How to reward really good people
The Problem Statement
Recognising and rewarding your best people is essential for maintaining motivation and retaining talent. However, it’s a delicate balance—too much emphasis on financial rewards can create an overly competitive environment, while too little can lead to disengagement. The challenge for SME leaders is designing a rewards system that feels fair, is sustainable, and drives the right behaviours without unintentionally causing friction within the team.
HR Best Practice
To get this balance right, consider the following best practices:
Link Rewards to Clear, Measurable Goals: Set up transparent performance metrics so employees understand how they can earn rewards. This ensures fairness and avoids arbitrary decision-making.
Balance Individual and Team-Based Incentives: While top performers should be recognised, rewarding team success fosters collaboration and ensures that a competitive culture doesn’t undermine teamwork.
Personalised Rewards: Not everyone is motivated by money alone. Some employees value extra leave, flexible working arrangements, professional development opportunities, or even public recognition just as much as a financial bonus.
Regular Feedback and Engagement: Ensure you have ongoing conversations with your team about what motivates them and adjust your rewards strategy accordingly.
Be Consistent and Transparent: Clearly communicate how the rewards system works, who is eligible, and why certain rewards are given. This builds trust and reduces the risk of perceived unfairness.
The Psychological Perspective
Understanding what truly motivates employees goes beyond simple financial incentives. Psychological research suggests that employees are more engaged when they feel:
Valued and Appreciated: Acknowledgment of effort—whether through words, awards, or financial rewards—boosts morale.
Autonomy and Growth: Employees who see a clear path for professional development and career progression are more likely to stay engaged.
Part of a Bigger Mission: Those who feel their work contributes to a larger purpose are often more motivated than those purely driven by financial incentives.
Red Flags to Watch For
A poorly designed rewards system can lead to unintended consequences, including:
Toxic Competition: If financial incentives are too focused on individual performance, it can create a cutthroat environment where employees prioritise personal gain over teamwork.
Demotivation for Non-Winners: If the same people always receive rewards, others may become disengaged, feeling their contributions are undervalued.
Short-Term Focus: If bonuses are tied to immediate targets without considering long-term goals, employees may make short-sighted decisions that aren’t in the best interest of the business.
Entitlement Culture: If rewards become expected rather than earned, they lose their motivational impact.
Conclusion
Getting the reward mix right means striking a balance between financial and non-financial incentives, individual and team recognition, and short-term and long-term benefits. When done well, your reward system will enhance motivation, engagement, and overall performance.
No-one teaches this stuff, but at RegenerationHQ, we have the skills and capability to help you with this and a multitude of other small and large issues that can bedevil your business.