Investing in employee rewards and recognition is a sound decision for any organization — what gets rewarded gets repeated! By tangibly providing evidence to employees of what you value, you positively impact the future behavior of the employee being rewarded, and their peers.
Too often these decisions are left to chance. They’re episodic and more reactive than proactive. Thinking strategically about your reward and recognition activities and budgeting for them will ensure you’re getting the maximum value out of your investment.
Companies are often reluctant to share their budgets with service providers or vendors. It becomes a bit of a chicken and egg approach with both sides hesitant to lay numbers out in black and white for various reasons — “I’d rather you tell me what other clients are doing,” which is never a fair comparison, or “We can’t tell you what we’re able to provide until you tell us what to spend” which, with about 3000 gift SKUs, makes it impossible to gauge.
There are solid reasons, though, for sharing your program budget with your rewards and recognition service provider.
Why Share Your Budget?
Providing a detailed rewards and recognition budget to your service provider ensures they have the information needed to maximize the value of your spend. This is especially important when it comes to rewards and recognition because what you spend sends a strong signal to employees. You want to make sure that you have ample funds to take you through whatever time period you’re looking at, so you don’t fall short and risk not being able to recognize key contributors and their contributions.
Involving your service provider in this process will also ensure that current pandemic-related supply chain challenges won’t keep them from delivering the gifts and rewards individuals have chosen as their recognition awards.
What Programs You Should Include
When budgeting for rewards and recognition there are several key programs to include. We’ve organized them into three buckets: service milestones and retirement, “on-the-spot” recognition programs and annual rewards and recognition programs.
Service milestones and retirement
Employee loyalty has perhaps never been more important to employers than during what is being called the Great Resignation. Employees will be loyal to you when you’re loyal to them — and when you express that loyalty in visible ways.
When budgeting you will want to consider what you will need to spend to cover service recognition, to recognize the number of years employees have been with your organization, as well as retirement awards.
‘On-the-spot’ recognition programs
‘On-the-spot’ programs offer supervisors, managers, and even employees the flexibility to recognize others for extra effort and ‘above-and-beyond’ achievements. When managers and supervisors catch their employees doing something right, offering immediate recognition can be very powerful, increasing employee motivation. The same is true in terms of peer-to-peer recognition.
These rewards might be for reaching sales goals, practicing safe behaviors, going the extra mile or simply demonstrating a “winning spirit.”
Annual rewards and recognition programs
Most companies have certain types of annual programs or celebratory events to acknowledge or recognize employees. This might be during onboarding, at holidays, for an annual employee appreciation event, or just to recognize and celebrate employee birthdays and other important life events.
Perhaps you have an annual event where you recognize employees across a range of categories — going the extra mile, pitching in to help a colleague, sharing an innovative idea, etc. Or it might simply be a once-a-year event to recognize your staff for the contributions they make each and every day.
When mapping out employee engagement strategies, consider each of these categories and outline the types of rewards that may fall within them. Planning out how you will distribute funds for each program throughout the year will ensure that you’ve laid the foundation and have the financial support for ongoing recognition throughout the year. This will help you increase employee engagement and gain a competitive advantage.
Keep in mind that your budget shouldn’t be a “set-it-and-forget-it” activity. You’ll want to set up times during the year — whether semi-annual or more frequently — to analyze and review your budget, how much is being spent by category and where you may need to shift funds to achieve your goals.
The Importance of Offering Different Programs
Your multigenerational workforce will need to be completely covered. That’s the importance of offering different programs — so you can address the generational differences that drive different behaviors or achieve different goals.
Not all of your employees, for instance, will be able to personally impact sales. But they can impact an inclusive culture. Not all employees will have decades of service with you, although those employees should also be recognized. New employees can be recognized for achieving many “firsts” — first day of work, completing training, first performance review — as well as at their one-year milestone, for instance. It’s a simple way to express employee appreciation for their effort even if they’ve only been with your organization for a short period of time.
Don’t keep your employee rewards and recognition budget a secret from your service provider. Being open about sharing this information can help them better advise you and ensure that you’re maximizing the value of every dollar used to recognize your most important asset — your people.
A side benefit — your service provider can offer advice, share best practices and provide other employee engagement strategies to recognize employees.
A great place to start is with our Rewards & Recognition Budget Planning Worksheet. It’s a great tool to help you think about the types of rewards you want to put in place, when you want to award them (e.g., annually, on-the-spot, based on specific milestones) and how much you want to budget for each. Keep in mind that rewards drive behaviors — your budget should align with your organizational goals and objectives.
Being proactive and mindful about your rewards and recognition budget will not only help you identify what you have budgeted for, but also by omission what you may not have considered but should be adding to your budget.
Recognition matters. Make sure you have the budget in place to recognize key contributions from all your employees.
Topics: data and reporting, Return On Investment (ROI), Return On Rewards (ROR), best practices