Having a clear and effective rewards strategy is key to retaining and attracting quality talent to your organisation. However, some reward strategies can be quite outdated and not fit the current working environment, especially after Covid-19 and the alteration to working from home. In this blog, Centric HR will discuss exactly what makes a good reward strategy, including what the different types of reward management are.
So, what makes a good reward strategy? A good reward strategy revolves around offering a variation of rewards to attract different types of people. This can range from monetary rewards to work/life balance rewards. A good reward strategy should also include clear set goals and strong communication so that employees feel as though they are being rewarded fairly.
Keep reading to find out more about reward strategies including what the main elements of one are and why they are important.
What contributes to a good reward strategy?
Ensuring that your employee reward strategy is good is very important when it comes to maintaining a motivated team. There are certain aspects of a reward strategy that help to make sure that you are encouraging your employees to work to their optimum potential and to help you out we have detailed them below.
It may seem obvious, but without clearly communicated goals it is overly optimistic to expect your employees to provide their best performance in the workplace. Similar to SMART goals, employees need to know what they are working towards when it comes to reward strategy, as it acts as a measurable metric. Without clearly communicated goals, your employees will not be motivated to work harder to achieve their targets because they will not be aware of the efforts they need to provide before reward is provided.
Variation of Rewards:
Another key factor to creating a good reward strategy is to provide a variation of rewards. Ranging from monetary, work/life balance related, or even in the form of promotion. Providing a variation of rewards rather than just monetary will help to attract and retain a variety of people with good talent. Not only will this help to improve the motivation of your employees, it can also help to create a team of people who provide different types of skills.
Having strong communication between the different hierarchical levels of employees is also an important factor in determining a good reward strategy. Ensuring that your employees have regular, clear communication with their managers allows for their progress to be tracked and evidenced straight to the people who make the reward strategy decisions. What’s more, this will also help employees to feel more valued and listened to which again supports their motivation to work harder for the company.
What are the main elements of a reward strategy?
To create a good reward strategy system, you need to ensure that you include some key elements as an absolute minimum. This will help you to manage your employees along their reward journey and help both them and the company to progress. Take a look at the key elements below.
|Career Development||One of the overriding features of a strong reward strategy is to make sure that clear career development is present. Despite monetary and work/life balance rewards being appealing, ultimately employees thrive from working towards promotion. Therefore, having a clear promotional structure in place so that employees know what to do in order to achieve that particular level of reward is imperative. What’s more, employees will be more willing to work harder if they know that a promotion is a potential for them.|
|Timely Recognition||Another important feature of a reward strategy is to ensure that rewards are provided in a reasonably timely manner. This is significant because if employees begin to recognise that they are working hard but not being rewarded, then their productivity will begin to reduce. It can be quite easy to fall into the habit of pushing rewards back to the following week or even month if you are particularly busy, but this can negatively affect employees’ motivation. Therefore, ensuring reward recognition is completed within a timely manner is key to reward management.|
|Measurable Goals||When it comes to a reward strategy it is also imperative that you lay out a set of measurable goals. This is because you need to be able to prove that your employee has reached a goal before they can be rewarded. For example, for a sales role, you may set the measurable goal of achieving 10 large sales a month before the employee can receive reward in the form of commission.|
What are the types of reward management?
When it comes to reward management, there are an array of different types of reward strategies that can be implemented depending on your type of organisation. Here are some of the main examples of reward management that might work for you.
One of the most common types of reward management is in the form of bonuses. This type of reward strategy is popular because it provides instant gratification and reward to the employee and when employees are lower than management, this can be quite appealing. A lot of organisations will provide bonuses when they have had a successful period as a business, when a high amount of sales have been achieved, or when a particular employee has secured an important deal. This type of reward strategy is usually more achievable for smaller companies.
To learn some more about reward strategies and why they are important, check out our recent blog by clicking here.
Incentives are becoming an evermore popular type of reward management because employees are beginning to expect more from their employees. Incentives are a form of reward that are not focused on money but rather the improvement of work conditions. Some example of reward incentives would be:
- Additional annual leave
- Flexible working hours
- Flexible working locations
- Relevant course tuition reimbursement
This type of reward is becoming quite popular because it can improve an employees working experience on a day-to-day basis and out of all of the types, it is probably the most popular with organisations.
Profit-sharing is also a type of reward strategy which can be appealing to employees. Profit-sharing involves rewarding particular employees, usually at a high level, with a percentage of the overall organisation’s profits. This type of reward strategy normally comes into play after an employee has had many promotions and contributes to a large part of an organisation’s success. However, that does not mean that it cannot be implemented lower down the employee chain, as long as the company can afford to do so. This type of reward can be very successful because it ensures that employees are invested in the success of the business and end up putting more effort into their daily responsibilities.
Performance and reward management at Centric HR
Centric HR is a team of experienced HR Consultants in Staffordshire and Birmingham. Our team is available to support your team with a comprehensive strategic reward management system so that your employees are more motivated and are rewarded fairly.
Get in touch today to learn more about our strategic reward management programme.