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What Is an Employee Rewards Program (and How Does It Work)?

Recognition’s impact on engagement, retention, and culture is all but written in stone. However, every team is different. Some are constantly chasing new goals, measuring and celebrating the progress each member makes week by week. 

Employee reward programs are a way to link recognition to a goal. An incentive to cap off a period of recognition, like guac atop a taco. 

And if you really love guacamole, you might be inspired to join the team on taco day. Rewards can help drive participation in recognition programs, giving us a double helping of those benefits.  

Provided, of course, we are clearing a navigable path to rewards employees really want. Keep reading to learn which rewards to offer, how to offer them, and how they can help.

What’s inside:

What is an employee rewards program?

How do employee rewards programs work?

Employee rewards vs. recognition

Benefits of an employee reward system

Improved engagement and retention

Reinforces values and behaviors

Helps managers and peers show appreciation consistently

BONUS: Watch out for these mistakes! 

Types of employee rewards

Monetary rewards

Non-monetary rewards

Experiential rewards

BONUS: Need more employee reward ideas?

Examples of employee rewards programs

  1. Freedom of choice takes flight at Southwest
  2. High morale and team spirit reign at Zappos
  3. Ndustrial stays conscious of core values

BONUS: Build your own program

Daily recognition, meaningful rewards

Employee rewards FAQ

What is the purpose of an employee rewards program?

How do employee rewards differ from recognition?

What are examples of low-cost employee rewards?

Do employee rewards really improve motivation?

How often should employees receive rewards?

What is an employee rewards program?

An employee rewards program is a system that’s usually a component of a recognition program. The purpose is to reinforce recognition and incentivize employees with perks, parties, and prizes. 

Rewards can help encourage positive behaviors, attitudes, and outcomes. They can even address work-life balance and support team bonding.

How do employee rewards programs work?

An employee rewards program runs on a basic structure:

First, we create criteria for earning rewards. Performance, milestones, or earning peer recognition points are common. In HeyTaco’s case, we’ve swapped points for something more fun and symbolic. Behold: 🌮.

Next, we decide what types of rewards the program offers. Tangible gifts, experiences, and more points (or tacos) are common. Some of the most popular rewards HeyTaco users put in their catalogs include gift cards, company swag, team celebrations, food, and charitable donations.

Finally, think logistics. How will rewards be delivered? Many organizations that use points software have their rewards programs mostly automated, such as with instant gift cards. Decide which, if any, of the rewards will require manual distribution. If using software, always take advantage of any custom options that can help personalize reward delivery.

Employee rewards vs. recognition

Before we wade too far into the program particulars, let’s gain some quick clarity on recognition vs. rewards. Rewards are something you add to a recognition program. You can have recognition without rewards, but rewards without recognition aren’t all that effective. 

Rewards 🏆

Recognition 🥰

Aligns with the culture

Embedded into the culture

Happens on occasion

Happens every day, if possible

Structured and incremental

Shared liberally with everyone

Tangible goods and experiential events

Positive words and amazing vibes

Motivation-focused (but helps engagement)

Engagement-focused (but helps motivation)

Benefits of an employee reward system

Research proves over and over that recognition is beneficial and effective, reducing the likelihood of burnout and increasing engagement. Maybe you wonder if you should include rewards at all. Some teams that use HeyTaco don’t feel they need it. Maybe you don’t, either. 

But if you feel you can derive a little more from your current recognition program, here’s why rewards can be worth it.

Improved engagement and retention

Engaged employees stick around, that much we know. Adding rewards can make a recognition program more dynamic and exciting, especially when you rotate different incentives in and out of the lineup. 

Rewards can also offer employees more of what they need to feel valued in the workplace. The chance to attain more flexibility, professional development, or autonomy–whatever you can personalize to strengthen that connection.

Reinforces values and behaviors

Tangible goods or experiences can make some achievements or milestones more memorable. 

Recognition handles much of the consistent, almost subconscious, emotional aspect. Rewards can create a larger, more immediate sense of pride in oneself. Feeling ownership over our wins can have a bigger impact on repeating the behavior and meeting company expectations. 

Helps managers and peers show appreciation consistently

Including rewards in a point (or taco) system can help with recognition program participation. They also provide easy access for everyone to give recognition freely, making the journey to a reward feel fulfilling and engaging.

HeyTaco does this in a very lightweight way that doesn’t disrupt workflows (again, encouraging participation). Rewards are blended into the system and feel like a natural feature of the recognition landscape.

BONUS: Watch out for these mistakes! 👀

If every organization could apply rewards without issue, we wouldn’t be here right now. These are some of the biggest problems impeding results.

  • Overemphasizing monetary rewards. Adding in more non-monetary rewards is best for personalization and won’t de-center the good feelings recognition gives in favor of cash-based transactions.
  • Inconsistency or favoritism. The why and how of rewards must be comprehensible to everyone. Reserving rewards for the highest performers or most visible team members does not create a culture of appreciation or foster engagement.
    • Making rewards too complex to redeem. Crazy high redemption thresholds, confusing conversion rates, and markups on items employees know cost less elsewhere. Rewards need to seem attainable and valuable, always.  
  • Not aligning with company values. Rewards should be custom to fit the culture and values employees are familiar with. Professional development, scheduling flexibility, and team celebrations are logically associated with values like growth, autonomy, and collaboration.

Types of employee rewards

Should someone who did a good job on a project phase get the same reward as someone celebrating their 15th work anniversary? Hopefully, you just screamed “NO!” inside your head. 

This isn’t about budget. Mixing up the types of available rewards lets us tailor them to the occasion. The performance reward says, “Yay! Keep up the good work!” while the work anniversary reward says, “You belong here where you are a valued member of our community.” 

Monetary rewards 

Monetary rewards include cash bonuses and gift cards. Higher-end rewards include stock options and profit sharing. It looks like a small category, but there’s incredible diversity here. A $25 Uber Eats gift card versus stock options for a veteran employee coexist in this category. 

Non-monetary rewards 

Your most meaningful, high-impact rewards will be non-monetary. This category is jam-packed with perks employees want more than anything else (aside from a paycheck). Extra time off, flexibility, and sincere praise live here. 

Experiential rewards 

Experiences are mentally and emotionally stickier than gift cards. Incorporate rewards like team outings, learning and development opportunities, or special events. Other options include a day spent volunteering or even a wellness retreat. 

BONUS: Need more employee reward ideas?

Letting the same rewards marinate on the menu makes them less appetizing. Rotate ideas from our budget-friendly appreciation gift guide

And sorry, but overseeing a virtual team is no excuse to exclusively offer gift cards. We have dozens more remote-friendly employee reward ideas for you.

Examples of employee rewards programs

Exciting, meaningful, and on brand. Let’s take a quick look at how some organizations blend employee recognition and rewards.

1. Freedom of choice takes flight at Southwest

Southwest Airlines offers a robust recognition and rewards program with pretty impressive monetary incentives and tuition reimbursement. They also get something called SWAG points, which can be redeemed for tickets to events, flying points, or tangible goods–the choice is theirs.

They also encourage peer nominations, where employees who champion the culture are rewarded with meaningful recognition. They get personal cards from coworkers and shoutouts from leadership. 

2. High morale and team spirit reign at Zappos 

Zappos is well known for a fun, spirited workplace culture. That’s probably because employees own so much of it; peer nominations and culture-specific perks are a big part of their employee rewards program. 

Employees give one another “Zollar” bonuses (their own cultural currency). They can be rewarded with premium parking, movie tickets, charitable donations, and more. 

3. Ndustrial stays conscious of core values

Energy waste reduction firm Ndustrial uses HeyTaco to build connections on its remote team. They share virtual tacos with one another, attaching positive feedback related to the company’s values.

Twenty-five tacos nets you a $25 gift card, but they’ve made it more meaningful by linking that to their values, too. Ndustrial also partners with Karma Wallet to incentivize environmentally conscious choices, reinforcing the importance of what really matters at every step of the program. 

BONUS: Build your own program

You don’t have to be a major airline to implement a recognition program that includes rewards. Use HeyTaco’s TEMPLE framework to get off the ground this month. If you can define your goals, start choosing relevant rewards, and lay some ground rules, you’ll be good to go.

You can even warm everyone up by adding HeyTaco right away, doubling the amount of positive interactions teams enjoy. Remote teams working at tech startups love a classic Taco Tuesday shoutout session in Slack. Marketing teams create storms of virtual tacos during periodic gratitude meetings.  

Daily recognition, meaningful rewards

Adding employee rewards to a successful recognition program shouldn’t be a burden HR and People leaders shoulder solo. The secret to motivating rewards and engaging recognition lies with employees themselves. They help define the culture that resonates with them. They can share what incentives matter most. 

When everyone has a say (not just managers), there’s a stronger chance that everyone gets what they need from the program. Using the right tools and software ensures that recognition happens every day, and can automate the stickier parts of reward redemption. Choose HeyTaco, and you can get plenty of assistance and ideas for high-impact rewards on any budget. 

Employee rewards FAQ 

What is the purpose of an employee rewards program?

An employee rewards program is a complement to a recognition program. The purpose of adding rewards is to reinforce the elevated engagement and morale that recognition can provide. Rewards can also increase motivation for a stronger culture or higher performance, depending on the prize.

How do employee rewards differ from recognition?

Employee rewards are intermittent prizes or special considerations distributed based on specific factors. Think hitting a project milestone, meeting a quarterly goal, or going above and beyond. 

Recognition, on the other hand, is given much more freely and frequently. It usually costs nothing and acknowledges the smallest of wins. From a great attitude to answering a question someone has, anything positive can be met with recognition. 

What are examples of low-cost employee rewards?

Job flexibility, public shout-outs, and activities are some of the most popular low-cost employee rewards. Offer employees an extra day of remote work, praise them during a meeting, or let the crew take the afternoon to play some games (they’re great for team-building, too).

Do employee rewards really improve motivation?

Yes, although the type of reward motivates employees in different ways. 

Non-monetary rewards like job flexibility and professional development can be more likely to increase intrinsic motivation. Intrinsic motivation has longer-lasting effects and is associated with higher levels of engagement and feelings of belonging.

Monetary rewards like bonuses are extrinsically motivating. They motivate employees to increase performance in bursts. They don’t have the same emotional impact as intrinsic rewards do. 

How often should employees receive rewards?

For those who want to add rewards to a recognition program, consider the 80/20 rule. That’s 80% recognition and 20% rewards. If recognition is being utilized effectively and employees can say they receive recognition weekly, they can expect some sort of reward every four to five weeks. 

Aim to make the majority of employee rewards non-monetary and tailored to the culture. 

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