Do Employee Rewards Actually Boost Engagement? New Research Answers It.

One thing many teams like about HeyTaco is the ability to customize features. You can show one leaderboard, another, or none at all. And you don’t have to open a Taco Shop and include rewards. 

On one hand, we get it. Compliments come easily now, people are getting along, the culture is steadily growing, and everyone’s output is where it should be. Having all of that goodwill and pride lead up to a gift card is kind of…insincere, right? Surely, employees would stop seeing recognition as their culture and more as a game they play to get paid more.

There are ways around this. If you fear rewards undermine engagement, keep reading. The benefits of employee rewards and recognition together are pretty huge, and we partnered with leading academics to help prove it. Plus, we have tips and examples for creating intrinsic rewards that work. 

What our research says about including rewards in a recognition program

Some companies avoid rewards because they’re not up to date on how they can reinforce the positive effects (engagement, motivation, retention) of recognition. 

HeyTaco recently collaborated with a small team of experienced researchers to come up with a firm answer to many questions we have about recognition and rewards. One of our goals was to determine how valuable rewards really are. Dr. Ewelina Forker, Dr. Adam Presslee, and Dr. Alex Vandenberg took data from thousands of teams using HeyTaco. Together, they examined recognition engagement, reward configuration, and length of usage.

Here’s an overview of some key findings:

• The structure of a reward is more important than how much it costs. Rewards that are a natural cultural fit and are tied into recognition programs make sense and feel more personal.
• Rewards, when designed well, do increase engagement. That includes engagement with the recognition program. Teams that included meaningful rewards had 80% higher recognition activity. 
• Recognition and rewards work best together, not in isolation. Because rewards require logic and structure, they’re only truly useful in tandem with recognition. 

The team also came up with firm figures on the real-life impact of our leaderboards. If you want to know more about the exact criteria of engaging rewards, as well as how your leaderboard visibility can boost program participation, download the white paper. It’s free and easy to access. 

How do rewards fit into employee engagement best practices? A psychological perspective. 

We know rewards and recognition are different in terms of how often they occur and under what circumstances. From a psychological standpoint, they’re very different. Here’s why our goal should be to design rewards that mimic or complement the effects of recognition.

Intrinsic vs. extrinsic motivation.

Long-term meaning or short-term performance? Rewards provide one or the other. We go more in-depth in our recent piece on extrinsic vs. intrinsic motivation in rewards, starting with the difference between the two:

Intrinsic motivation (“in” for “internal”) comes from within. Your passion, joy, curiosity, personal growth, purpose, and pride inform your behavior. 

Extrinsic motivation (“ex” for “external”) is when you perform a behavior to achieve an external result. Money, privileges, and prizes are the reasons you engage.

Recognition indeed has much more intrinsic value. However, that’s because a lot of businesses haven’t bothered to design intrinsically motivating rewards–yet.

Intrinsically motivating rewards feel fairer.

Cash bonuses, gift cards, and tangible, performance-based rewards aren’t totally off the table if you don’t want them to be. But they can eventually lower engagement, and not just because the recipient can become bored or entitled. 

Symbolic rewards (like tacos 🌮) can amplify engagement more sustainably than cash-only systems because they’re more meaningful to the recipient. They also send an important message to coworkers observing the reward.

Higher engagement is linked to feelings of fairness, especially in reward distribution. These types of rewards are more social, given and received among peers out in the open. An emphasis on intrinsic value gives the transparency onlookers need to stay engaged.

Rewards can compound the good feelings we get from recognition.

Here’s what the importance of fairness and intrinsic value often looks like in a workplace. 

An employee gets a cash bonus for outstanding work on a project that others pitched in on here and there. Another team member catches wind of this and feels their contributions are undervalued. Also, they could use the money. This is going to hurt their connection to their role, the company, and their colleague.

Now imagine the whole team got a shoutout for their help during a meeting. The lead employee who did the outstanding work was invited for coffee with the CEO. The key takeaway for colleagues is that their contributions were appreciated. They helped on a project that leadership truly approves of. 

Designing employee rewards that actually work

With everything we’ve taken in so far, let’s create some criteria for meaningful, intrinsic rewards that feel good to everyone. 

• Keep rewards consistent, never random. Employees should have a clear and legible map leading them to rewards. They know what behaviors may eventually result in a reward.
• Tie rewards to values and recognition behaviors. This positively reinforces the intrinsic value of recognition, boosts recognition participation (especially giving), and helps develop cultural identity. 
• Use limits and rituals to keep rewards meaningful. Cultural relevance links the reward to the community. We also use rewards sparingly enough to keep recognition the main course.
• Keep them distinct from compensation. Research shows that rewards have more meaning and memorability when they can’t be construed as reimbursement for their services. 
• Use employee feedback to tailor rewards. And switch them up regularly. Letting employees have a say is more motivating and engaging than points-for-gift-cards and not much else. 

• Ensure fairness and inclusivity. Tying rewards into peer-to-peer recognition adds more transparency and inclusiveness, since employees are driving the program. 

Common employee reward pitfalls to avoid

The most scrupulously designed programs can go off the rails in a single month. As you introduce new incentives to keep things fresh, one of these reward-ruiners can creep their way in.

• Relying only on monetary incentives. Meaningful rewards are tied to core values and recognition. Making those monetary rewards would basically be paying employees to play nice, which doesn’t help engagement. 

• Overcomplicating redemption systems. A well-organized, updated, and maintained reward center has more impact on participation than many know. 

• Forgetting cultural fit. For example, highly collaborative teams with strong connections will derive greater meaning from working toward rewards they can earn together. 

• Neglecting recognition alongside rewards. Rewards are occasional, while recognition happens daily. Occasional gestures won’t boost engagement. The regular affirmation of recognition is what makes the reward effective.

Meaningful recognition and rewards: IRL results for virtual teams

Team celebrations and ceremonies are a popular reward offering at many organizations. And at Haze Shift, a Brazilian consultancy with a fully remote team, they have a lot to celebrate. 

They’ve used HeyTaco since 2021 to strengthen peer connections. Now they hold ceremonies to honor their top participants and appreciate one another even more. After giving one another nearly 50,000 virtual tacos of gratitude, the camaraderie they generated resulted in:

• A 30% increase in team engagement, as measured through internal surveys.
• 90% of employees rating their experience above 3 on a 5-point scale.
• A satisfaction score of 4.50, the highest ever recorded at the company.

The emphasis on appreciation and shared core values exemplifies the best benefits of employee recognition and rewards. It’s proof that feelings of pride and acceptance at work can’t be matched by monetary incentives.

Employee rewards FAQ

Do rewards really motivate employees long-term?

Intrinsically motivating rewards do work long-term, yes. Offering employees autonomy, development opportunities, or special public acknowledgment inspires us to continue setting goals and crushing challenges at our workplaces.

By contrast, an extrinsic reward, like a performance-related cash bonus, has short-term effects on motivation. Once they’ve been paid for their extra effort, the employee moves on.  

What’s the difference between rewards and recognition?

Recognition is daily positivity and acknowledgment embedded into the culture. Rewards are incremental perks or treats to help further motivate employees. 

Can low-cost rewards be as effective as expensive ones?

In many cases, low-cost rewards are more effective than expensive ones, because they have a deeper, more specific meaning to the recipient. 

Giving a hardworking employee a pricey gift basket or cash bonus seems like compensation for the effort they put in. It feels fair and justified. Offering the same employee flexible work arrangements makes them feel like you value their preferences and work-life balance. They feel seen and cared for as a human. It’s an important distinction.

What does science say about employee engagement and rewards?

Older employee engagement research is skeptical of rewards. It states they can crowd out intrinsic motivation–positive feelings we get from simple, everyday acts. This line of thinking still applies to extrinsically motivating rewards, where the dollar value is what stands out most. 

However, more recent studies show that symbolic rewards can complement and reinforce engagement spikes from regular recognition. When we personalize rewards and align them with the work culture, they add a little extra oomph to the program. 

They also create more opportunities for team rituals. Think award ceremonies, celebrations, and charitable giving. 

Let HeyTaco introduce you to the full benefits of employee recognition and rewards.

Motivation, particularly intrinsic motivation, is a well-designed reward’s specialty. However, rewards can also reaffirm and enhance the engagement we gain from recognition. 

HeyTaco is proud to offer an app that helps organizations introduce peer recognition that’s fun, effective, and easy to use. It also simplifies adding rewards that make sense for your culture and its people. Before you add new, meaningful rewards to your Taco Shop, download our free white paper and see everything the new research has to say about rewards that boost the impact of recognition.