Ask yourself the importance of a chocolate or a muffin to motivate your child to finish his homework or clean his room. Same way, the rewards and recognition can prove to be extremely beneficial to keep your employees motivated to perform extraordinary, achieve the targets and stick to the organization.
The power of employee recognition can not be underestimated especially when they have thousands of lucrative opportunities in front of them.
Who doesn’t want to attract, hire and retain the best talents of the industry?
Why not explore the new ways to foster employee motivation and drive them to achieve their targets then?
After all an organization’s performance is directly related to the performance of its human resources. This is a simple logic; if you make their day, they make your organization.
Employee rewards and recognition system is not just a positive thing to do with people but communicating it effectively is an efficient tool in encouraging them to create and bring business for you. Treating your employees like your assets and maintaining harmonious relationships with them doesn’t only yield business in present but also an effective strategy for future. Employers and management need to be pro-active to develop a talented and dedicated workforce that can take you to your goals.
Fulfilling employees’ needs, recognizing their efforts and presenting them with monetary and non-monetary rewards help you create a right workforce for your organization that can be your partner in success. Recognition of their efforts and boosting their morale results in increased productivity and decreased attrition rate. It is a proven fact that the motivated and dedicated workforce can change the fate of a company.
After all, human effort is the biggest contributing factor in success of any organization. It is just next to impossible to achieve organizational goals only by the efforts of top management. It’s the workforce who executes their plans and helps them achieve their financial as well as non-financial aims.
Establishing and implementing a reward system needs careful analysis of the company policies and procedures. Deciding how to recognize employees’ efforts and what to provide them requires thorough analysis of responsibilities and risks involved in a particular job.
Reward system of an organization should also be in alignment with its goals, mission and vision. Depending upon the job profile, both monetary and non-monetary rewards can encourage employees to contribute more to the organization.
Monetary and Non-Monetary Rewards
Monetary Rewards
Monetary rewards cover anything with a direct dollar value attached. Common examples include:
- Salary raises, cash bonuses, and performance-linked incentives
- Redeemable coupons and gift certificates
- Stock awards or ESOPs (Employee Stock Option Plans), more common at senior levels
- Vacation trips and monetary allowances for special occasions
- Discounted or free health check-ups for the employee’s family
- School or tuition fee support for employees’ children
- For senior roles specifically: chauffeur-driven cars, premium housing, or club memberships
Monetary rewards should be designed as broadly as possible across the workforce rather than concentrated only at senior levels, since mid- and junior-level employees respond just as strongly to performance-based monetary recognition.
Non-Monetary Rewards
Non-monetary recognition costs less but can be just as meaningful, particularly for building a sense of appreciation rather than a transactional relationship. This category includes:
- Trophies, certificates, and letters of appreciation
- Public recognition, such as a dinner with senior leadership
- Small perks like office redecoration, recreation club access, or use of company facilities
- Suggestion awards recognizing good ideas, regardless of rank
- Promotion, or simply a greater say in management decisions
A combination of monetary and non-monetary rewards can work wonders and drive employees to perform well continuously. A proper and efficient employee reward and recognition program can establish harmonious relationships between employees and employer.
The Role of Incentives in Enhancing Performance and How They Work in Practice
Organizations exist to provide goods and services to their consumers and clients and in turn, pay their employees salaries and bonuses to get the necessary work done to produce such goods and services.
Such salaries and bonuses are part of the monetary incentives which motivate the employees in addition to some non monetary incentives such as free food, commute taken care of, and paid vacations with family as well as healthcare options etc.
Indeed, in the United States, and in some Western countries where healthcare is not provided by the government, many workers and employees in businesses often join to the inducement of employer provided health insurance packages.
In addition, the more senior you are in the organizational hierarchy, the better are your chances to avail of incentives such as ESOPs or Employee Stock Option Plans, paid vacations, chauffeur driven cars, as well as plush accommodation that is paid for by their employers.
Apart from this, in many corporates, midlevel and junior level employees to receive some of these benefits based on their performance.
In other words, these incentives are often used to enhance employee performance in organizations.
Is Maslow Correct or Only Pay and Perks Matter to Professionals at Each Stage
So, does this mean that only incentives that are tangible as far as the benefits provided motivate employees?
Moreover, do the absence of such incentives deter potential and present employees from either joining the firms or quitting them looking for greener pastures?
The answers to these questions depend on what motivates employees and what should organizations do to inspire them to give their best.
In short, if pay and perks are the only incentives that motivate employees, then the best and the brightest would join all the big guns among the corporates.
A more nuanced understanding of what motivates employees and what enhances their performance is needed to understand the role of monetary and non monetary incentives.
For instance, why do the Silicon Valley start-ups as well as fledgling ones worldwide manage to attract some very good performers?
This is because after a certain level of experience and at a stage of career, management theories such as Maslow’s Theory of Motivation state that there are higher needs that matter and hence, many employees are drawn to challenging work and the need to create something.
Moreover, such employees are intrinsically motivated in contrast to the employees who are extrinsically motivated.
What is the Fitment Process and How Does It Work in Real World Firms?
What these insights from theories teaches us is that while pay and perks are important, there are higher needs and hence, any organisation wishing to attract the best and the brightest has to design a work package that includes all the elements.
So, how do the HR (Human Resources) determine what suits potential employees and target the packages accordingly?
More often than not, the hiring process these days in top notch firms is an elaborate affair that includes elements of determining what is known as the Fit between potential employees and the employers as far as JD or Job Description, Pay, Perks, and the Nature of the Work itself are concerned.
No wonder the Fitment process, which is the term used to describe this process, takes place over several rounds both with the potential hire as well as with internal stakeholders.
In our working experience, we have come across instances where the hiring process extends over weeks and sometimes more as the organisations evaluate the responses of the potential hire to the interviews, the psychometric profiling test results, as well as extensive background checks in addition to examining academic records and the past working experience and referrals from them.
Why Incentives Must Not Catalyze Reckless Risk-Taking and Spur Unethical Behaviour
While all this looks good as far as the Fitment is concerned, in recent years, there has been a tendency to overemphasize incentives such as ESOPs and the others mentioned earlier.
For instance, there is the phenomenon of employees in start-ups quitting as soon as the IPO, or the Initial Public Offering — a term used when such firms go public — is concluded.
This is because they can engage in what is known as vestment, wherein their stock options are now eligible to be liquidated.
Moreover, in Wall Street firms, the perverse role of bonuses and other incentives tied to performance has been highlighted in recent years as the reason why such firms are always taking risks and gambling with the monies of their clients in order to make more and more money from performance-linked bonuses.
Of course, while all this is justified as a natural human tendency, the HR has to be cognisant of how badly designed emolument packages can result in both putting off potential and present employees as well as incentivizing them for reckless behaviour.
It is our argument that the HR and other stakeholders take all elements of what incentives motivate employee performance into consideration.
Fresh Grads Must Know What They Want
Last, if you are a reader who is about to graduate, it is our advice that you do not be carried away by the breathless media coverage of the huge pay packages offered to your seniors and peers, and instead, focus on what you really want at the beginning of your career.
In short, be smart but also be focused on your inner motivations so that there is no disappointment down the line.
Indeed, the corporate world is a place where heroes become zeroes in no time, just as the opposite is true — so it’s better to be safe than sorry.
