ensure all employees perceive the practice as fair and equitable. Allow employees to recommend other employees for awards.
  6. Probably the most fulfilling for employees is to be able to do useful work. Be sure that each employee understands the mission of the business and how his/her work is contributing to that mission. Post your mission statement on the walls. Discuss the action-planning section of your strategic plan with employees so that they see how their activities tie directly to achieving the strategic goals of the organization.

Additional Perspectives on Rewarding Employees

Links to Reward Systems
Rewards and Performance Incentives
The Pay For Performance Myth
How To Make Effort Rewarding
25 Ways to Reward Employees (Without Spending a Dime)
When to Reward Employees with More Responsibility and Money
How to Promote From Within
Rewards and Recognition
Merit Pay: Is It Really the Best Way to Reward Employees?
Do you prefer to hire supervisors and managers from outside the company or promote from within the company?
How to Encourage Everyone to Do Their Best Work


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