How to Reward Your Employees

Rewarding employees doesn't need to be expensive or showy. But it should be a little personal.
January 27, 2012

When you're rewarding employees, what's important is not how expensive or showy the award is. It should be a little personal.

Employee-rewards programs tend to be considered a softer part of business, says Dr. Bob Nelson, author of 1001 Ways to Reward Employees.

Typical small businesses don’t have much money to motivate people, so they don’t do anything, Nelson says. “By doing that, they’re making the assumption that it’s only money that speaks to employees, and they brush it off.”

But having a strong employee-rewards program is crucial for motivating employees, creating a positive work environment, and getting results. Whether you’re overhauling an existing program or starting one, don’t try to create an elaborate, expensive program right off the bat.

Here are five simple steps you can use to reward your employees.

Build a foundation

One of the most important ways to reward employees is to create a work environment that continuously acknowledges employees’ accomplishments and needs, says Cindy Ventrice. She wrote Make Their Day! Employee Recognition That Works. Without a positive workplace, rewards won’t carry any meaning.

“It comes down to what I call inherent recognition,” she says. “It’s the recognition that comes from the way people are treated…. It’s all about respectful relationships.”

Nelson says it's crucial to start with an environment where employees feel their managers have a genuine interest in them.

“Small-business owners have daily interaction with employees,” he says. “Take advantage of that contact and accessibility. Be open to connect with people, take their questions, and check in on them. Be interested in their life beyond the job and also on the job. Ask, ‘What can I do to help make your job better?'”

If your workplace doesn’t already emphasize acknowledging employees' daily work, a rewards program will do little good. Try to show employees you’re paying attention. You can do that verbally, saying “good job” in a meeting, or with a hand-written thank you card.

Leave the money out of it

Ventrice says her research shows that the more money you spend rewarding an employee, the less likely it is that you'll see positive results. Instead, when you're building a program or overhauling an existing employee-rewards program, think of creative awards that cost little if any money.

Time off is a good way to reward employees, Ventrice says, because it’s low-cost and it's what many employees want. Even if it’s just an extra hour or a half day, granting an employee some free time away from the workplace is a way to show them they deserve a break for putting in extra effort.

All employees love time off, Ventrice says. “It doesn’t matter if you’re close to retirement or brand-new, that is absolutely important for everybody.”

Nelson says 65 percent of the rewards in his book cost nothing to the employer, but carried a lot of significance for an employee. The rewards demonstrate the manager's selflessness.

Nelson's book profiles executives at Proforma, an Ohio printing and promotional-supply company. They knew they wouldn’t be able to give employee bonuses in the winter. Instead, executives cleared snow off their employees’ cars in the parking lot. Nelson says this program saved the company money, and it showed that the execs were willing to put themselves out there for their employees.

Other no-cost or low-cost ideas include things like giving an accomplished employee preferential parking for a week, cooking everyone lunch or granting an employee a day or two off.

Consider a peer-recognition program

You can recognize outstanding employees and create a supportive workplace by allowing employees to do their own rewarding through a peer-recognition program.

Zappos is an online retailer that has been recognized consistently for its outstanding benefits and its rewards programs. One program lets an employee nominate another for a $50 bonus each month, says HR spokesman Shannon Roy.

From the recognized employees, Zappos’ Human Resources department selects one hero for the month. The one chosen gets special perks, such as a gift card for the site, a coveted parking spot and the right to wear a cape around the office.

These employees not only feel recognized by their managers, but by their co-workers.

“You can steal that [program] however you want to…. It’s really cool because it’s heartfelt, from employees, and then it’s like a special, over-the-top recognition for one person each month,” Roy says.

Ventrice warns that a peer-recognition program is not an excuse for managers to be uninvolved.

“All of my research shows that the most important recognition is given between supervisor and employee,” she says. “Not between peers.”

Personalize the reward

There’s nothing more impersonal than being recognized with a gift that that employees have no interest in. An impersonal gift shows that a manager doesn't know the employee.

Rewarding an employee with something creative and personalized makes the reward worth more, says Ventrice. She’s seen everything from a traveling trophy to pens and other company paraphernalia, but they’ve all had one thing in common.

“The most creative rewards with the greatest amount of impact that I’ve seen is what I call symbolic awards," she says. An organization or supervisor creates an award that stands for something. “Make it unique to your organization or to your team.”

Roy says Zappos makes sure not only to personalize rewards for employees. The company’s core values include delivering wow through service, creating a little weirdness and building a positive team.

Listen to what your employees like or need and tailor your reward. If you notice that your employee carries in a venti latte from Starbucks every morning, offer to get him a coffee or a gift card. If you notice someone is having car troubles, offer to help with the repairs as a reward.

Be spontaneous

How about a mid-day movie? Or spur-of-the-moment ice cream sundaes?

If your team has been working hard and is under a lot of pressure, one of the best ways to say thank you is to make their day with a surprise reward. It’s a chance to unwind in the midst of chaos and spend quality time together.

Nelson warns, however, that rewards should always be tied to an accomplishment or performance—not just to be nice. Otherwise, a manager creates a culture of entitlement whereby everyone gets rewarded for just showing up.

No matter what direction you take to create a rewards program, whether it's quirky, inexpensive gifts or a peer-to-peer program, Nelson says the most important thing is to start now. He advises including employees in some way, such as by forming a task force of managers and employees to discuss and create a program.

“The key is to get started, and not to wait until you have the perfect program in three years,” Nelson says. “Start now, start small. Ask, ‘Beyond money, what would make this a better place to work?’”