Does your organization have an employee rewards and recognition program? If so, how long has it been since it’s been reviewed and/or revised? Or, if you haven’t implemented one yet, it may be time to do so.
Having a solid, flexible and forward-thinking employee rewards program not only helps you retain your top performers, it can also attract top new talent. That’s why one of the best ways to drive engagement and attract newcomers is to implement a recognition program. Today most companies spend 1-3% of payroll on employee rewards, for a total expenditure of $46 billion per year. But is that investment actually profitable? Does money spent on employee recognition reap real, measurable returns? The answer is yes.
According to a 2015 Workplace Trends Report, in addition to promoting higher engagement, recognition programs yield 21% higher retention rates, 27% higher profits, and 50% higher sales. Now that’s a great return on investment.
The Right Approach
A major mistake that many businesses make when developing a rewards program is establishing it based on what they think their staff wants. A better, more productive approach is to find out what your employees’ rewards preferences are and then work the plan from there.
Employers need to start from a place of data and knowledge. However, while 83% of executives agree that employee preference data is valuable, only 43% actually have to this information. Corporate Executive Board, a leading member-based advisory company, recently gathered rewards preference data from nearly 9,000 employees. Study results show that employee preferences have changed during the past three years. Employees are thinking short term, while personalized rewards are seen as more valuable.
The biggest change the study uncovered was an increased preference for a better work-life balance. Benefits in this area have moved up in rank in the past few years while advancement, raises, pay equity, medical benefits and retirement benefits have all moved down. While your employee preferences may vary, what's most important is to find out what those preferences are before crafting your rewards program.
While employee preference should be a major consideration in a rewards program, it’s not the only variable to consider. Organizations should also factor in performance, alignment, strategy and costs when piecing together the rewards puzzle. But you don’t want to waste time, energy and money focusing on ineffective rewards. Unfortunately, only 24% of employees said their company’s current rewards package matched their needs.
Meeting your employees’ rewards needs, especially on a personalized level, can have a major impact on your organization’s bottom line. Truly and accurately meeting your employees’ needs in this area can significantly increase employee retention and employee performance. And face it, the happier the employees the happier the company.
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