Employees are hard workers, recognized for being one of the pillars behind a company’s success. Keeping them happy and motivated at work is important, but it is not always easy. Surely, good paychecks and benefits help a lot, but they are not everything. Employees also long to feel valued, respected, and appreciated at work. That is where the reward system can make a difference. Rewarding employees is a great way to show recognition and appreciation, lift their morale, and push them to do their best at work.
What many employers do not realize is that a reward system also comes with its own advantages and disadvantages. Not all reward system works the same way for all businesses. Some systems can boost motivation and performance, while others can cause unnecessary rivalry and competition. So, let's find out the pros and cons of the most common reward systems.
1. Points-based Reward System -
This is the kind of reward system that allows workers to earn points if they meet criteria. These criteria can be hitting milestones, meeting team goals, or even showcasing coveted behavior. With time, employees can collect these points and redeem them for merchandise, gift cards, and experiences.
Advantages -
- Employees stay motivated to do well over time, not just for short-term goals.
- Earning points makes it easy to see how much someone has achieved.
- Adding things like leaderboards can make it feel like a game, which keeps employees more interested and makes work more fun.
Disadvantages -
- Employees may focus more on getting points than on growing or improving in the long run.
- If some employees fall behind, they could feel discouraged and stop trying if they think they cannot catch up.
2. Recognition-based Reward Systems -
This kind of reward system gives verbal praise, shout-outs at meetings, public acknowledgment, and awards to employees and acknowledges their efforts. Recognition-based reward system gives importance to the act of appreciating employees both formally and informally on a regular basis.
Advantages -
- Regular praise helps employees feel respected and appreciated.
- Simple things like saying “good job” or recognizing someone in front of others can make a big difference without costing much.
- When employees feel their work is noticed, they are naturally more driven to do well.
Disadvantages -
- Some employees may want actual rewards instead of just praise.
- If recognition is not given equally, it might look like favoritism and cause frustration among employees.
3. Performance-based Reward System -
This is another kind of reward system that recognizes employees based on their performance and specific achievements. This can be set at hitting specific targets, exceeding metrics of team performances, or even completing hard projects. The rewards can include bonuses, incentives, or even promotions.
Advantages -
- Employees clearly understand what they need to do to earn a reward.
- Clear goals encourage employees to do their best and take responsibility for their work.
- Trying to do better than others can help improve everyone’s performance.
Disadvantages -
- Focusing too much on individual success might hurt teamwork.
- Employees may care more about their own goals than helping the team do well.
Balancing Pros and Cons -
Every employee is different, and they feel motivated by different things. Understanding what drives them in the first place would save you a lot of time and effort. It also increases your chance to use the right reward system for the right employee.
When you have understood everyone’s preferences, you can also try offering flexible reward choices to your employees. Their options could be redeemable points, extra time off, or even cash bonuses. This approach will keep your employees engaged and make sure your rewards have value.
