If you’ve considered revamping your employee rewards program, then kudos! You are definitely thinking strategically about employee engagement and retention.

Employee rewards programs have evolved significantly from their HR origins. Traditional rewards were point-in-time recognition intended to communicate a “thank you” to employees that might be soon forgotten.

Twenty-first century rewards have pivoted to a strategic focus that aligns closely with recruiting, employee engagement, and retention efforts. They’re comprehensive and inclusive in nature and designed to address some of the current issues employers are facing with their workforce.

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What are Employee Rewards?

An employee rewards program creates unique opportunities for an organization to thank employees for something specific such as a job well-done, or completing a high-priority fire drill.

While historically rewards have been tied to standard employee compensation and benefits, they are evolving to be more comprehensive and individualistic as more focus is being placed on overall employee well-being,

Rewards vs Recognition

Rewards and recognition are are connected and often grouped together as an employee benefit. But there are distinct differences that impact their application and reception.

Rewards are generally something tangible and tied to a specific situation. Examples might include a bonus payment, plaque, or gift card. Rewards are frequently a one-off event and typically given by HR or a direct manager.

In contrast, recognition is broader in scope and focuses less on tangible items and more on the emotional aspect of calling out an act or performance that rises above the norm.

Both rewards and recognition are essential for creating a culture that drives high performance, but it’s important to remember to strike a balance between the two.

Types of Employee Rewards

There are so many great ways to reward employees for their contributions to the success of your organization ranging between traditional and innovative. Below we’ll explore some of the most common rewards used today.


There are two types of monetary rewards:direct and indirect.

Direct compensation refers to actual pay, such as rate increases, bonuses, incentives, and overtime.

Indirect compensation refers to perks or benefits for the employee which are paid totally or in part by the employer. It typically includes health & welfare insurance, car allowance, paid parking and other similar compensation.

Everyone likes to receive more money or financial benefits. But money alone is not usually sufficient to retain employees if the company culture is not welcoming and nurturing.


Intrinsic, extrinsic, and non-traditional rewards are all examples of  non-monetary or  “feel good” benefits. These  keep employees engaged because they have specific value to employees.

Intrinsic rewards have psychological benefits. They represent things that are valuable to the employee because it comes from internal motivation. It represents something that the employee enjoys and wants to do.

Extrinsic motivation refers to behaviors that the employee will perform in order to receive a reward that they perceive as valuable.


After the pandemic and in the midst of tough competition for talent, employees have gotten used to enjoying flexibility in their schedules, working from home, and traditional rewards.

In the new reality, it’s time to up your rewards game to non-traditional rewards that are more personalized to employee needs.

Having a difficult time determining rewards? Ask the intended recipients – your employees! Giving people things that they really value shows that you’re listening, that you understand them, and that you care. Great, non-traditional rewards make life a little bit easier or more fun for your employees.

10 Impactful Employee Rewards Ideas

Aside from an excellent total compensation program, employers will need to understand the things that are most important to their workforce and incorporate them into their rewards programs. Typically, you can structure your rewards around 3 main buckets: rewarding work, inclusive benefits, and environmental rewards.

Rewarding work

Employees in general want to do work that matters, and there’s a growing demographic of younger employees entering the workforce in the next decade that are especially focused on quality of life and of work.

  • Job enrichment – The objective for this strategy is to provide depth and meaning to the work employees do every day. Everyone craves a sense of purpose and contributing to a greater cause. This could look like giving employees more autonomy in decision-making or providing learning opportunities for advancement.
  • Job enlargement – Enlargement focuses on the breadth of an employee’s duties. It involves adding more responsibilities or tasks. While fulfilling this strategy should be planned carefully to avoid the appearance of more work for the same pay.
  • Job rotation – When employees rotate through different jobs and learn different skills employers benefit by building cohesive teams instead of silos. This strategy can also strengthen your diversity and equity initiatives by ensuring that all employees have equal opportunities for advancement.

Inclusive benefits

One size should definitely not fit everybody when it comes to rewards. A diverse benefits program is equitable and attractive to employees as well as future new hires.

  • Floating holidays – It’s nice to have the same day off as friends and family for celebrations. But if you’re fostering a Diverse, Equitable, and Inclusive (DE&I ) culture, you’ll find that standard holidays may not be valued the same by all employees. Letting employees choose which holidays are important to them sends a clear message that your company supports differences.
  • Health & Welfare insurance – Provide comprehensive and inclusive coverage to employees. It removes the focus on worrying about life challenges and allows them to focus on the shared business objective.
  • Generous paid time off – Time away from work is one of the best ways to ensure that time at work is highly productive. In general, the U.S. lags behind other industrialized countries in regard to the amount of time off provided so this is a definite competitive edge for many U.S. employers.

Work environment rewards

Gifts and memberships are great thank-yous but have a short shelf-life. Rewards that enrich employees’ work environment have a much longer positive effect.

  • Technology – Consider using technology to enrich the work environment. Examples could include gamification, automation of tasks, enhanced communication, etc.
  • On-demand learning – Provide employees with options to select learning opportunities from their phone or tablet whenever they choose.
  • Comfort – Use adjustable workstations, innovative common areas designed to draw people together, inclusive facilities and grounds to create a welcoming, collaborative environment.
  • Collaboration – The ability to work collaboratively and build teams with a diversity of thought is rewarding to employees and beneficial to employers.

Your employees are diverse and unique. Strive to build a rewards program that reflects that uniqueness by providing a range of comforts and benefits that relieve personal worries. Although this can seem like a daunting task at first, it can be easily managed when broken down into a few impactful steps.

How to Start an Employee Rewards Program

Congratulations! If you are considering a rewards program for your company then you’re moving in the right direction. The right reward system can be highly motivating, which ultimately translates to more benefit to employer and employee.

Step 1: Form a Rewards Team

Form a cross-functional “rewards” team or committee with members that are invested in employee engagement. Determine the plan objectives and desired outcomes and create a plan that aligns with the goals of the program.

Step 2: Get Buy-In

Identify a realistic budget and obtain leadership input and engagement. HR may be the driving force or have the responsibility for the creation and maintenance, but rewarding employees is everyone’s responsibility.

Step 3: Explore Reward Options

Investigate options for rewards that are inclusive and best suit your workforce. This could look like polling employees to assess what they find valuable or collaborating with a company that specializes in rewards, giving employees the power to choose their reward from a catalogue. Be creative and innovative. Don’t be afraid to try something completely new.

Step 4: Roll Out

Communicate your plan. Part of the benefit of a rewards program is to allow for some autonomy in giving or recommending rewards, but it’s still necessary to have a written policy outlining guidelines and eligibility to ensure fairness and appropriateness.

Ensure that everyone in the organization understands the objectives, procedure, and rules but also feels empowered to recommend a reward for their co-workers.

Regardless of what program you implement, remember to always include accountability for management and leadership to ensure the program’s success.

The Value of an Employee Rewards Program

It should seem obvious that a well-crafted employee rewards program has numerous benefits for employees as well as the employer. Unfortunately, it has historically been viewed more often as a “feel good” afterthought.

Studies continue to report on the positive returns on investment (ROI) to organizations that invest in a rewards program. However, an article in SHRM’s HR Magazine warns that producing hard numbers is a bit of a challenge, especially when trying to measure how good people feel.

But while hard numbers are difficult to produce, experts like those at SHRM make it clear that these programs are well worth the effort. As the authors point out, “Just because something can’t be measured doesn’t mean it has no value”.

Questions You’ve Asked Us About Employee Rewards

Studies continue to show that a rewards program is a cost efficient investment that reduces turnover and increases productivity.
The eligibility factors for receiving any type of reward should be clearly outlined and communicated according to your company’s objectives.

Beth has many years of corporate HR and business experience in a variety of business environments. She found her second career writing a wide variety of HR content (DE&I, thought leadership, blog articles, eBooks, case studies, and more) for HR SaaS companies.

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