Why employees need both financial and non-financial rewards
By now, it’s common knowledge that employees need to be fairly recognised and rewarded for their contributions and successes in the workplace in order for them to fully engage with their role and organisation, be inspired to push their boundaries and go the extra mile. Reward and recognition schemes are no longer a nice-to-have in the workplace and, instead, a must-have for retaining and attracting top talent. Therefore, fostering a company culture with recognition and appreciation at the centre is key to forging relationships between colleagues, creating a united team, improving organisational outcomes and reaching business goals.
There are a huge variety of creative ways to reward and recognise contributions from your team that go above and beyond. It’s often debated whether the most effective form of recognition is financial rewards, such as gifts, bonuses, and points-based schemes, or whether, actually, the most fulfilling way to show your appreciation for a job well done is to simply say ‘thank you’ – whether that be via a peer-to-peer recognition scheme, one-on-one feedback with a manager, or publicly on a company intranet or social wall.
Ultimately, a workplace with a recognition-rich culture has a place for both financial and non-financial rewards. In fact, according to a survey from Eurofound, the European Foundation for the Improvement of Living and Working Conditions, the two leading factors influencing employee motivation are offering financial rewards and bonuses (31% of respondents) and showing recognition (20.7% of respondents). So, it’s clear that the best way to show gratitude and thanks in the workplace is to use the two in unison and get creative with how you reward hard work.
It’s also important to think about the different needs of your team. Everyone is unique and will be driven by different things, so taking a one-size-fits-all approach to your reward and recognition initiative will quite likely fail to reach and motivate all of your employees. Take into consideration how others like to receive appreciation, identify the correct response for different types of success and ensure your employees are praised in a variety of ways that will boost both their morale and financial wellbeing. Here are the benefits of delivering both non-financial and financial rewards and how both approaches can be used together to encourage and engage your team.
THE BENEFITS OF NON-FINANCIAL REWARDS
We’ve all heard the phrase ‘money can’t buy happiness’ but from a business perspective, money alone also can’t buy loyalty or engagement. Many individuals nowadays want more than a salary, they want an experience, culture and company values that align with their own. That’s not to say financial incentives don’t have their place, but in order to really reach and inspire each and every one of your employees, you need to use the combined influence of both monetary and non-monetary rewards. Another problem with recognition schemes that use financial rewards alone is that they can often result in a short-term solution for a long-term challenge. There isn’t a quick fix for engaging disengaged employees, and money motivators on their own won’t get to the root of the problem. So, it’s important to keep all of this in mind when deciding the best way to reward and recognise success in your workplace.
Non-financial rewards such as verbal praise and public recognition are fantastic ways to boost overall morale, bolster your team and give them a real sense of value which, in turn, will help engage and fulfil them. Promoting gratitude, generosity and kindness in this way will also contribute to a thriving company culture and employee experience. If your organisation is looking to integrate reward and recognition for the first time or change its approach to how it congratulates employees, a great place to start is with a non-financial peer-to-peer recognition scheme. Not only is this a great way to reinforce business values and a cost-effective approach to engaging and encouraging your team to work efficiently, but it will also help to foster a culture of generosity and gratitude, boost self-confidence and a sense of belonging. Recognition and praise from a colleague or manager can send a stronger message of thanks than a simple raise or bonus, especially when this also involves feedback from a manager on how they can further improve and progress in their role and beyond.
EXAMPLES OF NON-FINANCIAL REWARDS
Peer-to-peer recognition is a great non-monetary approach to celebrate employees’ successes and contributions. It empowers individuals to freely show gratitude and reward hard work, regardless of seniority. Not only will this have a positive effect on overall satisfaction, but will also help to build strong relationships between colleagues and result in an ongoing cycle of generosity and collaboration. In fact, according to an SHRM/Globoforce Employee Recognition Survey, peer-to-peer recognition is 35.7% more likely to have a positive impact on financial results than manager-only recognition.
Employee of the year
Public recognition, such as being recognised as employee of the month or year, will positively impact employees’ morale and help to drive engagement year-round. By implementing a scheme like this, you’ll be promoting healthy competition as well as encouraging individuals to create good habits and work to the best of their abilities.
Managerial praise and feedback
Private recognition also has its place in your reward and recognition initiative. Individuals want the chance to progress and develop in order to feel fulfilled in their role, so individual praise and feedback from a manager or senior colleague are important in influencing job satisfaction, career growth and in turn, the employee experience as a whole. Encourage your managers to touch base with their teams regularly, give praise and feedback as often as possible and remind them that a simple ‘thank you’ can go a long way.
Flexible working and increased holiday entitlement
Flexible working arrangements can bring many benefits to an employee’s life. So, offering this, and increased holiday entitlement, as an incentive is a very popular way to show your appreciation in a cost-effective way. This type of work, where the hours and the location an individual works are flexible, is a great way to help improve work/life balance, prevent burnout and feelings of dissatisfaction, all of which influence employees’ performance and engagement. It also demonstrates to your team that their wellbeing is a priority, and that hard work will be rewarded generously.
THE BENEFITS OF FINANCIAL REWARDS
While non-financial incentives are valuable, financial incentives can also be an extremely beneficial motivator in the workplace, and offering them can be a very appealing quality when looking to retain and attract talent. In fact, a study from the Harvard Business Review showed that performance-related pay was positively associated with job satisfaction, organisational commitment, and trust in management.
First of all, offering monetary rewards in return for hard work is a great way to support your employees’ financial wellbeing, by providing a valuable opportunity for them to save money. A points-based reward scheme is a useful way to offer flexibility and choice to your employees, as it gives them the chance to buy an item or experience using their points. A system like this enables the recipient to choose something useful or personal, whatever their needs and priorities are, such as a digital voucher to treat themselves or help with their everyday expenses. This means the reward is relevant and meaningful to the employee and makes your company’s recognition culture more inclusive. If your employees know that organisational success equals added financial rewards – and therefore increased financial security for them and their families – they’ll be more likely to work efficiently and produce work to the highest of their capability.
Financial rewards also have their place when celebrating a special occasion, a notable achievement, personal milestone or life event such as a Long Service Award, a birthday or at the end of the year. It’s important that these things are celebrated in a way that stands out, and encourages co-workers to participate and celebrate in order to build culture and enhance the social wellbeing of your team. Financial rewards show the recipient that what they’ve done deserves extra attention and something tangible. Ultimately, they are ideal for when you want to distinguish good from great and take that ‘thank you’ a little further.
EXAMPLES OF FINANCIAL REWARDS
A small token of thanks is a worthwhile investment, especially if there is meaning and thought behind it. The personal value of a gift when recognising a job well done usually exceeds a simple cash reward. In some circumstances, a generic ‘thank you’ such as a bottle of wine or gift voucher is ideal for boosting individual and organisational morale.
Rewarding employees with a bonus at set times during the year whether that’s quarterly or annually is a great way to incentivise them to work to the best of their ability each day and reach their performance targets. Enticing your team with performance-based bonuses and encouraging them to work towards a common goal can also help to inspire them to contribute and collaborate more, as well as spark some friendly competition.
Points-based redemption services
A points-based redemption service works by allowing a sender to gift points to a recipient with a specific monetary value, for them to redeem for a reward of their choosing. The biggest benefits of this type of scheme are that it’s convenient and low-maintenance, it enables managers or peers to give points at their convenience which boosts an overall sense of value, and allows for customisation so the recipient is rewarded with something truly meaningful.
To conclude, you shouldn’t, nor needn’t, rely on money exclusively to motivate and retain your employees. Financial rewards, if not delivered in the correct way and at the correct time, can sometimes end up feeling transactional and disingenuous. That’s not to say they don’t have a place in your employee reward scheme, but it’s all about thinking outside of the box and finding the right ‘thank you’ suitable to the individual and circumstance. For a huge number of people, particularly millennials and Generation Z, money isn’t the only motivating factor in the workplace. They are looking for an experience, day-to-day challenge and fulfilment, growth opportunities and a sense of value and belonging, all of which come from a culture where recognition and appreciation are ingrained.
Using our ereward reward and recognition solution, we help businesses celebrate their people in their own way. We leverage the best of our technology to create a branded platform that’s tailored to your business’ unique goals. So, whether you want to introduce a peer-to-peer recognition programme, celebrate your employees’ life events, deliver Long Service Awards or something else, we have a fantastic selection of both financial and non-financial reward options for you to choose from.