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Top - Down Recognition

In a top-down employee recognition system, an employees

supervisor witnesses and recognizes their contributions. Top-
down recognition can take many forms. Some examples are:

Years of Service Award

In recognition of an employee's continued contributions to
an organization over a number of years, a 'Years of Service'
award can be given at specific intervals, or milestones.

'Years of Service' awards do not often involve financial

compensation, but may include a gift of some kind. Commonly
offered awards include: plaques, engraved pens, or group
greeting cards.

Employee Appreciation Day

Employee Appreciation day is a semi-formal holiday founded

by Bob Nelson, a founding board member of Recognition
Professional International. Over the past 20 years, other
companies have embraced the unofficial holiday, paying
homage to their employees on the first Friday of March.

Organizations have been known to celebrate Employee

Appreciation Day with small company-funded events like
barbecues, or small office parties. Additional financial
compensation is not often an element of Employee
Appreciation Day.
Annual Bonuses

An annual bonus is financial compensation given to

employees in addition to their base pay. Annual bonuses are
given once per year, usually at the end of the fourth business
quarter. Annual bonuses can be given for a multitude of
reasons, but are usually based on performance, either the
performance of the organization, the individual, or both.

For example: Emma's sales numbers exceeded her quota for

four consecutive business quarters. To recognize her
achievements throughout the year, Emma is given an annual
bonus in addition to her base salary and commissions.

Quarterly Bonuses

Quarterly bonuses are similar to annual bonuses, but are

metered out on a more frequent basis (per business quarter).
Quarterly bonuses are most commonly given as part of a
heavily performance-based compensation model. Sales
organizations are common adopters of the quarterly bonus

For example: Alex landed Acme Inc.'s largest customer this

quarter. In recognition of that achievement, Alex is given a
quarterly bonus at the end of Q2.

Spot Bonuses
Many organizations choose to thank workers 'on the spot' for
achievements that merit particular notice. These bonuses are
generally given in recognition of an employee exhibiting
exceptional productivity.

Spot bonuses are normally $50 USD or more. They're most

often given by a direct manager, an indirect manager, or
senior coworker in the organization, but can also be given by
coworkers as part of a peer-to-peer recognition program.

Their on-the-spot nature dictates that spot bonuses are given

at an irregular cadence, in contrast to annual and quarterly

For example: Fatima's attention to detail and quick thinking

saved the company from losing a long-time client. In
recognition of her valuable contribution, Fatima is given a
$100 spot bonus.

Peer-to-Peer Recognition

In a peer-to-peer recognition system, managers as well as

other co-workers are all empowered to recognize and reward
the contributions of their colleagues. Some of the most
common forms of peer recognition are:

'Gold Stars'

Some organizations encourage employees to recognize one

another's contributions through the giving of small mementos.
Gold stars are a good example of this type of recognition.
These stars are sometimes given a tangible value, and can be
exchanged for real-life items.

For example: Despite an already busy schedule of coding,

Javier decides to help out his colleague in the marketing
department, who is having trouble implementing a new tool.
He earned a gold star from his colleague Allison in return for
the impactful assistance he offered.

Verbal Praise

Verbal praise is perhaps the oldest, and longest-standing form

of peer-to-peer recognition in the workplace. Verbal praise is
given by colleagues, generally in an ad-hoc fashion, in
recognition of a staff member's valuable contribution.

Although nearly always informal in nature, verbal praise is

occasionally solicited as part of a formal staff recognition

For example: Acme's newest customer was extremely

impressed with Esther's timeliness and attention to detail. At
the beginning of their sales strategy meeting, Esther's
colleagues all congratulated her on the achievement, showing
their appreciation for her efforts.


Microbonuses are small monetary rewards given frequently by

one colleague to another in recognition of a valuable
contribution. Although microbonuses can be given by
managers to their direct reports, they can also be given by
other colleagues, and even from a direct report to a manager.

Microbonuses provide several unique benefits. Like spot

bonuses, staff recognition in the form of microbonuses can
be given in the very moment that a valuable contribution is
made by an employee. Employee recognition given in the
moment has the greatest potential for impact, because the
action is rewarded almost immediately, when it is top-of-mind.

Because microbonuses are small by nature, they can be

given often, providing multiple positive instances of employee
recognition without dramatically altering an employee's

For example: Jeremy's new update to the company's landing

page improved conversion by 60 percent, and brought in
three new signups in one day. Jeremy's colleague Elisa gave
him a microbonus because those new signups became part of
her sales pipeline.
5 Effective Types of Reward Systems for
Posted by Milen Vasilev on Mar 21, 2017 10:00:00 AM


Building your company is the easy part. Implementing sustainable practices that will keep it in good
health is when the real work begins. One of the most important issues is keeping your employees
content and focused on your goals. It is increasingly rare to hear about companies with an average
employee tenure of more than a few years. Low turnover often means that employees are happy
and happy employees are productive employees. The hard part is to find a balance between
effective employee rewards and the cost of these rewards to the company. This is where your
innovative and creative ideas can help you tailor this system to your business. Identify important
behaviors that help your company grow, show commitment, prove productivity, and achieve goals.
Here are a few different types of employee reward systems:

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The most obvious and most effective way to reward employees is monetary compensation. Your
employees are mostly driven by financial benefits that enable them to fulfill a certain lifestyle.
Depending on the maturity of your company, your ability to give bonuses varies. When you do give
bonuses, make sure you differentiate these rewards from regular pay. Do not pay a yearly bonus
unless it is deserved. Tie monetary incentives to goals and milestones to promote productivity.

Your reward strategy should be multi-channeled. Benefits are some of the most common types of
reward systems for employees and can help to attract and retain talented employees. They may
include a good healthcare plan, daycare, shuttle transportation, and assigned parking spots. Making
your employees commute easier is a great way to compliment them on their work. Aiding them in
aspects of their lives outside of work goes a long way and improves commitment.

It is good to compliment the tangible aspects of your reward ecosystem with written and verbal
recognition of achievements. They can take the form of company memos, mentions in speeches in
front of managers, and employees, as well as private, one-on-one talks. Utilizing different forms of
recognition will ensure your top achievers that their work is appreciated and will motivate others to
strive for recognition.

Appreciation completes the ecosystem of reward and can come in many forms. It can include
instituting casual Fridays, catering in food once a month from a favorite restaurant, weekend
getaways, company lunch outings, and fresh snacks on Monday morning. You can tailor your
appreciation approach to your budget and business model, effectively incorporating it into your
company culture.
Once you have crafted every aspect of your reward system put it to paper and execute it consistently.
Be honest and thorough with your reward practices and your employees will follow you. Once you
incept a reward tradition see that it is executed in the most consistent way possible. Consistency is
the most important aspect of all types of reward systems for employees.

Trust and ask for inputWhen you show others that you trust them, they
begin to do things on their own initiative. They create energy for your
organization. If you look over their shoulders constantly, youll get employees
who will only do what they are told.

Showing trust means asking for help in making important company decisions.
When a major Detroit car manufacturer changed its management approach,
one of the workers said, Ive been working for this company for twenty-seven
years, and before the recent changes, not once in that time did anyone ask
me what I thought should be done. For the first time they are now receiving
the benefits of my head, not just my hands.

Intrinsic rewards
Intrinsic rewards are the non-physical rewards. They cannot be seen or touched
but are emotionally connected with the employees. In other words, intrinsic
rewards can be defined as the feeling of contentment one finds in completion of
any task.

Intrinsic reward is directly related to job performance as a successful task

automatically produces it. Higher the success rate, higher will be the rate of
intrinsic rewards one receives.
Different people have different perception and therefore, there are various
forms of intrinsic rewards, some of which are:

Sense of achievement

It takes lots of efforts, skills and courage to perform any task and there is no
better feeling than the joy one feels seeing his hard work pay off.

Words of praise from the seniors

Employees become more than happy when their seniors or supervisors speak
few words of appreciation for them in front of peers or co-workers.

Everyone wants to be renowned at the place where they work. It is rewarding
for employees when they are recognized by the co-workers and other members
of the company for the work theyve done.

Taking pride from the job

People try to avoid the credit when the jobs are wrongly done. But they feel
proud of themselves when the work is perfectly done. Such feeling of pride
plays vital role in motivating them to give continuity to make even better

Work freedom or autonomy

When employees continue to make better output, supervisors may bother less
to manage them. The freedom that employees receive to make their own
decision and work as per their schedule is also a form of intrinsic reward.

Extrinsic rewards

Extrinsic rewards are the physical ones that come from an external source
(employers) only. A properly designed extrinsic reward can also be emotionally
attached with the employees as employees value such rewards.

An extrinsic reward is also directly related to job performance of the employees

but it is necessary that employees receive reward every time they accomplish
the task. It depends upon the policy of the company.

There are various ways a company can choose to reward its employees. Some
examples of extrinsic rewards are:
A company can design good payment for the employees as the reward for
contributing their precious time and energy in achieving the organizations goal.
A good payment is motivational and is a major factor that affects job satisfaction.

Bonus or commission
When a company earns profit due to the effort of an individual or group of
employees, the company should appreciate their contribution by giving them
additional payment as a bonus or commission. Financial rewards are always
known to have received more value from the employees.

Fringe benefits
Fringe benefits are extra facility provided to the employees in addition to their
salary. Fringe benefits can be a companys car, free life/health insurance,
employee discount scheme, pension plan, etc.

Improved working condition

An employee spends a lot of time at the workplace, completing tasks of the
company and for the company. A company must acknowledge such attribution
and reward its employees by providing a comfortable workspace. Comfortable
furniture, air conditioned rooms, latest models of computers, etc are some
factors that contribute for an improved workspace.

Some employees are average performing, while some others are intensely hard
working, as a result of which they make huge difference on the companys
status. Such employees can be rewarded by handing them over new
responsibilities and duties. Promotion is directly related with increment in status,
payment and power.

Profit sharing
Employees are equally creditable for the organizations progress or success as
much as the employers are. Therefore, a responsible company rewards its
employees by sharing the profit with it employees.

Rewards vs. Motivation

As you may recall, motivation is the reason that drives someone to do something (i.e. a
behavior or an activity). Reward is a completely different animal. It is what you get for
doing something rather than the reason for doing it in the first place. A simplistic way to
look at the difference between motivation and reward is that motivations generallycome
before the behavior, but rewards come after the behavior.

So what is the distinction between intrinsic and extrinsic rewards?

Intrinsic vs. Extrinsic Rewards

An intrinsic reward is an intangible award of recognition, a
sense of achievement, or a conscious satisfaction. For example, it is the knowledge that
you did something right, or you helped someone and made their day better. Because
intrinsic rewards are intangible, they usually arise from within the person who is doing
the activity or behavior. So intrinsic in this case means the reward is intrinsic to the
person doing the activity or behavior.

An extrinsic reward is an award that is tangible or physically given to you for

accomplishing something. It is a tangible recognition of ones endeavor. For example,
its a certificate of accomplishment, a trophy or medal for winning the race, a badge or
points for doing something right, or even a monetary reward for doing your job. Because
extrinsic rewards are tangible, they are usually given to the person doing the activity; as
such, they are typically not from within the person. Therefore, extrinsic rewards means
the reward is extrinsic to the performer of the activity or behavior.

Here is an important distinction that I like to emphasize. When talking about rewards,
intrinsic rewards are those that originate from within the person, and extrinsic rewards
are those that originate from something beyond the person.

Howeveras you might recall the previous postwhen talking about motivation,
intrinsic and extrinsic has nothing to do with whether the motivation originates from
within the person or outside the person. Instead, it means whether the motivation is
intrinsic to the activity or not.
Intrinsic rewards actually fulfills employees intrinsic factors or motivators and
thus motivates him. Examples include; giving challenging task, involving in
decision making process, giving a higher rank in hierarchy etc all these rewards
do not required to have increased salary as well and employee may be working
at higher management rank without an increase in the salary and still more

Extrinsic rewards actually fulfills employees extrinsic factors or hygiene

factors and thus do not let him start thinking about leaving the
company. Examples include; pay rise, bonuses, paid leaves, annual recreational
plans etc.

What are intrinsic rewards?

What is often missing from these managers descriptions is any discussion of

the actions they are taking to make the actual work their employee is doing
rewarding. Employees need to receive some value from actually doing the
work (intrinsic rewards).

As I explain to these managers, if you want employee engagement youll need

to provide intrinsic rewards. Youll need more than money and benefits!

Fortunately, there are many things managers can do to provide intrinsic

rewards just by adapting their leadership style. Five intrinsic rewards you can
provide to your employees are the following:

1. Look for opportunities to give your employees positive feedback. Catch

them doing something right and recognize them for their good
performance. (Intrinsic reward: the employees get recognition when they
perform well. Recognition!)
2. Respect your employees dignity when you have to coach them for
performance problems. Follow the management saying: praise in public, correct
in private. Engage the employee in a two-way discussion about their
performance issue. Provide support. (Intrinsic reward: the employees work for
a supportive boss who helps them to succeed. Personal growth!)

3. Include your employees in operational decision-making. Ask their opinion

before you drastically change processes and procedures. Make them an
active part of solving organizational problems. (Intrinsic reward: the employees
have influence over how departmental work is done. Participation in
operational decision making!)

4. As your employees demonstrate their ability and desire to perform good

work, loosen up your rein of control over them. Allow them to make some
independent decisions about their work. As much as possible, allow room for
variation in how work is done. (Intrinsic reward: the employees have autonomy
in how they complete their work. Greater job freedom and discretion!)

5. Strive to get the right employees doing the work that best aligns with their
skills and interests. Instead of concentrating on what your employees cannot
do, look instead for what they can do. As feasible, readjust work and train and
mentor your employees so they can succeed. (Intrinsic reward: the employees
have challenging work that fits their skills and interests. Challenging and
interesting work!)

Effective Reward Systems

A motivated workforce can be a significant factor in organizational success. When employees are
motivated to work at higher levels of productivity, the organization as a whole runs more efficiently
and is more effective at reaching its goals. This is in contrast to an unmotivated workforce, who can
negatively disrupt an organization and distract employees from their work. For this reason, it is
imperative that managers understand the power of reward systems and how they are used to
influence employee behavior.
Rewards are positive outcomes that are earned as a result of an employee's performance. These
rewards are aligned with organizational goals. When an employee helps an organization in the
achievement of one of its goals, a reward often follows. There are two general types of rewards that
motivate people: intrinsic andextrinsic.

Intrinsic Rewards
Intrinsic motivation is internal to the person in that it is something that you have to offer yourself
and is driven by personal interest or enjoyment in the work itself. Because intrinsic motivation exists
within the individual, achieving it does not depend on others. Some people believe that the most
powerful rewards come from inside a person.
Think of that sense of accomplishment you feel once you have overcome a significant challenge or
completed an assignment or work project that required a good deal of effort. Intrinsic motivation
provides that personal pat on the back or natural high that reflects a person's ability, competency,
growth, knowledge and self-control over their endeavors. Employees who are intrinsically
motivated tend to work at higher levels of productivity and strive to develop professionally. Intrinsic
rewards include things such as: personal achievement, professional growth, sense of pleasure and

Intrinsic Rewards in the Workplace

In a knowledge economy where the greatest asset an employee can offer an organization is their
intelligence, experience, problem solving ability and change-savvy persona, intrinsic rewards are
especially important to workers. In fact, Frederick Herzberg, who is one of the leading theorists
of workplace motivation, found intrinsic rewards to be much stronger than financial rewards in
increasing employee motivation. This is not to say that employees will not seek financial rewards in
addition to intrinsic rewards, rather it just means that money is not enough to maximize motivation in
most employees. People want to feel like their contributions matter.
For example, an employee might want to reach a sales quota set by his manager to earn the bonus
that is attached to it, but unless the employee feels a sense of accomplishment as part of making
those sales, the motivation to achieve the quota is less powerful. To help employees with their
intrinsic motivation, managers should:

provide meaningful work

allow workers to make choices through a high level of autonomy
provide opportunities for employees to show their competence in areas of expertise
facilitate professional development so that employees can expand on their level of
offer frequent opportunities for employees to reward themselves
allow employees the opportunity to connect with those with whom they serve to obtain
valuable feedback
give them a path to monitor their progress with milestones along the way

Extrinsic Rewards
Extrinsic motivation is based on tangible rewards. Unlike intrinsic motivation that is self-
administered, extrinsic motivation is external to the individual and is typically offered by a supervisor
or manager who holds all the power in relation to when extrinsic rewards are offered and in what
amount. Extrinsic rewards are usually financial in nature, such as a raise in salary, a bonus for
reaching some quota or paid time off. However, extrinsic rewards can also be as simple as getting
the better office, verbal praise, public recognition or awards, promotions and additional responsibility.
These material rewards can be motivating to employees because pay, time off, advancement and
recognition are important to most workers. Just imagine how de-motivating it would be to underpaid,
overworked and unappreciated, and you can quickly see how important extrinsic rewards are to
organizational success. An extrinsically motivated person will work on a task that they do not
particularly care for simply because of the anticipated satisfaction that will come from some extrinsic
reward. For example, the employee may not be interested in the product he is selling, but reaching
the quota means the bonus, therefore he is motivated to put forth the effort he needs to meet the
sales quota.

Extrinsic Rewards in the Workplace

Providing employees with extrinsic rewards is relatively straightforward and usually built into
performance reviews or individual projects. They are particularly useful in the short-term for
motivating employees to work towards one specific organizational goal. Meeting the sales quota for
a bonus is an example of offering an extrinsic reward for a short-term goal.
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