How Much Should You Budget For Employee Rewards & Recognition?
The average budget for employee recognition is 2% of payroll, and the median amount is 1%. (source)
Considering these statistics, an employee recognition and rewards program will cost you ~$100 per month per employee. (calculation based on average $60k yearly salary per employee)
Benefits of Giving Employee Rewards
Companies give their employees rewards and recognition because of the following reasons:
- Better customer service arising from better employee engagement
- Employee retention that lessens recruitment cost
- Enhanced adherence to protocols that reduce absenteeism and workplace accidents
- Improves organizational culture and employee well-being
- Increased productivity due to employee motivation
Steps in Creating a Reward System
To create a reward system for company employees, management undertakes certain steps, as follows:
- Identification of group or company goals that's supported by the reward system;
- Naming the desired worker performance that will strengthen the company's objectives;
- Determination of main performance measurements founded on the person's or group's earlier achievements;
- Determination of proper rewards; and,
- Communication of the program to the staff.
Business Reward Cost Factors
There are many factors that will increase the cost of employee rewards:
- The design or nature of the reward and recognition program.
- Age of workers. (A firm with older workers may have increased health costs).
- Gender of workers (Women may have higher insurance premiums than men).
- Lifestyle of Employees
Examples of Rewards Most Preferred by Employees
Rewards and recognition can be anything from a simple pat at the back of the excelling employee. Other than that, there are some other forms of rewards that employees appreciate getting from their immediate supervisor or the company, such as:
- Clothing or stuff with company logo
- Free monthly subscription of magazines or consumable products
- Company-paid online course to learn a new skill
- Premium or upgraded office products
- Company-sponsored yoga classes
- Lunch coupons
- Tickets to concerts, movies, sports games, or a festival
- Sponsor a team or employee in a marathon or a contest
- Giving a transportation budget for a week or month
- Free team lunch
- Spotify or Grammarly Premium subscription
- Paid day off
- A long lunch break
- Cash or gift checks
- Dinner with the immediate supervisor
- Parking space
- Get free training as preferred by the staff
- Tech accessories, such as a headphone, tablet, speaker, or smartwatch
- Company-paid weekend holiday with the family
- Healthy snacks at work
Employee Recognition Software Platforms for Rewards Programs
Considering that we are in the digital age and businesses would like to cut costs, there is now a growing demand for employee recognition software. These were created to assist companies in retaining talent, building culture, and measuring essential intangibles like staff morale.
Factors to Consider when Choosing an Employee Recognition Software Platform
Since the software platform recognizes employee attainments and even provides gifts for birthdays and other special occasions, companies should consider the following when choosing which platform to use.
Compatibility with company systems
Clear identification of recognition against rewards
Ease of use and scalability of the software
Best Employee Recognition Software Platforms and Rewards Programs
Elevates the performance and engagement of employees by continuously asking questions and starting the right conversations.
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Hey! 👋 I'm Pat Walls, the founder of Starter Story.
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