happy employee chat in an office

Employee Reward and Recognition

Performance Management
October 12, 2021
Rad time: 10min
Get Advanced Tips

The average cost of employee turnover in the UK is roughly £11,000 per person. What’s more is that about 49% of British employees share that they wouldn’t have quit if they were being recognised more regularly for their efforts. These statistics have led to the initiation and focus on reward and recognition in the workplace. 

While a primary strategy for employee retention is employee rewards and recognition programmes, there’s more than meets the eye. Although benefits do entice people and promote a positive working environment, it cannot be the only method used to retain your talented workforce as it’s not everlasting. 

Ultimately, employees’ wellbeing, mental health, and overall sentiments about their role plays a pivotal role in their sense of satisfaction, their likelihood of retention, and their levels of motivation. The best HR teams know employee wellbeing tools can work alongside rewards and recognitions programmes to reap spectacular results. 

We’ll cover what you need to know to develop rewards and recognition in the workplace, as well as how you can adequately monitor your workforce’s mental wellbeing.

What is Reward and Recognition in the Workplace?

While reward and recognition are often talked about in conjunction with one another, they are slightly different in their meaning and application. Essentially, reward is pay (of economic value), whereas recognition is regarded as praise (of emotional value). There are additional differences that separate the two that we will touch on shortly. 

Reward and recognition is a tactic that’s deployed by HR teams and organisations to motivate, engage, and support positive behaviours. Some examples of rewards and recognition in the workplace are: compensation, bonuses, team celebrations, milestone celebrations or recognition of years served, to name a few. 

How To Implement Reward and Recognition Schemes?

Implementing reward and recognition schemes does not have to be complex, costly, or chaotic. As a rule of thumb, the reward and recognition scheme should be strategically separated from merit pay or salary increases. 

In order to implement a reward system within your organisation, consider the following steps:

  1. Define your vision: Outline the goals, benefits, and costs of your program. 
  1. Build a team: Pull together a committee of people who can be held accountable for implementing and managing rewards programs. (This is a place where technology can be of service). 
  1. Develop clear guidelines: Create guidelines that can be used time and time again. This will include the timeliness of recognition, frequency, and specificity of what type of accomplishments receive praise. 
  1. Set criteria: Review the reasons, actions, or behaviours that earn recognition so that employees are aware of what to expect. This includes: the types of behaviour, the time frame, and the type of recognition granted. 
  1. Monitor implementation: Once you get your programme up and running, be sure to check it against your vision to ensure it’s working as intended. 

How to Create a Reward and Recognition Scheme?

While every organisation can develop an entirely unique reward and recognition scheme, there are specific guidelines and considerations worth taking into account when creating your own. 

In essence, a well-designed reward and recognition programme should consist of these attributes: 

1. Business Goals Connection 

It is of primary importance that employees are aware of the overall business goals and can directly see their role in helping to accomplish said goals. When you strongly link the rewards to business objectives, then employees get to see how their work makes an impact and they have a grasp on what’s expected from them (and most importantly, why). 

But be sure to reward based on outcomes, not deliverables, otherwise this can drive gamification and other negative goal-orientated behaviours.

2. Personalisation

At the end of the day, employees are humans, and all humans have their own set of needs and motivating factors. It’s best to deploy a rewards program that is tailored to each individual’s wants and desires. But, how can you know what every single employee wants? 

A surefire way is to ask directly. You can also give staff the option to choose which reward they prefer. This can be done during annual reviews and salary negotiations for large rewards like pay rises and bonuses, while gift vouchers can be used for lower value rewards.

No matter how good your rewards and recognition programme is, staff will leave if they feel stressed or unhappy at work or in life. That is why a wellbeing platform is a powerful tool for HR that provides your HR team with the means to improve employee wellbeing, productivity and focus. 

The tool can provide executives with real-time insights and analytics behind your workforce’s mental and emotional state of being. 

The feedback remains anonymous, and the wellbeing platform can inform you about what challenges exist to different areas of the business so that your business can tailor support to those areas. This means issues can be proactively addressed before they transform into a bigger problem that results in absenteeism, or ultimately, staff turnover. 

The wellbeing platform also offers a self-diagnosis tool so that employees can understand the causes of their own anxieties and stress and take actionable steps to overcome these hurdles. 

3. Clear Communication 

All of your employees’ questions about a rewards programme should be clearly and concisely answered in your messaging. Be sure to answer questions like: 

  • What is the goal of the rewards and recognition programme? 
  • What resources can your employees rely on? 
  • How is their success being measured? 

Why is Timing Important for Reward and Recognition Schemes?

The following is true of life and reward and recognition schemes: timing is everything. 

Recognition and rewards have to take place when the deserving performance is still on top of mind. Otherwise, it will seem forced and disingenuine. 

Even if the valuable performance occurs more than once, then the reward and/or recognition needs to follow each time. Developing the scheme ahead of time can help to ensure timeliness and relevant reward based on the pre-defined measures of success. 

However, timeliness is not always enough. Even when the rewards and recognition programme is executed properly, employees may still feel overworked, stressed, or unhappy if their needs are not being met in the workplace day-in and day-out. 

To overcome this challenge, an employee wellbeing tool can be used to robustly monitor employees mood so that you can address issues before they worsen and even be able to predict what’s yet to come based on patterns in data. 

Why is Employee Reward and Recognition Important?

Over 91% of human resources personnel believe that recognition and rewards programmes make employees more likely to stay in their jobs. While reward and recognition is surely linked to employee retention, it is not the only reason why it is important. 

Beyond retention, reward and recognition plays a large role in how satisfied, motivated, and productive employees will be. Rewards and recognition become essential to how an employee feels about the work that they do. The more satisfied and happy someone feels about the work they accomplish, the more likely they will be to continue doing good work, which boosts the entire company culture’s morale. 

With high morale, there’s a lower turnover rate because everyone is aligned with achieving their goals, as well as the business goals overall.  

But, rewards and recognition programmes can only go so far to boost morale. If your employees are stressed, anxious or overworked, then no matter how good your rewards scheme is, they will be unhappy and unmotivated. 

A wellbeing tool can solve this by enabling HR to track employees' mood across the business, in real time and understand employees’ sentiments and overall mental health. This way, you may find rather than just rewarding employees for succeeding in big projects, employees actually are more focused and motivated when their wellbeing is better supported. 

What is the Aim of Rewards and Recognition Schemes?

The goal of your rewards and recognition scheme will be to encourage and engage your employees while promoting positive behaviour and success. 

To make the most out of your programme and prompt these desirable outcomes, your rewards and recognition schemes should be:

  • Aligned with the overall business goals and objectives so that the right behaviours and processes are prioritised to achieve said goals. 
  • Reflect the organisation’s overall values. For example, if your organisation takes pride in creative thinking or out-of-the-box problem-solving efforts, then it is important that you take notice when employees share creative solutions for problems. 
  • Include spontaneous recognition that is not expected like rewards are. This way, employees continue to perform at their peak while being consistently recognised and appreciated for the work they do. This creates a positive reinforcement loop. 
  • Rewards and recognitions should always be fair and remain unbiased. If employees feel that there is favoritism, then the result will be the exact opposite of what’s intended as employees will become deflated and resentful. 

What is the Difference Between Reward and Recognition Schemes?

When developing your reward and recognition schemes, it’s best to fully understand the difference between reward and recognition so you know which is optimal to apply in each scenario. 

Here’s an overview of how they differ: 


  • Rewards are transactional and mostly tangible 
  • Rewards have economic value 
  • Rewards are impersonal and fixed 
  • Rewards are conditional and expected 
  • Rewards are tied directly to accomplishments and goals. For example, “If a salesperson reaches the sales goal of $X, then the salesperson will earn Y.” 
  • Examples of rewards include: variable pay, bonuses, stock options, and profit sharing, to name a few


  • Recognition is relational and intangible
  • Recognitions are generally experienced (rather than consumed like rewards)
  • Recognition is personal 
  • Recognition is spontaneous and unexpected 
  • Recognition entails emotional value over economic value 
  • Recognition tends to happen more frequently than reward because it’s relatively less expensive 
  • Recognition can be employee-led as there’s no approval in budget for recognition, as there is with reward 
  • An example of a recognition may be a hand-written thank you card or a plaque that’s presented for a job well done to a specific employee in front of their entire team 

When developing your organisation’s program, it literally and figuratively pays to incorporate both recognition and rewards. 

What to Consider When Making Employee Benefits and Rewards?

We’ve said it once already, but it’s worth reiterating: the most successful employee benefits and rewards systems are aligned with business goals. 

In order to develop a programme that meets this criteria, be sure to address these considerations:

  • Identify the business goals you wish to support 
  • Determine what rewards are appropriately tied to each achievement
  • Communicate the rewards and recognition program effectively to employees so that everyone knows what to expect and what is expected of them in order to reap the rewards.

Importantly, even when you design the perfect rewards and recognition programme, you’ll need to understand the psychology and motivators behind your employees actions. 

The foundation of maintaining a successful reward and recognition scheme relies on your employees mental health and overall wellbeing, which can be made known with the help of an employee wellbeing tool and the analytical data that comes with it. 

How to Tell if Reward and Recognition Scheme is Successful?

Ultimately, the goal of your rewards and recognition programme is to ensure that your employees are happy, satisfied, and feel valued. So, naturally, the best way to find out if the programme is achieving success is to directly ask your team for feedback. 

You can do so by devising asurvey and sending out the questions to your employees directly. It’s typically a good idea to make these surveys anonymous so that your team feels comfortable being completely transparent. 

However, we all know that surveys contain bias, not only in the questions, but in the responses as many employees feel the need to respond with the answer they believe their employer wants to hear. 

An employee wellbeing platform can provide you with the ability to honestly gauge how your employees feel and think about their job. With the platform, employees can utilise the check-in and reflections feature to log their sentiments. 

This data is made available to employers allowing HR to monitor employees’ mood in real-time to see the impact of changes made across teams or the organisation as a whole.

How to Know if Reward and Recognition Scheme Is Good Value?

Since reward and recognition schemes are tied to a monetary value (in the case of rewards), you’ll want to make sure there is ROI. From various survey data, it’s become clear that the standard investment for a reward and recognition hovers between 1% - 2% of payroll. 

Granted you are spending that amount and witnessing a motivated and engaged workforce, then you can rest assured your scheme is providing good value. Depending on your business goals, you can test various KPIs or rely on a wellbeing tool to monitor employees’ emotional responses so you can keep an eye on the impact of your programme at all times. 

Your Employees are Everything 

At the end of the day, businesses don’t work without the people that do the work. As such, it’s of paramount importance to ensure that your employees are well-taken care of and feel appreciated. A rewards and recognition programme is just one of many tried and true initiatives to ensure these outcomes. 

A rewards and recognition programme can only take your team’s satisfaction so far. The real difference in employee focus, productivity, and retention comes down to how they feel about what they do, which can be monitored and understood in real-time with the deployment of an employee wellbeing tool. 

Your employees want to be seen, heard, and understood. By developing a culture that supports this notion and equipping them with wellbeing support enables you to boost employee retention, satisfaction, and productivity more effectively. 

Share this post

Related articles

Book a Demo

To find out how LUME can help your organisation to better understand and support the mental health of your employees, just fill in the form and we’ll be in touch.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.