` Rewards and recognition vs bonuses - how to give more in difficult financial times | Reward and Employee Benefits Association (REBA)
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20 Feb 2017
by Iain Thomson

Rewards and recognition vs bonuses - how to give more in difficult financial times

Employers across the UK are preparing for the start of the new financial year in April, but uncertainty over Brexit is causing some potentially turbulent economic times and as a result there is a squeeze on budgets.


Salary increases and bonuses have been used to achieve the best performances from staff but for the forthcoming financial year could face restrictions. Such restrictions and budget freezes will damage employee morale and motivation at a time when businesses need enthused employees to them through the uncertain times ahead.

The problem for sales managers, directors and HR professionals is how to motivate and engage employees. Even in uncertain economic times there is always competition for the best talent - so what can you offer your employees so that you can continue to attract and retain the best employees?

The value of money

Workers claim that the lack of bonuses and other financial incentives is creating a productivity lag but unfortunately cash is not a long-term motivator. Bonuses are not the best way to motivate staff according to the Institute of Leadership and Management (ILM). A 2013 study by the ILM suggested that the £36.9 billion spent on performance bonuses in the UK last year had “no impact on the motivation and commitment levels of the vast majority of recipients”.

Numerous studies show that performance-driven non-cash rewards will have a greater impact on the motivation of your employees. This is because cash rewards disappear into the monthly salary and are often used on day-to-day bills, rather than employees using them to treat themselves to something special.

And if cash rewards are used too often then there is also a danger that your employees will come to see them as part of their pay packet, so if they are lower than expected or not given at all, then they can demotivate employees rather than motivate them.

Beyond the bonus

In general, intrinsic motivators, such as how you treat your employees, how much they like and are challenged by their job, and how well they get on with their colleagues, are more effective than extrinsic motivators like performance bonuses.

But that’s not to say there is no room for extrinsic motivators in your motivation initiatives, instead you need to use non-cash rewards as a key part of your employee engagement and motivation strategies.

Recognition programmes, incentive schemes and non-financial rewards are an excellent way to motivate employees, and they are highly desirable meaning that they can help you attract and retain the best talent.

Recognition programmes

Recognition doesn’t need to be complicated, just expressing regular appreciation for a job well done and presenting smaller, lower value rewards more often will have a greater impact on employees than occasional, large scale events and rewards.

The benefits of a recognition scheme include:

  • Improved communication between co-workers and between managers and employees
  • A greater sense of team spirit
  • Stronger working relationships and improves collaboration
  • Improved employee loyalty, retention and reduces staff absenteeism.
  • An organisation which employees are proud to work for

Manager-led recognition is the most common form of recognition programme but unfortunately it puts an additional pressure and burden on managers to ensure that employees are being recognised. As a result, it often drops to the bottom of a managers’ to do list. Additionally, managers often look after a team so large or spread out they may not know about the extra effort that an individual employee puts in. 

An alternative is a peer to peer recognition programme. Peer to peer recognition programmes allow any member of the organisation to recognise their co-workers. Employees are empowered to recognise the efforts of not just those in their own team but employees throughout the entire organisation, and everyone is included. What makes peer to peer recognition programmes particularly effective is that employees often have a better understanding of the contribution their co-workers have made than managers.

Peer to peer recognition programmes are easy to set up and can have positive impact on your business while avoiding over-burdening your managers with additional recognition responsibilities and tasks.

There’s no doubt that staff recognition schemes can be an extremely effective way to encourage employees to surpass targets, work better as a team or develop citizenship behaviours at work, such as supporting colleagues, but only if they are run correctly.

Sales incentive schemes

Generating a healthy sales pipeline is one of the biggest challenges in any business, so it pays to provide staff incentives that are directly linked to sales performance. After all, rewarding good performance for sales staff has been around since Maslow’s days when he created his well-known ‘Hierarchy of Needs’.

However, in recent years the need to underplay the role of incentives in recognising performance has been very much on the agenda. As such, sales incentive schemes are being reborn as performance improvement programmes, which both reward and recognise staff based on expanded outcomes such as customer satisfaction, cross-selling, upselling, aftersales care and customer retention.

This means that sales incentive schemes need to be much more than a ‘carrot and stick’ exercise. Instead of focusing the targets, and attention, on glamorous end-of-year rewards, sales directors need to focus the scheme on what the business needs to achieve, such as:

  • Changing the daily behaviours of sales staff
  • Educating employees on new products/services
  • Communicating brand values and encouraging employees to ‘live them’
  • Sourcing the right product/service for your customer (moving away from a ‘hard sell’ to a ‘consultative sell’)
  • Identifying opportunities to cross sell other products / services
  • Building long standing relationships with your customers

These new generation sales incentive schemes will make your employees feel valued and as a result play a role in improving employee loyalty and recruiting and retaining the best talent.

Say thank you with vouchers

There is no point wasting time on incentive programme rewards that don’t incentivise and motivate your employees, but it can be tricky to decide what rewards to offer your employees.

One option is to give your staff a choice by rewarding them with vouchers, gift cards and e-vouchers. If sales managers talk to their employees they can understand them and what makes them tick, this enables them to tailor the voucher choices to their employees and so offer an aspirational award that is tailored to each individual’s tastes.

When buying vouchers in bulk organisations can also usually negotiate a discount on the vouchers so that their budget goes further.

If your organisation is looking to give employees more but doesn’t have the budget to offer cash bonuses and pay rises then peer to peer recognition programmes and sales incentive schemes can have a positive impact on your employees - and your business.

Iain Thomson is the director of incentives and rewards at P&MM Motivation, part of the Sodexo family. B512-1483615384_iainthomson.jpg

This article was provided by P&MM Motivation, part of the Sodexo family.


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