Despite managerial efforts, some extrinsic employee rewards programs fail to produce the desired results. Below are the top eight reasons why rewards programs fail:
1. Rewards programs are too cash-focused
Solution: Managers must combine cash rewards with material and social rewards. By including all three components, managers will ensure that their rewards programs have the most desired outcome.
2. Employee don’t appreciate the rewards
Solution: Rewards should be personalized so that they have the largest impact on each employee. Managers should spend time understanding the personal needs of their employees and match the reward to fit their needs.
3. Benefits transform into entitlements
Solution: End employee entitlement by rewarding performance on a variable ratio and/or variable interval schedule of reinforcement. Employees will be less likely to know when they will be rewarded, more surprised by the reward and feel less entitled.
4. The wrong behavior is rewarded
Solution: Only reward behavior that will result in an increase in performance. Identify acceptable behavior and performance targets and consistently reward employees that meet the predefined standards.
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5. There is too long of a delay between performance and reward
Solution: Offer immediate rewards for performance using computerized incentive programs. Ensure that the program has a social component in order to increase its impact on performance.
6. Too many one-size-fits-all rewards
Solution: Personalize each reward to each employee or allow employees to choose their own reward. This will maximize the impact of the reward and increase motivation to obtain the reward.
7. Use of a single reward with short-lived motivational impact
Solution: Ensure that reward programs are long-term (last longer than 6 months) and that rewards are given periodically throughout employment.
8. Continued use of demotivating practices (e.g. layoffs, excessive executive compensation)
Solution: Ensure that reward practices as well as executive compensation amounts are transparent. When employees can freely access this information, they perceive the practices as more fair.
Identifying the cause of a failing rewards program is essential in fixing it. Managers should consider each of the top eight reasons why rewards programs fail and engage in reparative action or take proactive steps to increase the effectiveness of their program before it starts to fail.
 Jeffrey, S.A. (2009). Justifiability and the motivational power of tangible noncash incentives. Human Performance, 22, 143–155.
 Kreitner and Kinicki. (2004). Organizational Behavior. Boston. MA: McGraw Hill, Irwin.