Beyond the realm of traditional yearly cash bonuses, an increasing number of companies are embracing rewards to keep employees happy, motivated, and productive at work.
Unless you’re working for a luxury fashion brand, receiving a designer handbag as a perk at work is rather unlikely. However, London-based communications manager Jackie earned exactly that through her company’s reward system, which assigns employees “points” that can be redeemed as recognition for their achievements.
“I would never spend my salary on a £950 bag, I simply couldn’t bring myself to do it. But that’s the beauty of these points – you can buy things you would never normally buy,” she stated.
Jackie, who works for a multinational corporation unrelated to fashion, is among many employees now benefiting from micro-rewards within their companies. In addition to traditional annual performance-based bonuses, employee effort and contributions are recognized when they hit milestones or assist colleagues, as reported by BBC.
Employers are increasingly turning to these micro-incentive programs to motivate their staff while fostering a positive atmosphere and workplace engagement. Apart from feeling regularly appreciated, these perks can also help companies boost productivity and retain employees. “Colleagues Value You”
Micro-incentive programs vary from company to company. Some offer cash incentives, but many employ a point-based system. Managers can award points in reports, but in some instances, team members can give them to each other across various departments. Over time, these accumulate, and employees can exchange them for a wide array of gifts from various retailers.
“They’re used across a wide variety of organizations,” says Sam Lepak, Growth Lead at Matter, a US-based employee recognition and rewards application.
According to his company’s experience, these programs are particularly sought after in industries such as technology, advertising, and financial services, but Matter’s clients span beyond these fields. Lepak notes a special interest in hybrid and remote companies as well, as the distributed workforce has made nurturing culture more challenging, becoming more crucial in the worker-friendly job market.
Numerous factors underpin companies’ adoption of these programs over sticking to the traditional yearly employee recognition system, experts say.
Firstly, their design can boost employee morale as they feel consistently appreciated. In Jackie’s case, while the handbag was a delightful perk, the recognition tied to the reward is a significant aspect that makes her company’s points program so effective.
Especially during a “challenging year,” she says, earning points from her managers and colleagues made a difference to her morale.
“You simply feel like your colleagues genuinely value you,” Jackie shares. She compares this feeling to that of end-of-year performance reviews.
“I always feel very valued when we have that discussion, but the opportunity to get points throughout the year makes you feel like you’re constantly valued.”
The element of surprise built into many of these programs—being able to receive them at any time and immediately—can amplify their positive effects.
Anthony Kesterton, Chief Solution Architect at London-based software firm Red Hat, agrees that points or other micro-rewards that surprise employees have the most impact.
“Your salary package and quarterly bonuses are part of your income, but these recognition points are truly special, especially when they’re completely unexpected,” he says. Beyond their monetary value, the fact that someone took the time to do it can boost employees’ spirits.
They can also foster a sense of connection and even gratitude in the workplace.
Jeff Hagel, owner and operator of McInnis & Holloway Funeral Homes in Calgary, Canada, noticed that his employees had become more introspective due to the pandemic. He wanted to do something that would gratify them and make them feel recognized for more than just working.
“We’ve really tried to change our culture, so we can retain people and keep them motivated post-COVID,” Hagel says.
Prior to the pandemic, Hagel attempted to cultivate a recognition culture among his 100-plus employees, but office donuts and sporadic free lunches fell short. Now, they have a more gamified approach: every employee receives a certain number of recognition points to distribute weekly.
“It’s contagious. It’s an incredible psychological motivator… we’ve seen literally thousands and thousands of messages of gratitude, which is so motivating for our team,” he adds.
These micro-incentive programs can also have a positive business impact. Researchers have shown that employee productivity can be further enhanced when they receive consistent recognition.
Data from employees at a Greek internet company, who were receiving regular monetary rewards, revealed a temporary boost in performance across all segments.
The positive effects weren’t confined to just the task for which employees were being rewarded and anticipating future rewards; they extended to other projects in the workplace. Argyro Avgoustaki, co-author of the study and a management professor at ESCP Business School, adds that the immediacy of these rewards, rather than waiting for a bonus months away, for instance, had the greatest effect.
Micro-rewards don’t necessarily need to have monetary value to achieve this effect. A 2017 study by Duke University and Intel, conducted with employees at a technology company, found that employee performance jumped by over 5 percent, whether they received cash rewards or verbal praise. The impact of praise, in particular, lasted for days, even after the incentive was removed.
As more companies start embracing these micro-incentive programs, experts caution against removing them once implemented.
“If you cut them, the consequences for employees will be quite negative: low morale, more absenteeism, lower productivity,” Avgoustaki emphasizes.
In Intel’s study, when cash bonuses were removed, worker productivity dropped below the pre-incentive levels.
For the same reason, these programs, while satisfying for employees, likely won’t replace established reward systems, such as yearly bonuses, as their removal would have a similar negative impact.
As Hagel explains: “If you ask any of our staff, their bonuses are expected, budgeted for, and spent, whereas this is something unexpected and fun that goes beyond that.”
