The success of an organization depends on the employees it has. Top employees are hard to find and expensive to hire. Organizations are therefore
The success of an organization depends on the employees it has. Top employees are hard to find and expensive to hire. Organizations are therefore keen on keeping the acquired top talent.
If employees are not properly motivated in an organization, they move to competition. This is undesirable because as top employees leave the organization, performance shrinks. A comprehensive employee reward policy if introduced can limit the effects of employee turnover to manageable levels.
To nurture loyalty, top performing employees are for instance, given service certificates, salary increments or cash bonus payouts for exemplary performance observed over a certain period or while executing a certain task. A reward policy can only be effective if deserving employees are correctly recognized for their contribution. In addition, identifying the kind of contribution required for recognition and its corresponding type of reward is paramount. It is commonplace for organizations to adopt a five level rating system to distinguish employee performance notably from 1 to 5 to denote; Unacceptable performance (1), Meets some expectations (2), Meets expectations (3), Exceeds performance expectations (4) and Exceptional performance (5). A token of appreciation is given to employees whose rating is a 4 or 5 for that period.
There are two kinds of rewards namely, monetary or non-monetary. Line managers carefully select suitable rewards for the teams and present their ideas to management for approval.
A) Monetary rewards
Monetary rewards offer an array of recognition and reward possibilities that are quite flexible in recognizing employee performance. Experts recommend doing employee performance appraisals quarterly to benchmark and review performance over this period. All forms of cash rewards must then be given to those deserving employees. If undeserving employees receive recognition, or deserving employees go unrecognized, the rationale of the reward policy is lost. Cash rewards must only be based on merit and proportionate to employee contribution.
Monetary reward policies encourage employee loyalty. Mostly adopted examples include; Performance, Service, Salary or wage increment, Special Operating Unit, Cash-in-Your-Account and Suggestion rewards.
1) Performance reward
This is a one-time lump-sum cash bonus based on the employee’s rating record for the most recent performance appraisal period. This reward is primarily used with a five-level rating system. Employees who exceed performance expectations and those with exceptional performance are duly rewarded for their contribution.
2) Service reward
A service reward is also a one-time lump-sum cash bonus based on a special contribution or service. It is not based on performance; it is rather awarded for a single contribution or a series of connected actions documented in terms of tangible benefits within a short time period.
3) Salary or wage increment
Many organizations motivate their top performing employees by increasing salaries every financial period. This is kind of reward translates into a fixed cost to the organization. Therefore, increase salaries if only organizational resources permit!
4) Special Operating Unit reward
Certain offices or departments may set up suitable award programs for their interests in recognizing certain groups of employees. These programs are of several forms, for example; recognition for scientific accomplishments, employee of the year awards etc.
5) Cash-in-Your-Account reward
This is a small cash reward designed to recognize employees for going an extra mile to execute assigned tasks and duties. It is not meant to recognize overall performance, but rather specific instances of exemplary performance. Such performance could be about an exceptional handling and execution of an urgent project.
6) Suggestion reward
A suggestion reward is given to employees with a previous record of excellent idea contribution. The amount of reward depends on the tangible and intangible benefits of the idea. With this kind of reward employees feel wanted and part of the organization, which results in employee loyalty.
B) Non-monetary rewards
Non-monetary rewards are more varied and unique than cash rewards and offer two major advantages over cash rewards: they help meet an employee’s needs for recognition, growth and responsibility; and are relatively inexpensive. Non-monetary rewards can take on many forms including merchandise, honorary rewards, service excellence certificates, certificates of appreciation, honorary rewards, etc. It is always important to keep the reward process as reasonable and justifiable as possible for maximum effectiveness. The amount of reward should always be congruous with the value of employee contribution and resources available to meet such an amount.
Examples of Non-monetary rewards include, On the Spot, Time off, Honor, Certificates of appreciation, Length of service recognition and external rewards.
1) On the spot rewards
This is a small merchandise reward granted to an employee to recognize the daily contribution towards getting the job done.
2) Time off reward
This reward allows managers to give employees time off from duty, without loss of pay or charge of leave. It is normally used as an alternative to Service rewards. The line manager determines the amount of time off given to an employee but is usually between 40 to 80 hours.
3) Honorary rewards
A department can reward its employees with Gold and Silver Medals for distinguished and meritorious service. Exercise sound judgment while giving these awards; only reward deserving employees.
4) Certificates of Appreciation
Certificates of Appreciation are normally granted to employees or non-employees who have made outstanding contributions to the Department.
5) Length of Service Recognition
Pins and certificates are available to recognize employee career service. An employee must have at least ten years of service to get a pin or certificate. It can also be a bonus payout payable to an employee over a 10-year period. This can afterwards be awarded in 5-year increments or otherwise as deemed necessary by the manager.
It is worth noting that the effectiveness of a reward system always depends on proper timing and suitability. A careful selection of the kind of reward is vital because of employees’ diverse needs. The manager should appropriately find the most suitable reward system for the team. A manager’s sound judgment thus remains central in modulating the effectiveness of this process.
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