There are a number of issues that companies need to consider when they are building reward programs, including budget, objectives and administration.
Organizations that conduct employee incentive programs have lower employee turnover and higher productivity than businesses that don't, making the initiatives an essential part of maintaining an advantage in the marketplace. There are a number of issues that companies need to consider when they are building reward programs, including budget, objectives and administration.
Managing the budget
When it comes to companywide initiatives, the general rule of thumb is to spend 1 percent of payroll on rewards and recognition. This can generate substantial benefits. Indeed, a Society of Human Resources Management survey found that firms see an 85 percent positive impact on worker engagement when dedicating 1 percent of payroll to incentive programs.
The majority of the budget should go toward ensuring there is enough incentive for all employees to feel they have the opportunity to earn a reward. Rewards should also have significant value to workers to increase their motivation, but that does not mean the company should only provide large, expensive items. A number of small rewards can be effective at acknowledging milestones throughout the program and keeping teams on task. In all, 70 to 80 percent of the overall budget should be dedicated to the rewards, with equal parts of the remaining funds going to communication and administration.
The overall objective may impact the allocation of funding. Some training may need to be provided to establish new business processes or achieve company goals, which would require additional money to be set aside.
Program objectives will have a large impact on how reward and recognition programs are conducted, as well as their funding levels. Companies need to consider the length of the programs, the number of participants, whether the initiatives are open-ended and more. Each objective should be measurable, achievable, specific and easy to understand. Businesses need to clearly outline company goals and how the programs will impact employees to encourage participation. Use promotional materials to inform workers about the programs and their objectives.
Overseeing the program
Communication is vital to the success of any program. Regular feedback keeps employees moving along the right path and enables firms to achieve their goals. Program administrators will spend about half their time tracking numbers, sending updates and evaluating progress. Companies should not wait until their programs are over to analyze the results. Periodic updates allow for course corrections and keep team members focused on the end objectives. Successful employee incentive programs are an ongoing process and organizations need to adjust their strategies to continually improve their programs.