[VIDEO] 7 Fundamentals of An Effective Employee Rewards & Recognition System

You only have two kinds of employees: loyalists or mercenaries.

Loyalists know you genuinely care about them, they believe in your cause, and they bond with other employees.

Mercenaries, on the other hand, are always looking for the next biggest check – whether it’s with your company or not.

If your only differentiator is you pay the most, don’t be surprised when they pick up and leave for $5 more an hour!

Thinking about all the employees that work for you with a mercenary mentality might make you mad.

But who is really to blame?

If you don’t show them appreciation for their work, and you don’t care about their successes, why should they be loyal to you?

If all you offer is monetary rewards, then YOU are creating mercenaries in your workforce.

What Employees REALLY Want

Employees want to be recognized for their work.

Mary Kay Ash built a multilevel marketing empire based on this understanding. In her words, “There are two things people want more than sex and money, they are RECOGNITION and PRAISE.”

Yet Gallup Research found that 65% of American employees said they had received no recognition from their manager – IN A YEAR!

Can you believe it? No wonder we have so many people with a mercenary mentality in the workforce today!

The difference between loyalists and mercenaries is based on their level of engagement.

Do your employees show up to work excited and thankful to be a part of your organization?

If you are currently thinking: “Why should I worry about that? It’s not up to me whether people are motivated at work. That’s their problem.” That’s partly true.

Employees do need to take personal responsibility for their attitudes at work.

At the same time, if you don’t recognize your employees, it will fast become your problem too!

4_icon_btwkv2Gallup’s research is monumental for another reason.

Not only does it show the negative effect of not recognizing your employees, it also shows the positive impact that recognition can have on your company.

According to the study, businesses that recognize their employees have nearly double the odds of success than their counterparts.

Those in the upper 99th percentile have FOUR TIMES the success rate than those in the lowest percentile!

Employees that are engaged in their company – meaning they believe in the mission and they show up on time with a good attitude – catapult the business to success.

Employees with a loyalist mentality also have lower turnover, fewer excuses for missing work, rarer safety accidents, produce better products, have higher customer satisfaction, and send more profits straight to your bottom line.

The facts don’t lie

The number of engaged vs. unengaged employees will determine the level of your success.

Let’s pretend you are a farmer and have a team of horses plowing a field.

If the entire team is pulling in one direction, but two are sitting on their haunches refusing to move, how far will you go?

What would happen if half of your horses decided they weren’t working today?

Often, managers believe that if a majority of workers are engaged, that is good enough.

But as you can see, it only takes a small number of disengaged employees to sabotage your workplace culture.

A “bad apple” really can “spoil the whole bunch!”

For employee recognition made easy, click HERE.

Make it easier… Not harder

If employee engagement is important to your success, then you should make it easier, not harder, for employees to enjoy their work, feel appreciated, and constantly do their best.

Letting employee engagement levels fall where they may is putting your success in the hands of luck.

If you are waiting on your employees to magically become engaged, you are counting on magic to be successful.

Doesn’t sound like a very good plan!

Your success as a manager depends on it

You have the responsibility to create an atmosphere that encourages your employees to give their best every single day.

If the majority of your employees are not engaged workers with loyalist mentalities, YOU WILL NOT SUCCEED AS A MANAGER.

How can you rise to new heights if your employees keep jumping off the boat?

You need to start recognizing your employees or you will continue to stall on the path to success.

Napoleon said it best, “A soldier will fight long and hard for a bit of colored ribbon. Give me enough medals… and I’ll win you any war.”

It’s up to you

As a manager, the responsibility for your employees’ engagement rests directly on your shoulders.

For the most part, people want to do their best, get rewarded for it, and enjoy the satisfaction that comes from both.

If they don’t, you shouldn’t have hired them, and you probably need to let them go.

You need to have a team that works together in order to be successful yourself.

You can’t leave your company’s success or your achievements as a manager up to fate.

Once you have the right team, its time to correctly reward them for their efforts.

Steps to An Effective Employee Rewards System


1 – Determine the Result

First, you need to establish the end goal.

What are you trying to accomplish? What is the company’s vision? What goals do you have as a manager?

Creating rewards for the sake of rewards is pointless.

You need to know the specific goals you want your team to achieve.

Once you’ve determined the result, you need to convey it to your employees in a way that garners their interest and spurs them into action.

2 – Establish the Rules

For the same reason you want to clarify the end goal, you also need to make sure the compensation or reward structure is clear and easy to understand.

If your employees are spending their time trying to figure out the rules of the game, they won’t be working on the goal.

Make the rules easy to understand and it will give clarity and establish trust in the rewards system.

Establishing trust in your system is imperative.

No one wants to win a contest only to have to fight at the end to get his or her reward.

The last thing employees want to do is work their butts off only to have to fight about whether or not they truly “won”.

Don’t make them fight over the terms when they should be receiving their reward!

3 – Make the Reward Worth it

The reward needs to be worth the effort.

Just as the “punishment should fit the crime” so the “rewards should fit the achievement.”

If you decide to reward the highest sales mark for the year with a golf ball set, you may want to rethink your strategy.

Put yourself in your employees’ shoes.

What reward would you want for reaching that goal?

Choose rewards that are appealing to your employees, and are appropriate for the amount of effort it takes to win.

You don’t want to be seen as cheap, but you also don’t want your employees expecting a reward for every little thing they do. Let the reward fit the goal!

4 – Set a goal that is challenging, but not impossible

Challenges force us to perform above and beyond what we thought possible.

The SEAL team is a perfect example of this in action. SEAL members, part of the Navy’s Special Forces, swear on the same code, “I persevere and thrive on adversity.”

Sailors within the SEAL team ranks are a living testament to the idea that the body can endure far more than the mind thought possible.


5 – Reward On Time

If you want your rewards system to work, give your employees the gift of immediate gratification.

The closer you can tie the reward to the goal achieved, the stronger the reinforcement will be.

This applies to everything about recognition, not just rewards systems.

Once an employee has done something well, aim to reward or recognize them within one week of their effort.

Recognition doesn’t always have to be something big.

Often, all people really want is for someone to acknowledge their effort and appreciate it.

People want to be noticed.

They want to know their work matters and their extra effort hasn’t been swept under the rug.

6 – Analyze the Entire Rewards System

Once you’ve written down the goals you want your team to achieve, and thought of creative ways to tie rewards to those specific goals, you need to think about the entire system.

Do any of your goals conflict?

The last thing you want is for your employees to be confused on which goal you actually want achieved.

Often, managers create rewards systems that don’t make sense.

If you want your team to reach a sales goal, don’t tie most of the rewards to customer service.

Make the reward worth it, and tie it to the right goal.

7 – Protect Against Unintended Consequences

People respond to incentives.

When you reward your employees, they will change their behavior.

But most managers forget that incentives often have unintended consequences.

If your reward pits team members against one another, don’t be surprised when they start sabotaging each other or refuse to share helpful tips.

How will they try to accomplish the goal?

If it is detrimental to your office culture, you may want to change the rewards system and keep teamwork a top priority.

So before you roll out your new rewards system, think through the entire process.

Don’t be lazy. Nail down your end goal, the rules for winning, and the reward that fits the effort given.

Think about this:

  • What specific, well-defined goal are you going to reward?
  • What are the contest rules?
  • What reward will make employees want to win?
  • Is the goal challenging but not impossible?
  • What is the timeframe for the reward?
  • Step back. Does your reward system make sense? Accomplish what it should?
  • Will your competition create animosity among team members?

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