Why employees need both financial and non-financial rewards
Recognising and rewarding employees is one of the best ways to encourage a great company culture and improve the performance of a business. When an employee feels their hard work is being recognised and they’re being fairly rewarded for their achievements, they’re more likely to go above and beyond in their role.
So how should companies reward their people? Well, there is a huge variety of ways to recognise and reward employees from gift cards and end-of-year bonuses to Employee of the Year awards. However, given that many people have been hit hard by the current economic climate, plenty of companies have understandably focused on providing financial incentives for their teams.
But while we all love a bit of extra money in our back pockets, especially during the current cost of living crisis, any employee will tell you that money isn’t everything. In fact, research shows the two leading factors influencing employee motivation are offering financial rewards and bonuses and showing recognition. Ultimately, a workplace with a recognition-rich culture has a place for both financial and non-financial rewards and the best way to show gratitude in the workplace is to use the two in unison and get creative with how you reward your employees’ hard work.
WHY YOU SHOULD TAILOR YOUR REWARD AND RECOGNITION OFFERING
When implementing reward and recognition in the workplace, it’s important to think about the different needs of your team. Everyone is unique and will be driven by different things, so taking a one-size-fits-all approach to your reward and recognition initiative will quite likely fail to reach and motivate all your employees. Take into consideration how others like to receive appreciation, identify the correct response for different types of success and ensure your employees are praised in a variety of ways that will boost both their morale and financial wellbeing. With that in mind, here are the benefits of delivering both non-financial and financial rewards and how the two approaches can be used together to encourage and engage your team.
THE BENEFITS OF NON-FINANCIAL REWARDS
We’ve all heard the phrase ‘money can’t buy happiness’ but from a business perspective, money alone also can’t buy loyalty or engagement. Many individuals nowadays want more than a salary; instead, they want an experience, culture and company values that align with their own. That’s not to say financial incentives don’t have their place, but in order to really reach and inspire each and every one of your employees, you need to use the combined influence of both monetary and non-monetary rewards.
Another problem with recognition schemes that use financial rewards alone is that they can often result in a short-term solution for a long-term challenge. There isn’t a quick fix for engaging disengaged employees, and money motivators on their own won’t get to the root of the problem. So, it’s important to keep all of this in mind when deciding the best way to reward and recognise success in your workplace.
Non-financial rewards such as verbal praise and public recognition are fantastic at boosting overall morale, bolstering your team and giving them a real sense of value which, in turn, will help engage and fulfil them. Promoting gratitude, generosity and kindness in this way will also contribute to a thriving company culture and employee experience. If your company is looking to integrate reward and recognition for the first time or change its approach to how it congratulates employees, a great place to start is with a non-financial peer-to-peer recognition scheme. Not only will this help reinforce business values and a provide cost-effective approach to engaging and encouraging your team to work efficiently, but it will also help to foster a culture of generosity and gratitude and boost self-confidence in employees. Recognition and praise from a colleague or manager can send a stronger message of thanks than a simple raise or bonus, especially when this also involves feedback from a manager on how they can further improve and progress in their role and beyond.
TOP NON-FINANCIAL REWARDS
Peer-to-peer recognition is a great non-monetary approach to celebrating employees’ successes and contributions. It empowers individuals to freely show gratitude and reward hard work, regardless of seniority. Not only will this have a positive effect on overall satisfaction, but will also help to build strong relationships between colleagues and result in an ongoing cycle of generosity and collaboration. In fact, peer-to-peer recognition is 35.7% more likely to have a positive impact on financial results than manager-only recognition.
Public recognition, such as being recognised as employee of the month or year, will positively impact employees’ morale and help to drive engagement year-round. By implementing a scheme like this, you’ll be promoting healthy competition as well as encouraging individuals to create positive habits and work to the best of their abilities. Plus, holding regular big events is the perfect opportunity to encourage remote employees to join in with team events in person, making them feel more included.
Employee of the year awards
Private recognition also has its place in your reward and recognition initiative. Individuals want the chance to progress and develop in order to feel fulfilled in their role, so individual praise and feedback from a manager or senior colleague are important in influencing job satisfaction, career growth, and in turn, the employee experience as a whole. Encourage your managers to touch base with their teams regularly, give praise and feedback as often as possible and remind them that a simple ‘thank you’ can go a long way.
Praise and feedback from managers
Flexible working arrangements can bring many benefits to an employee’s life, including giving them a stronger sense of autonomy. Making employees’ work locations and hours flexible is also a great way to help improve work-life balance and prevent burnout and feelings of dissatisfaction, all of which influence employees’ performance and engagement. It also demonstrates to your team that their wellbeing is a priority, and that hard work will be rewarded generously. The same goes for increased holiday entitlement. This is why offering both as a collective incentive is a very popular way to show your appreciation in a cost-effective way.
Flexible working and extra holiday
THE BENEFITS OF FINANCIAL REWARDS
While non-financial incentives are valuable, financial incentives can also be an extremely beneficial motivator in the workplace and offering them can be a very appealing quality when looking to retain and attract talent. In fact, a study from the Harvard Business Review showed that performance-related pay was positively associated with job satisfaction, organisational commitment, and trust in management.
Offering monetary rewards in return for hard work is a great way to support your employees’ financial wellbeing, by providing a valuable opportunity for them to save money. A points-based reward scheme is a way to offer flexibility and choice to your employees, as it gives them the chance to buy an item or experience using their points. A system like this enables the recipient to choose something useful or personal, whatever their needs and priorities are, such as a digital voucher to treat themselves or help with their everyday expenses. This means the reward is relevant and meaningful to the employee and makes your company’s recognition culture more inclusive. If your employees know that organisational success equals added financial rewards – and therefore increased financial security for them and their families – they’ll be more likely to work efficiently and produce work to the highest of their capability.
Financial rewards also have their place when celebrating a special occasion, notable achievement, personal milestone or life event such as a Long Service Award or birthday. It’s important that these things are celebrated in a way that stands out and encourages co-workers to participate and celebrate, specifically to build culture and enhance the social wellbeing of your team. Financial rewards show the recipient that what they’ve done deserves extra attention and something tangible. Ultimately, they are ideal for when you want to distinguish good from great and take that ‘thank you’ a little further.
TOP FINANCIAL REWARDS
A small token of thanks is a worthwhile investment, especially if there is meaning and thought behind it. The personal value of a gift when recognising a job well done usually exceeds a simple cash reward. In some circumstances, a ‘thank you’ gift such as a carefully chosen retail voucher and a bottle of wine or chocolates is ideal for boosting individual and organisational morale.
Rewarding employees with a bonus at set times during the year, whether that’s quarterly or annually, is a great way to incentivise them to work to the best of their ability each day and reach their performance targets. Enticing your team with performance-based bonuses and encouraging them to work towards a common goal can also help to inspire them to contribute and collaborate more, as well as spark some friendly competition.
A points-based redemption service works by allowing a sender to gift points to a recipient. These points equal a specific monetary value that the recipient can use to redeem a reward of their choosing. Arguably the biggest benefit of this type of scheme is that it’s convenient and low maintenance. But that’s not the only reason why you should consider implementing a points-based scheme. It also enables managers or peers to give points at their convenience with a personalised message that gives the recipient recognition that’s truly meaningful.
While your employees are sure to enjoy a monetary boost from time to time, you shouldn’t, nor needn’t, rely solely on money to motivate and retain your employees. Financial rewards, when not delivered in the correct way and at the correct time, can sometimes end up feeling transactional and disingenuous.
But that’s not to say they don’t have a place in your employee reward scheme. It’s all about thinking outside of the box and finding the right ‘thank you’ to suit the individual and circumstance. For a huge number of people, particularly millennials and Generation Z, money isn’t the only motivating factor in the workplace. They are looking for an experience, day-to-day challenge and fulfilment, growth opportunities and a sense of value and belonging – all of which come from a culture where recognition and appreciation are ingrained.
Ready to step up your reward and recognition offering?
Now you know the value of properly recognising and rewarding your people for their hard work and achievements, it’s time to think about implementing a scheme that works for your company and its employees. So, why not get in touch with us and see how we can help you build a personalised reward and recognition scheme that effectively boosts your people?
With over 20 years of experience in developing and executing reward and recognition, we know a thing or two about helping people feel seen, heard and respected in the workplace. But don’t just take our word for it! Book a chat today to get to know us better and discuss how we’ll collaborate to get the best for your employees.