Rewards; Gold Mine or Minefield?

Rewards, to facilitate ongoing performance or to effect change in the company’s culture, are not generally used effectively, or often enough, by many otherwise astute, business owners.

Too often, consultants observe the wrong behaviours being rewarded by business owners, resulting in unintended consequences which can, and often do, derail well thought out business plans and lead to serious financial issues.

In business, rewards are generally allocated for the purposes of developing people and influencing changes in their behaviour to prepare them for alternative or higher level roles, or for effecting required organisational changes and improving overall company financial performance.

At an individual level, rewards encourage people to learn, prompt the taking of necessary steps for personal growth, facilitate the desire to make greater contributions to the company’s well being, entice the desire to lead others and leverage off their success, and flame the passion in those who aspire to top leadership roles.

At a company level, rewards encourage the development of the required company culture, promote teamwork throughout the company, shift the performance focus to the achievement of specific financial outcomes, and display how serious the company is in respect to compliance with ethical and governance norms.

Rewards can take many forms, some which are familiar to most business owners, and many which may not be so familiar for one reason or another. Common rewards include;

a) a simple thank you
b) quiet words of encouragement
c) transfer to chosen area or location
d) promotion to a new position
e) better shift or roster allocation
f) paid day(s) off
g) preferred holiday dates
h) tickets to special events
i) discounts on company products/services
j) cash bonuses
k) trips at company expense
l) company shares or options
m) company expense account
n) child care/education allowances
o) company car

Used well, and with careful attention to ensuring that any reward offered is actually rewarding the right behaviour(s) to deliver the specific outcome the business wishes to achieve, rewards can turn any business into a veritable gold mine.

Used unwisely, not nearly often enough, or only in favoured parts of the business, rewards can create a minefield for the unsuspecting business owner. Whilst it is beyond the scope of this article to provide the level of guidance needed to step a business owner through the minefield that reward systems can become, the following tips may prevent a little pain;

a) ensure that you reward only behaviours that clearly support and reinforce company culture,
b) ensure that rewards to encourage high performance in all areas of the business are spread throughout all operational and support areas,
c) ensure that everyone, without exception, receives a reward of some kind when key elements of the business strategy are delivered on time and on budget,
d) ensure that evidenced behaviour supporting required cultural change is immediately rewarded and crucially,
e) ensure that any reward offered, especially at an individual level, is of a value to the recipient equal to, or exceeding, the cost of the reward to the company.

How well do you understand how rewards motivate or demotivate?

Do you use appropriate rewards to encourage peak performance and staff retention?

When did you last reward yourself?

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