Do Cash Rewards Actually Boost Employee Performance?
There’s always value in finding ways to strengthen employee morale and boost performance. Launching a rewards program is a popular way to boost productivity and performance. But it’s not as simple as announcing a cash reward and sitting back to reap results. We’ve collected critical insights into what makes rewards programs succeed or fail, and how you can get the best results from a financial incentive.
Individual vs. Team Rewards
Several studies found that team rewards tend to yield better results in terms of employee satisfaction than individual rewards — but this isn’t guaranteed across the board. Some advantages of team-based rewards are that employees encourage each other and don’t want to let down the team, which can drive performance. Potential downsides include high-performing employees losing motivation when team members who coast also get rewarded.
If you’re considering a rewards program mainly for a group of employees already performing at a fairly high level, it may make sense to opt for an individual approach. A downside to watch out for is unhealthy competition, but you can avoid this by connecting rewards to individual performance or tasks, rather than having employees compete over limited resources. A bonus for frugal travel budgeting is less likely to cause trouble than rewarding the salesperson who closes the most new clients (which can lead the sales team to fight over new accounts).
Rewarding Quotas vs. Specific Achievements
A study in Human Resource Management Journal on over 13,000 employees found that performance-related pay incentives were associated with organizational commitment and trust in management.
Recent research shows rewards programs may work better when they’re based on immediate rewards for accomplishments, rather than asking employees to wait until a long project is complete. Delivering a reward promptly keeps the rewards-earning strategy top of mind and may increase motivation to keep the new habit strong. Quotas require a longer wait, and because they represent a broader goal, it can be tougher to connect the reward to a particular skill or action. Achievement-oriented rewards can drill down into specific practices you want to encourage in your organization.
Long-Term vs. Short-Term Rewards Programs
A common misconception about rewards is that they will start to feel like an entitlement and lose power over time. In fact, the Incentive Research Foundation found that incentive programs that continued for a year or longer resulted in an average 44% increase in employee performance, compared to 30% increase in programs that lasted 6 months or less.
The key to keeping a long-term rewards program feeling fresh and motivating is maintaining a clear connection between goals and rewards. When rewards are contingent on achieving specific objectives that represent above-and-beyond performance (as opposed to rewards that are generic or based on everyday tasks), they keep their efficacy even in the long term.
TravelBank’s incentive feature allows companies to split travel savings with an employee. So the specific dollar reward is directly related to excellent use of a company’s travel budget resources, reinforcing the cost-saving value of smarter travel planning.
How to Measure Results of an Incentive Program
Your best chance to see impactful results from a cash incentive program is to start with a thorough understanding of what the rewards program is meant to achieve:
Assess current performance gaps
Chances are, you’re considering an incentive program because performance is lacking in some way. Identify and quantify the gap if you can so you can measure improvements. For example, note average daily spend for business travel or percentage of business trips that go over budget.
Choose an incentive strategy that fits your company
Some companies need to improve collaboration and may prefer a team reward, while other companies lean toward individual recognition for more independent workers. Companies pushing toward a critical deadline may see more value in a short-term reward, while companies focused on long-term job satisfaction and employee retention might be more interested in an ongoing rewards structure.
Communicate the value of meeting focus goals
Incentives put a spotlight on tasks that employees might have otherwise moved to the bottom of the list. Be clear about why you want to boost the value of the actions that earn rewards.
Offer training and support
A successful rewards program should be one part of an overall model that helps employees work effectively. That could mean implementing a centralized travel management system for the whole company instead of having each business traveler handle booking arrangements solo. Training workers on new tech or keeping supervisors looped in to check any travel arrangements out of budget maximizes everyone’s chance of success.
Analyze and adjust
Set a date to measure progress, like productivity, cost savings or morale. Do you have measurable improvements in time for task completion, or budget compliance? Compare data and feedback against your initial targets for the program, and decide on any adjustments to continue improving.
Learn more about how TravelBank’s features can support your rewards options for your team and help save time and money.