4 Key Reasons Employee Reward Programs Fail

By on November 27, 2019
Employee receiving public recognition by manager

From gold-plated, company-branded watches to luxurious travel experiences, employee reward programs have a long history of attempting to inspire employee behavior and performance in organizations.

The existence of such programs isn’t slowing down. According to insights the Incentive Research Foundation reported from a recent Incentive Marketplace Estimate Research Study, more employers than ever are offering non-cash rewards aimed directly at building relationships, encouraging inclusion and knowledge-sharing, and promoting engagement.

Yet, in a survey by employee engagement specialist Reward Gateway, only 20% of HR managers are confident in their employee recognition and rewards strategy.

As a leadership and strategic talent development consultant for St. Louis Community College’s Workforce Solutions Group, I’ve worked with a multitude of organizations who aim to drive positive employee behavior by implementing reward programs. When they work, employee incentive programs can successfully foster a high-performance culture filled with individuals who are happy to come to work. However, when they don’t work, organizations lose quite a bit in terms of financial and personnel investment, and employees can find themselves discouraged or resentful.

In many cases, there are a few key reasons employee reward programs fail.

Failure reason #1: Incentive-worthy employee behaviors are not defined clearly enough

Employee reward programs often fall flat when specific behaviors the organization wants to promote are not identified from the start.

Before you design your employee reward program, consider two key questions:

  • What behaviors does your organization want to drive?
  • What behavior changes will have the most positive impact on your organization’s goals?

Once you know the answers to these questions, see how you can then narrow the focus on individual observable behaviors. For instance, rather than stating that your organization wants to improve the friendliness of its staff, a behavior such as thanking every customer is far more specific and actionable, which makes it easier to measure and reward accordingly.

Failure reason #2: The rewards are not meaningful or motivating to the targeted employees

If you worked in a quality assurance role, would you work any harder than usual to acquire an “I ♥ Quality” button that you could wear around the office? (And would you even wear it if you got one?)

When you want to know what rewards your employees might find meaningful or motivating, the first step is to ask! Send out a survey requesting reward suggestions that your employees would find most desirable. Perhaps they want something tangible, or they might be interested in an opportunity to experience lunch with friends on the company’s dime.

Your employee incentive program investment could be wasted without a reward that truly captures your employees’ attention.

Failure reason #3: Lack of publicity

The reason lottery programs are so successful in attracting individuals to spend their hard-earned money to buy tickets with very rare chances of winning big is because lottery advertising often includes images of extraordinarily happy past winners. When individuals see the ecstatic faces of these lucky people, they begin to envision their own good fortunate and think, “Perhaps that could be me!” Next thing they know, they’re purchasing a ticket. The publicly celebrated reward drove their behavior.

This phenomenon is called “modeling,” and it is especially relevant to our employee reward programs. Not every employee will receive a reward, so it is essential that employees witness others exhibiting the behavior and getting rewarded for it to successfully promote widespread behavior change. Driving performance improvements through publicizing other employee achievements and rewards is vital since it is not feasible from a time and money perspective to reward every single employee every time.

Failure reason #4: Lack of systematic support for the new behavior

It’s not uncommon for an organization to incentivize one behavior without updating and aligning the preexisting systems in place to further reinforce that behavior. When this is the case, employees are confused at best and demotivated at worst.

When a behavior is taught or promoted, it needs to be supported systematically to survive. For instance, if an organization wants to reinforce the behavior of thanking every customer, a new dimension documenting the employee’s adherence to this behavior should be added to the existing performance expectations and measures. Supervisors and leaders need to be educated on this new expectation so that they can reinforce it when they see it and promote it when they do not. This provides a way to continue monitoring and validating the reward program behavior.

It is good practice in any organization to check the alignment of the performance improvement system with their mission and goals. Oftentimes when they do, they find systems that do not support each other and, in many cases, work against each other. Ideally, all systems should be working together to move the organization in the desired direction.

If you want to learn more about creating a more motivating business culture, we can help. Check out our workforce training solutions and contact us for more information.

About Lou Gerst

Lou is the Practice Leader for Strategic Talent Development with the Workforce Solutions Group of St. Louis Community College.

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