Employees are the backbone of a business and their performance matters more than anything else. Employee turnover rates are not worth it; your business might suffer huge losses when they get out of control.
According to statistics, the employee turnover rate is around 57% now, which is quite a high number for businesses. That’s why employee retention is necessary and directly impacts their performance. Employee retention is also directly related to rewards and it.
However, how on Earth can a reward management system directly impact employee performance?
Let’s dive deep into this article and find out more.
How Performance Management Systems Impact Employee Retention
Take yourself as an example and see how you would feel if you worked at a company and continuously received rewards for your excellent work.
This is an automatic motivator for acquiring and retaining talent in the long term. Employee retention is even more important for the younger workforce since they look forward to their future and must find themselves in the right place.
Overall, performance management systems are running over challenges to meet annual performance expectations. However, these systems allow managers to automate people management processes and directly encourage employee growth.
According to research, 84% of employees claimed that they are most likely to become more loyal in the long term when they receive rewards compared to those who don’t. Overall, a rewards management system not only makes employees feel better but also reduces the employee turnover rate and boosts the company’s reputation.
You can check out this guide to read more about performance management systems.
How do financial and non-financial rewards impact employee performance?
There are several ways in which employee performance is impacted, both from receiving financial rewards and not receiving them. Here are a few that can help you tweak your reward strategies:
- Employees who have a lower income will usually be much more motivated by financial rewards.
- Employees with more family members will need financial rewards, which will impact their performance.
- Skilled workers with many years of experience are more likely to be motivated by financial rewards, but also non-financial ones.
- Employees working from a developing country are more likely to be motivated by financial rewards than non-financial ones.
- The same goes for employees from a third-world country.
How Does A Reward Management System Improve Employee Performance And How Do You Use It?
1. Let Employees Choose Between Rewards
It’s never a bad idea to allow employees to choose between rewards. However, depending on your requirements, your workforce will highly depend on the demographics it has across multiple generations.
This positively affects what they prefer to use. In this case, older generations will have different preferences than newer ones. Therefore, it’s vital to find out what fits best with your team.
Comparatively, research shows that 85% of employees would find it much better to receive rewards individually than a group reward. For this reason, most companies that give out rewards will offer personal gifts based on personalization. These gifts may include eGifts, gift cards, and even an experience that might mean a lot to the employee.
2. Make Rewards Constant
Long-term rewards are a good indicator, but sometimes not the best idea since employees might lose interest. So instead, it’s a much better idea to recognize employees by offering them smaller rewards but regularly.
Not only will this affect employee engagement rates, but it’s also a powerful indicator that you will see much better behaviors among your employees and their actions.
3. It Increases Productivity
Productivity makes the best out of an employee and helps them entirely contribute to the business. An employee reward system motivates team members to become better at what they do and makes the workplace better for everyone.
What exactly does increased productivity mean? First, employees will spend less time not doing anything and be more motivated to work for longer periods.
4. Consider Offering Digital Rewards
Really, a digital reward? Yes! Digital rewards are a trend now and who wouldn’t like to receive an eGift? Right now, the digital world dominates the market, and there are many goods online that all employees look after. If we look at statistics, more than six billion people worldwide use mobile devices.
In addition, billions of other devices are connected to the internet and every employee has a smartphone. Maybe some of your employees love to watch Netflix or use a digital product, so when you offer them a free Netflix account or any other related egift that matches their personal preferences, it will matter a lot to them.
Otherwise, providing your team with digital rewards isn’t challenging to do. Plenty of easy payment methods allow you to deliver egifts to other mobile devices and redeem them from several retailers worldwide.
Additionally, from a personal perspective, digital rewards can be much more cost-effective in the long term. You aren’t dealing with post or printing costs in this case.
5. Enhances The Company’s Culture
A company’s culture becomes even better with the right employee rewards system. An Employee reward system allows you to improve your company’s culture and help improve the type of value it holds.
6. Ineffective Employee Reduction
The last you want on your team is for your employees to be ineffective. This usually happens when employees aren’t happy at their job, earning a minimum wage with a poor reward system. In the long term, this will highly demotivate employees and cause them to show poor performance at the workplace.
Therefore, it’s pretty clear that employees need to be retained at all times because once they lose their motivation to work, it’ll highly affect performance and might even cause more turnovers.
7. Reduces Employee Turnover
If your rewards system is appropriate and you personalize them for your team, your workforce won’t feel dissatisfied and this will directly contribute to the employee turnover rate. As we mentioned, more than 50% of companies worldwide have high employee turnover rates.
However, studies show that companies that offer rewards are four times less likely to experience employee turnover rates. Therefore, statistics show you how much money and time you are saving without continuously hiring new people because of their dissatisfaction.
8. It Affects Job Satisfaction
Reward systems help improve employee recognition and allow them to feel much more valued when working at a company. To better understand this, you can take yourself as a perfect example. If someone gives you a gift for a good job you did, you will most likely feel more motivated to complete more tasks compared to if nobody ever said anything positive about your work.
9. Improves Team Collaboration
Employee reward systems will encourage a happier work environment, which means that teammates will respect each other more and have a higher level of contribution.
This not only builds better company culture but will improve mental health and productivity levels and encourage employee recognition.
10. Compliant Reduction
When employees are happy, they have fewer reasons to complain and be dissatisfied with their job position at the workplace. Therefore, when there are few complaints, it’s better for the workplace environment and the company itself.
The last thing you want to happen is for a team to be burned out and demotivated from their daily job.
An Excellent Example By Samsung
An excellent reward strategy we saw effective was Samsung. Samsung has a fascinating reward system, which gives out rewards based on the results you achieve. But, above all, if you go and see how employees at Samsung work, you’ll be shocked that most of them rarely complain because they all get valued based on results.
Workers are motivated to contribute because of the type of rewards they receive and this encourages job execution, which is how much workers want to complete daily tasks and objectives. In the long-term, this not only makes them more motivated but also directly contributes to the business’s productivity level.
Furthermore, employees are given clear objectives and the right tools to achieve these types of objectives. Following all of these great benefits, what exactly does Samsung offer its team members when performing at the highest level? They are the following:
- Travel, dental and health insurance
- Vouchers and coupons
- Discounts on Samsung products
- Voluntary benefits
- Pension funds and services
- Group incomes protection, etc
Are Reward Systems Worth It?
You bet so. We wrote an entire article on why they are effective, not only because of that, it’s since reward systems motivate employees. When employees are motivated, they will want to contribute more and this will directly affect productivity levels.
After all, we all want to be valued and recognized, so consider it this way: when you realize someone’s good work and reward them for it, they’ll always be appreciative.
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