Understanding employee rewards
Employee rewards go beyond base pay to provide additional compensation for performance, contribution, or loyalty. While recognition addresses the need to feel valued, rewards provide tangible benefits that demonstrate that value materially.
Monetary rewards
- Performance bonuses
- Profit sharing
- Spot bonuses
- Salary increases
Non-monetary rewards
- Gift vouchers
- Extra leave days
- Experiences
- Development opportunities
Types of rewards
Organisations use various reward approaches:
Common reward types
Reward program design
- Clear criteria: Define what behaviours or outcomes earn rewards
- Transparent process: Employees understand how rewards are determined
- Timely delivery: Rewards close to the achievement have more impact
- Fair distribution: Consistent application of criteria across employees
- Budget alignment: Sustainable within financial constraints
- Tax consideration: Understand FBT implications
Rewards don't fix bad management
Money can't compensate for poor leadership, toxic culture, or lack of development opportunities. If employees are disengaged due to management issues, rewards provide temporary motivation at best. Fix fundamental problems first.
Reward best practices
Design principles
- Align rewards with desired behaviours
- Make criteria achievable yet challenging
- Offer variety (monetary and non-monetary)
- Combine individual and team rewards
Implementation
- Communicate the program clearly
- Deliver rewards promptly
- Track effectiveness and adjust
- Consider tax implications
Common reward mistakes
Rewarding the wrong behaviours
Rewards shape behaviour. If you reward individual sales but want teamwork, you'll get competition not collaboration. Ensure rewards align with desired outcomes.
Entitlement creep
Regular rewards can become expected rather than appreciated. Vary rewards, ensure clear performance links, and don't let bonuses become de facto salary.
Unfair distribution
Rewards perceived as favouritism damage morale. Apply criteria consistently. If employees don't understand why some get rewarded and others don't, trust erodes.
Key takeaways
Employee rewards provide tangible compensation for performance and contribution. Effective reward programs have clear criteria, timely delivery, and fair distribution. Balance monetary and non-monetary rewards, and ensure base pay is fair before adding performance rewards.
RosterElf's staff management helps Australian businesses support employee rewards through features like shift preferences that improve work-life balance.
