The Basics of a Successful Employee Rewards Program
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Reward strategies should be based on years of research dedicated to studying the effects of rewards on employee performance, not the manager’s preference or intuition. Below is information explaining the components of successful employee rewards programs.
Reward Program Types
There are different types of rewards programs that companies can implement. These types are not mutually exclusive, but rather should all be implemented to some degree in order to gain the most desired effect.
1. Individual vs. Team Based Rewards Programs
- Individual rewards – monetary compensation above and beyond salary that is linked to results or accomplishments.This type of incentive program is also known as pay for performance. Examples of this type of reward are: merit pay, bonuses, commission plans and profit sharing. In one meta-analysis, individual based performance programs increased performance by 19% in employees.
- Team-based rewards – monetary compensation that rewards individuals for teamwork and/or rewards teams for collective results.Team-based incentive programs can be extremely effective in increasing individual and team performance. They can also be very effective in shaping employee performance to be more in line with company values and goals. Team-based reward systems have been found to increase employee performance by as much as 48%.
Both individual rewards and team-based rew