Wrong Way road sign Photo by NEONbrand.

At Arcade, we work closely with our customers to build employee rewards programs that actually deliver results. It’s always surprising to us how much the success of a rewards program is unrelated to its cost. When companies find that they’re spending a lot of money on employee rewards programs but not seeing the benefits, it’s usually because they’re making one of these five mistakes.

1. Not involving employees in developing a rewards strategy

Just like you can’t buy a great gift for someone unless you know what what makes them tick, designing an effective rewards program requires that you understand what matters to your employees. This can change at the department, team, and individual level.

What kinds of rewards do they like?

What do they want to be rewarded for?

Which kinds of rewards are most meaningful for them?

These kinds of up-front discussions will ensure that the rewards you choose are the right fit for your workforce, your organization culture, and for achieving your business goals.

Employees collaborating with post-it notes Collaborate with employees to design a rewards program that gives them a strong sense of purpose at work. Photo by rawpixel.

2. Assuming one size fits all

Most companies run ‘one size fits all’ rewards programs because they’re seen as easy to administer. The problem with these kinds of rewards programs is that they rarely involve rewards that are uniquely meaningful to the person receiving them. Therefore, their ability to motivate is limited compared to tailored rewards programs.

The key is to offer employees as much choice as possible when it comes to rewards. For example, you may allow employees to pick a gift card of a certain value from a large library of suppliers. This way, they can choose to be rewarded with dinner at their favourite restaurant, or to treat themselves to a special gift from their favourite hobby store. Digital rewards solutions like Arcade allow employees to pick from a large selection of gift card providers and take care of fulfilment on your behalf.

3. Only rewarding outcomes

Rewards can only form habits when they’re used to reinforce a behaviour. A desirable outcome, like landing a big new client, is not a behaviour. Instead, it’s the by-product of a behaviour.

Instead of rewarding employees only for the sale (an outcome), reward them for identifying 50 quality leads with the potential to lead to a sale (the effort). For each of your organization’s business goals or targets, identify the behaviours that are needed to reach them. Rewarding these behaviours will help bake them into your organization’s culture.

4. Overlooking meaningful non-cash rewards

The most common type of employee reward is a cash bonus. However, cash bonuses are usually absorbed into the employee’s salary and, ultimately, used to cover routine expenses. In the end, they don’t end up creating meaningful, memorable experiences for your employees.

You can create a stronger sense of reward by giving employees something that is uniquely meaningful to them. Even better, these kinds of rewards are often free or low-cost. Here are a handful of ideas for meaningful non-cash rewards:

  • Let the employee go home early enough to pick up their children from school
  • An extra ‘work from home’ day (depending on your industry)
  • A mentorship meeting with the CEO
  • An extra day of paid vacation time

A mother playing with her son on a beach Meaningful non-cash rewards, like increased flexibility, can make a huge difference to some employees. Photo by Xavier Mouton.

Thoughtful, tailored rewards work best

Ultimately, the most effective rewards programs are not the most expensive. Instead, thoughtful, tailored reward programs tend to deliver outsized results. Better yet, they are often extremely affordable to run.

Take the time to tailor your rewards program to your employees and you’ll receive a reward of your own: a purposeful, inspired and motivated workforce.