Designing a Reward System

“Designing a Reward System” Tiffany Hautau Rewarding and recognizing employees is a ticklish business. It can motivate people to explore more effective ways to do their jobs – or it can utterly discourage such efforts. Here are a few tips and traps: Establish a clear link between what people are rewarded for and the organization’s priorities. Does everyone see and understand the relationship between their improvements and financial rewards? Too many profit-sharing plans, for example, are disconnected from daily work. The effect of cost control or customer satisfaction efforts on the bottom line is so fuzzy that it’s meaningless.

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Be careful when offering money or recognition for employee suggestions. This can lead to conflict rather than cooperation. Individuals and groups often end up jealously protecting their ideas or arguing about the source of ideas. Suggestion systems also separate idea generation from implementation. Effectiveness is a function of how strongly ideas or strategies are accepted and then implemented by the people who can make them work. Suggestion systems work best in traditional “command and control” or paternalistic organizations. Workers come up with ideas and managers decide which ones get implemented.

In a highly involved organization, teams generate and test ideas as part of a bigger focus on improving their own key processes. Involve team members, individuals or managers in developing their own incentive and reward systems. Involvement can be achieved through opinion surveys, focus groups, teams that study and recommend, or teams that design and implement the rewards. The best organizations always use combinations of these approaches. Despite mountains of evidence to the contrary, many managers believe money is more rewarding than recognition and appreciation.

You should balance your incentive plans and reward systems with generous amounts of “thanks pay. ” And make sure managers have the skills to show recognition when people are doing good work. They often find it awkward to express appreciation. Reward systems and recognition practices speak volumes about your organization’s values. Are they designed and delivered to employees – or with them? Do they reflect a management view of “we know what’s best for you? ” Are they partial and piecemeal or part of a larger system and philosophy?

You should ask if financial incentives seek to penalize people and have them “share the pain,” or look for ways to make people feel like winners. Are people given paternalistic pats on the head or treated as equal adults? Like customer service and quality, reward and recognition are highly subjective. Just as they monitor the changing needs of customers, effective leaders constantly try to understand the shifting perceptions and values of everyone in their organization. ==========================================================================

Employees are motivated by both intrinsic and extrinsic rewards. To be effective, the reward system must recognize both sources of motivation. All reward systems are based on the assumptions of attracting, retaining and motivating people. Financial rewards are an important component of the reward system, but there are other factors that motivate employees and influence the level of performance. Today’s emphasis on quality-improvement teams and commitment-building programs is creating a renaissance for financial incentive of pay-for-performance plans.

To ensure the reward system is effective and motivates the desired behaviors, it is essential to consider carefully the rewards and strategies utilized and ensure the rewards are linked to or based on performance. To be effective, any performance measurement system must be tied to compensation or some sort of reward. Rewarding performance should be an ongoing managerial activity, not just an annual pay-linked ritual. Strategies for rewarding employees’ performance and contributions include both non-financial and financial mechanisms. Some of the primary ones are iscussed below. The list is not exhaustive, and individual units/departments may identify additional mechanisms that are appropriate for and support their culture and goals. Praise/recognition from supervisors – Praise and recognition from supervisors is consistently found to be among the most important motivators. Employees want to be recognized and feel their contributions are noticed and valued. It is important that supervisors recognize the value and importance of sincerely thanking employees verbally and/or in writing for their specific contributions.

Professional growth and development opportunities- Supervisors may provide employees opportunities to participate in educational programs or other activities that will expand their skills/knowledge . Employees benefit by developing new skills, and the institution benefits from the additional expertise individuals bring to the job. A  recent survey found that 87% of responding workers viewed special training as a positive incentive, and it appeared most meaningful to employees with postgraduate education.

Paid Leave – Supervisors may award employees up to 32 hours of paid leave annually in recognition of meritorious performance . Progression through the salary range – Employees may receive salary increases to recognize the attainment of new and/or the enhancement of existing skills/competencies or for assuming increased responsibilities within the scope of the current position. The salary increase represents a progression through the salary range approved for the position .

Merit increases –  policy  should allow  supervisors to give employees an annual merit increase to recognize consistently meritorious performance or successful completion of a project that had a significant impact on a department or the university. The reward may be in any amount up to 5% of the employee’s current base salary, subject to the availability of funds. Budgetary information regarding fiscal year merit increases are issued annually as part of the budget process as soon as the institution’s fiscal position can be determined. To be eligible for a merit increase, employees ust have been employed for at least six continuous months and at least six months must have elapsed since the employee’s last salary increase, promotion, salary increase due to progression in the salary range, demotion or transfer from another department. Promotions and lateral moves – Promotions and lateral moves may be long term rewards that recognize employees’ professional growth, expertise, and capacity to contribute to the institution in new roles. Promotions are typically associated with an increase in salary, and the increase may be any amount up to 10% of an employee’s current salary.

For employees with base salaries under $25,000, the increase may be any amount up to $2,500. The new salary also must be within the salary range approved for the position, and employees are subject to a 90-day probationary period following a promotion/lateral move to a new department . Administrative salary supplements – Employees who assume new/additional responsibilities on an interim basis may receive administrative salary supplements that are paid in addition to the base salary. The supplement is discontinued when the employee is no longer responsible for the additional responsibilities.

Informal rewards – When warranted, supervisors may choose to give employees informal rewards for specific accomplishments/contributions. State law and institutional policy  allow expenditures of up to $50 of state funds and $100 of non-state funds per employee for informal non-cash rewards that demonstrate the supervisor’s/institution’s appreciation. Supervisors can be creative in identifying informal rewards that will be appreciated by the particular individual being recognized, but, in selecting and purchasing rewards, supervisors must be sensitive to the institution’s responsibility to be good stewards of public funds. ============================================================================ Keys to Selecting the Right Reward The first key to selecting an effective reward is knowing what your employees will find rewarding. When an employee’s performance, morale or motivation has not been influenced by a reward, it is likely because it was the wrong reward for that employee. When rewards don’t fit, they don’t work. However, it is sometimes difficult to identify a reward that your employee will find valuable.

There are three easy ways to find out what your employees would find rewarding: Watch what they do – Pay attention to how they spend their free time or what they might have as hobbies. Listen to them – By listening, you can learn about their interests or work place concerns. (i. e. the desire for advanced training)    *Ask them – If you’re unsure, ask them! ——————————————————————————————————— The second key  to selecting the  most  effective  reward  is  having a  large number available from which  to  choose.

The following  list  offers  ideas and  you   can add  on  more  from your  own  experience. Praise, “thank you” in person and/or in front of others Email thank you *Letter  of  appreciation with copies to  employee’s file and   CEO. *Publicity – mention in newsletter/COMPANY  News Bulletin/Local newspaper [ special achievement] *Electronic message boards recognizing accomplishments *   “Behind the scenes” Award – for those not normally in the lime light *Employment anniversary note *”Meet the President” forum or lunch Lunch with senior  management *Invitation to “higher-level” meetings *Offer to mentor the employee *Opportunity for advanced  training *attendance at seminars or conferences *More frequent assignment of responsibilities the employee enjoys *Reassign work the employee does not enjoy *More autonomy to determine how the work is completed *Additional staff for project development *Job sharing *Work off-site *Flexible work schedules *Increase work space privacy *Upgrade of computer *Special parking space near the office *Regular recognition lunches Tickets to local events *company   t-shirts, jackets, hats, cups, desk accessories *Restuarant  coupon *Tour  factory workshop/facilities during work hours Contribution to a favorite charity Food basket Social  club membership Cash bonus – with taxes pre-paid Food parcels , balloons or flowers delivered to employee(s) home. Employee appreciation day – with banners, lunch, etc. in honor of employee Employee photo boards or “Hall of Fame” – with kudos provided by peers Certificate of accomplishment Employee of the month

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