3 Types of Rewards & Incentives for Employees

There are three types of rewards and incentives that are effective.

  • Informal rewards: These include anything from saying “thank you” to taking a successful team to lunch at a favorite restaurant. Be spontaneous when handling informal rewards and do it as soon as possible.
  • Rewards for specific achievements: When employees meet and exceed some standard, whether it’s a sales quota, production targets or quality measures, they should be rewarded for their achievement. These can be rotating awards, a trophy or a plaque that the winners display in their work area for a period of time. It’s also a good idea to publicly announce these rewards in the company newspaper or on the bulletin board. Rewards can also be given for unique individual achievement. How you reward your employees is a matter of budget and imagination. The important thing is not to overlook them.
  • Formal awards: These are usually presented for efforts made over some predetermined period of time, such as sales representative of the month or year.

Guidelines for effectively rewarding and recognizing these employees:

  • Match the reward to the person. Start with her personal preferences; reward her in ways she truly appreciates. For instance, if you know the person’s hobby is rug weaving, you could buy her a nicely packaged assortment of yams. Such rewards may be personal or official, informal or formal, public or private, and they may be gifts or activities, such as a night at the theater. A useful thing you can do as a supervisor is to survey your people about what they want for rewards and incentives. Survey yourself, too. You also deserve recognition and rewards.
  • Match the reward to the achievement. Take into account the significance of the achievement. Obviously an employee who completes a two-year project ahead of schedule should be rewarded in a more substantial way than someone who does a favor for you.
  • Be timely and specific. To be effective, rewards need to be given as soon as possible. Rewards that come weeks or months later do little to motivate employees to repeat their actions. Always explain why the award is being given.
  • Rewards and recognition programs, like any other project, require preparation, planning and effective implementation. If you plan them well and select people who will see them through, you’ll increase their effectiveness considerably.


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