| 5 criteria of an effective reward system |
 When workers who leave or who have left previous work are asked for the reason why, a significant number of them will give lack of recognition as the reason. Most workers apply for a job because of the compensation. However, why are there people who stay in a company even if they know that they could go somewhere else where the pay is better? Or, why are there well paid employees still leave this supposedly attractive job? It can be said that though compensation is what makes an employee get a job, it is but the recognition he gets for his efforts that makes him stay. Rewards are very important in keeping employees reinforced and motivated. However, even if the company has established a reward system, it seems that the rewards do not yield the expected outcome. One reason for this maybe that the reward system is not managed effectively. What kind of rewards should be given? How should they be given so as they serve their purpose? Here are a few criteria on what an effective reward system should be. Must apply to everyoneFor a healthy morale for the entire organization, everyone must qualify for the reward. It may be all the members of the team or everyone who is part of the organization depending on the scope of the performance measures. Some organizations have “Top Employee of the Month” awards. Although this still provides a competitive environment, this only targets those who are already on the top of the ladder. This however singles out those who are not on the top level but are still doing well. Even if the top performers are motivated, the other supposedly good performers may become discouraged or under motivated. This is why only few people are motivated to be chosen as the “salesperson of the month” but are highly motivated with incentive programs based on reaching an established quota.It might be better if group rewards are given. Each member is motivated to do better at the same time; they feel a sense of cooperation and camaraderie among other members of the team. This will also teach the employee that his individual effort is actually a part of accomplishing his team’s goal. On a larger scale, he is able to feel a sense of belongingness to the company and a sense of responsibility in accomplishing company goals.
Must be intrinsically and extrinsically motivatingGiving of extrinsic rewards such as an incentive, an increase in the salary or a new office space motivates employees to perform better. However, extrinsic rewards may lose their value over time. Employees will later on think that these extrinsic rewards are automatic payoffs for their performance. When employees feel this, they will no longer feel extrinsically motivated by such rewards. Moreover they will lose their intrinsic motivation as what push them to work are the things they get. This is what psychologists mean when they say that extrinsic rewards undermine intrinsic motivation. It is suggested that to prevent this undermining from happening, managers need to have a mixture of extrinsic and intrinsic rewards. While giving material things for rewards, it is also good if you boost his self esteem by telling him how valuable his individual contribution is to the achievement of the company goals. This will nurture his love for work and will make him perform even better.Must have a clear relationship between rewards and job performanceWhen planning a reward system, you must first establish the performance measures or standards. In doing so, you must make sure that they are consistent with the company goals. You must also take into consideration the employee demographics. Performance standards should be well-defined and must be challenging but still achievable. For a reward system to be effective there should be a clearly established connection between the rewards and the job performance. This means that employees should understand that better/more performance means more rewards in the end. When he has seen this connection, he feels that the expected result of his action happened because of his own efforts. This then makes him feel confident of his abilities and so he feels reinforced.Must be immediateRewards should be given immediately following the recognition of the achievement. This is necessary so that the connection between the reward and the job performance is strongly established. If it is too late, the employee might not be able to make a strong association that he was able to get the reward because he did well in the company. Delayed rewards then fail to yield the desired outcome which is to reinforce good performance and behavior.It should also be noted that it is more beneficial if the giving of rewards and recognition are made known to everyone in the company. This will not only boost the recipients’ self-esteem but will also lead to a competitive yet friendly environment for the rest of the employees. Rewards though costly will bring forth more benefits to your company. As mentioned in the early part, if employees fail to be recognized they will leave. You will not only lose skilled employees but also money spent in hiring and training new employees. To counteract the law of diminishing returns (things lose value over time), it is better if you do a rotation of rewards. Avoid giving the same thing for so long. The effectiveness of reward systems depend on how well it is managed. The 5 criteria mentioned above will guide you on what kind of reward to give and how you deliver it to your employees. Rewards will not just make your employees more motivated and more productive but will of course; make you reach your company goals.
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