Employee Rewards to Boost Profitability

(amiatrevisan). Submitted on Wed, 25 Jan 2012

Employee rewards, if done properly and within a comprehensive incentive strategy, can ultimately lead to stark increases in profitability and even shareholder returns.



It goes this way: a properly implemented employee rewards program will help increase employee motivation; a highly motivated workforce can be tremendously productive and turn in increased results; constantly reaching goals means increased profit. 

As the influential 1990s HR text “Contented Cows Give More Milk” by Bill Callette and Richard Hadden, cited in the paper “Motivation and Incentive Strategy: The Key to Making Your Workplace Exceptional” said, “Building an environment of positive employee relations is not just the “right thing to do, it is the profitable thing to do.”  

What happens to organizations that address employee rewards and motivation?

1. According to Contented Cows Give More Milk, companies that care about their employees and communicate this well across the organization post four times more sales growth than organizations that don’t have an employee rewards program. 

2. They have two times more revenue than companies that choose to ignore employee rewards.

3. They have more job growth.

4. They have a net income increase of 756%. Compare this to the paltry 1% net income increase of companies that don’t have any kind of employee rewards program.

5. They have a revenue increase of 682%; while companies that don’t pay attention to their workforce only post 199 %.

6. They typically see their stock performance increase by 901% while organizations that don’t have an incentive strategy only have an increase of 74%.  

The key is creating and implementing an employee rewards program that will properly motivate employees. The incentive program has to objective, transparent, consistent and it has to be communicated as such to the entire organization. If selected, implemented and monitored correctly – according to the study “Incentives, Motivation and Workplace Performance: Research & Best Practices,” conducted by researchers for the International Society of Performance Improvement and funded with a grant by the SITE Foundation incentive programs can deliver the following results:

* Improved individual performance by as much as 22 percent
* Improved team performance by as much as 44 percent
* Hiring and retention of quality employees
* Increased employee engagement

“Motivation and Incentive Strategy” also mentions the following benefits:
* Reduction on turnover
* Stark increases in profitability and shareholder return.
* Enhanced levels of organizational performance
* Positive returns that make any workplace exceptional.

The average return on investment in a reward and incentive system? According to “Motivation and Incentive Strategy,” it’s a whopping 300%. And your incentive system doesn’t even have to be a costly program. 

Formal and informal activities for the programs, for example, are typically low-cost or almost no cost. The public recognition can be a simple affair. It can even be part of a bigger celebration – the company’s anniversary, for example – the important thing is to set the right tone. You have to communicate that it is a sincere effort to recognize the achievements of employees.

 

About the Author

Amia Trevisan is a HR specialist who manages employee motivation programs, employee rewards and benefits. On the other hand, if you need help in payroll services, you can also consult The EI Group. They can give you a hand.

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