HR Management & Compliance, Talent

How to Create an Employee Rewards and Recognition Policy

Companies implement policies to define the rules of an organization and shape future decisions with a thought-out framework. They help employees make day-to-day decisions that lead to overall cohesion and success. These policies guide many aspects of running a business, from how employees are expected to behave to ways they should be rewarded.

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A successful business thrives on a culture that values workers and treats them fairly. That’s why companies are choosing to implement rewards and recognition programs designed to help employees feel valued and make the most of their lives.

If you’re interested in developing an effective employee reward and recognition policy, follow the steps below.

Step 1: Assess the Current System in the Workplace

Your company may not have a rewards policy, but you should still have a general understanding of employee attitude toward recognition in the workplace. This can be gained through anonymous surveys or focus groups. Sometimes, the best approach is to be direct and outline what you hope to accomplish.

Ask information-seeking questions, such as:

  • What’s your ideal work environment?
  • What types of rewards would you like?
  • What don’t you like about our current policy?
  • What would make your job easier?

These questions get to the root of any problems and gather helpful data. Using this information, you can identify and outline what you want the rewards and recognition policy to address. Be sure to get input from all roles and departments, as mind-set can shift from group to group.

Step 2: Have a Predetermined Goal Before You Start

Now that you know the problem, you can address it with a well-constructed policy. The most effective ones use SMART goals, objectives that are specific, measurable, attainable, relevant, and time-bound.

Vague or unrealistic goals are unhelpful because they don’t provide your team with direction. Check out some of the examples of SMART and unsmart goals below.

  • An unsmart goal: Make employees happier, and reduce the number of days they call out.
  • A SMART goal: Implement an incentive program for reliable employees, and reduce callout days by 5%.
  • An unsmart goal: Help employees feel more comfortable by giving them perks.
  • A SMART goal: Increase employee satisfaction and comfort in the workplace through the implementation of a food and beverage station.
  • An unsmart goal: Reduce the number of sick days employees take by telling them to stay healthy.
  • A SMART goal: Keep employees healthy, and decrease the number of sick days by one per employee annually with a high-quality healthcare plan.

Step 3: Research Types of Rewards and Recognition for Employees

Your current situation will determine the type of rewards policy you implement. It’s up to you to decide which program will best meet the needs of your employees.

Some of the most popular types of rewards and recognition programs include:

  • Optional remote work: Many businesses are now allowing employees to work remotely. This doesn’t have to mean working from home—it can also mean working in a coworking space, in the library, or even at a favorite Starbucks. About 54% of workers worldwide say their ideal work environment would include flexible arrangements, such as remote options.
  • Paid family leave: Some countries offer generous paid leave for new parents, but the United States is slow to jump on the bandwagon. Most employees consider paid family leave a perk that shows an employer values their time and well-being outside the office. One leader in this field is Netflix, which currently offers employees 12 months of paid parental leave.
  • Free office snacks: It may seem like a no-brainer, but free office snacks are a great way to make employees feel comfortable, encourage collaboration, and foster a healthy work environment that values achievements. Research shows that companies that provide free food have happier workers than those that don’t.

Step 4: Implement and Optimize the Companywide Policy

Once you’ve talked to employees, pinpointed the problem, developed a goal, and researched the best rewards and recognition practices, it’s time to draft and implement your policy companywide. Make information clear and concise, outlining what the plan is and what it means for employees. If the incentive is exciting enough, workers will want to know right away how they can become eligible or get involved. Don’t hold out on them.

Success is determined by your SMART goal. For example, say your aim is to increase employee satisfaction through the implementation of a food and beverage station, leading to a decline in callouts by 5%. Give yourself a designated time period, whether it be 3 months, 6 months, or a year, and then compare callout rates. If they have not decreased after implementing free food, perhaps a bigger issue is at play. If rates have dropped, you know the policy has worked.

Remember: An effective policy is all about optimization. Very few get it perfect on the first try. After making changes and implementing a new plan, gain feedback from employees, and study the numbers. Pinpoint areas that are strong and those that need to improve. Keep lines of communication open, and let workers know the road to success is an ongoing one.

Creating an Employee Rewards and Recognition Program

Unhappy employees can be the bane of any business. In fact, 66% of employees say they would quit their current positions if they didn’t feel appreciated enough. If you don’t already have a rewards and recognition policy in place, now is the time to create one. Luckily, the process is easy—start by opening a dialogue with employees on their thoughts and feelings. Don’t be afraid to be direct, asking employees what they’d like to see in terms of perks and rewards.

Once you know how employees feel and what they want, you can develop SMART goals and research the types of rewards programs that will offer your company the most value. From perks like free food and beverages to the ability to work remotely, the benefits happy employees are looking for don’t always include the highest pay. They simply want to feel valued and appreciated by the people above them.

Kayla Matthews, a technology journalist and human resources writer, has written for TalentCulture, The Muse, HR Technologist,, and more. For more by Matthews, follow @KaylaEMatthews on Twitter or visit her blog, Productivity Bytes.

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