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The Point of Points-Based Rewards Systems

The Point of Points-Based Rewards Systems

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79% of employees who choose to leave their job claim lack of appreciation as a major reason for leaving. It’s a shame, because a good employee reward system is one of the most cost-effective drivers of employee engagement and retention. And a points-based rewards system taps into employee motivation to take you even further.

So, how can your organization implement employee recognition and rewards programs that really work?

In this article, we’ll discuss points-based rewards systems: what they are, when to use them, and how they impact your business for the better.

What is an employee recognition and rewards system?

An employee recognition and rewards system is a framework for recognizing, rewarding, and appreciating employees and their work. Systems and processes vary from one organization to the next based on company size, culture, and other factors. But at the end of the day, your employee recognition and rewards system should promote a culture of recognition and motivate, engage, and retain high-performing employees.

Why? WorkTango says it best:

“Because people have a deep-seated need to express gratitude. Saying “thanks” not only makes the receiver happier, healthier and more strongly motivated — it gives the sender a boost too.”

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The Science of Recognition and Rewards

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4 common models of employee recognition and rewards

Different types of employee rewards systems -- public praise with robust rewards is the clear winner

1. Top-down, private praise

Who gives recognition: Supervisor or leadership
Who receives recognition: Employee
How? Private recognition, no reward

In this model, a supervisor privately recognizes a direct report. The gratitude can be conveyed verbally or through writing. But it takes place between the manager and the employee only. According to Gallup, employees most appreciate this model of praise from high-level leaders and CEOs.

Does it work? Everyone appreciates recognition. But top-down, private praise is far weaker than public. Want proof? This Gallup poll ranks public recognition higher than private recognition — and promotions and salary increases.

2. Public praise with no associated reward or bonus

Who gives recognition: Supervisor, leadership, or peers
Recognition: Public
Reward: No

In this model, public praise is the reward. Often called “zero-point recognition,” this model leans into digital activity feeds or social channels to enable shout-outs with company-wide visibility. This system is even better if it allows for some sort of amplification, like peer “likes,” high fives, or comments. 

Does it work? As researchers at O.C. Tanner and elsewhere conclude, public recognition is much more effective than private recognition or monetary rewards. With public praise, employee engagement, satisfaction, and productivity soars. Because who doesn’t love being celebrated?

3. Public praise with generic reward

Who gives recognition: Supervisor, leadership, or peers
Recognition: Public
Reward: Generic (e.g., plaque, certificate, gift card)

This model builds on the foundation of public praise by adding a reward or bonus to make the recognition more impactful. Rewards do increase the perceived value of recognition to employees, so this is a step in the right direction! These rewards are generic, meaning they’re the same for every employee. Think gift cards, bonuses, or company swag. 

Does it work? Yes and no. Public praise with generic rewards demonstrate that a company is — quite literally — putting their money where their mouth is. And employees notice! But generic rewards miss a key opportunity to tap into your employees’ intrinsic motivation. Read on for more.

4. Public praise with points and robust, meaningful rewards

Who gives recognition: Supervisor, leadership, or peers
Recognition: Public
Reward: Personally meaningful to the recipient

In this model, recognition is public and socially shared. It also comes from all directions — from and to employees, supervisors, leadership, peers, and cross functionally. So combine that recognition with a point reward system. This lets employees rack up points in the same way consumers do through customer loyalty programs. (Which, by the way have a fantastic track record for boosting customer loyalty and customer retention. So why shouldn’t employee recognition programs resemble them?)

A major bonus of these systems is the flexibility and customization they allow in employee rewards. As reported by Alight Solutions, employees who feel their rewards meet their needs are 7x more likely to be engaged with work compared to employees who don’t feel that way. So, some team members may opt for gift cards. Others may use rewards for experiences like kayak trips. Still others may use points to make charitable donations. And all of them will be more engaged.

Does it work? The first three recognition models are steps in the right direction. But as SHRM notes, recognition is most meaningful when employees have a choice in what they receive. This is what the points model enables: custom rewards that speak to each employee. This makes your company’s recognition culture more inclusive, for one. And while contributing impactfully to employee engagement, satisfaction, and retention. 

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What are the benefits of points-based rewards systems?

Still need proof that public praise with points works? Let’s dig into the various benefits this model has to offer.

Points allow employees to earn rewards they care about

It’s an old truism in the fashion industry: “One-size-fits-all” fits nobody well. Give your employees the chance to earn rewards that fit them.

In a points-based recognition and reward system, your employees use their points to pick out rewards they’re excited about. Rewards with personal meaning tap straight into our intrinsic motivation — letting you offer powerful rewards to each employee without having to do any guesswork.

Points-based systems increase reward frequency

This is a biggie for two reasons: motivation and employee engagement.

First: As psychologist Kendra Cherry notes, positive reinforcement is most effective when it immediately follows the behavior you want to reinforce. Meaning, if Employee X doing an incredible job owning his first solo account — or reflecting your company values, providing great support, or any behavior that helps your company — recognize and reward that behavior now! Don’t wait until the next quarterly meeting. The distance between the behavior and the reward will diminish its reinforcing power.

And second: When you’re maximizing the power of motivation by recognizing and rewarding behavior in real time, we call that a culture of recognition. That culture is key to boosting employee engagement, morale, and retention. (In fact, Gallup points out cites that employees who don’t feel recognized often enough are twice as likely to quit than their more-appreciated peers.)

Points-based systems facilitate incentivized behavior

A points-based management system makes it easy to incentivize desired behaviors and values that matter to your organization. Assign a different number of points to various types of rewards, so everyone is on the same page about what matters most. The results are organizational alignment, unity across teams, and a culture where everyone is celebrated.

Points add impact and value to recognition

What about recognition alone? It’s better than nothing — everyone likes a “thank you.” In fact 81% of people say they’d be motivated to work harder if their boss showed appreciation. But adding points to that appreciation helps recognition go the extra mile. Think of it as the extrinsic motivation equivalent of putting your money where your mouth is.

Points-based rewards systems generate measurable data

…and that data gives you insight into:

  1. What’s working. Are you spending your reward budget money efficiently and well?
  2. Who’s getting rewarded the most. These are your super stars for performance and soft skills — keep your eye on them!
  3. Who’s not giving or getting rewards points. Survey says these folks aren’t just low performers — they’re likely disengaged. Take this opportunity to meet with them and see what you (or they) could be doing better.

Points systems allow for team-based recognition

Team-based recognition and rewards are also referred to as points pooling. This is when a team of coworkers combines their points to use toward a shared big-ticket reward. Maybe a fun meal together, or donating to their favorite local charity. Team-based recognition is multi-purposed. In addition to showing appreciation, it also drives connection and camaraderie. 

Points-based rewards systems are low maintenance

If your program design requires a full-time manager, you’re doing it wrong. Rewards systems should be easy to manage! No more tallying up points, shopping for gifts, then spending hours distributing them. Points-based reward systems are low maintenance. Store points, scores, and rewards in the same place, then automate each part of the process. Now you can just sit back, relax, and enjoy the smiles. 

Examples of points-based employee recognition and rewards

Here’s how points-based recognition and rewards could work at your company:

Example 1: Basic points-based recognition

Points-based recognition example showing Jordan Monopoly received 350 points for helping his coworkers

In this example, Jordan helped his coworker battle through some technical difficulties before a big meeting. Before the day was out, his coworker sent a meaningful, specific recognition with 350 points. As a bonus, other team members saw, commented, and gave “high fives” to boost Jordan’s points! Now, Jordan can take his points and get a reward he’s excited about from his company’s rewards marketplace. This leaves Jordan feeling seen for his effort, which makes him happy. And, he’s more likely to help again next time.

Example 2: Team-based recognition with points

Points-based recognition example: A team receives 50 points each

In this example, Mavis wanted to recognize her entire team for a strong presentation. (Group recognitions, offered in the WorkTango platform, build camaraderie by celebrating team wins!) Mavis gives each team member 50 points, awarding a total of 250 points.

Example 3: Milestone award with points

Points-based recognition for years of service milestone

Some traditions are irreplaceable. Your new culture of recognition doesn’t (and shouldn’t) mean you forget traditional reward mainstays like years-of-service awards. In fact, it’s easy to make those part of your points-based system, too. Here, Ariana’s employer has recognized her for her 5-year service anniversary. In the WorkTango platform, milestone awards are set-it-and-forget-it for admins. This allows you to easily set up and automate anniversary, birthday, and other milestone awards.

Driving employee motivation with WorkTango

We hope this article helped you better understand the value a points-driven reward system creates for both you and your employees. And if you’d like to learn more, we should talk. Because at WorkTango, we’re revolutionizing how the world’s most forward-thinking companies engage and inspire their people. We offer the only Employee Experience Platform that enables meaningful recognition and rewards, offers actionable insights through employee surveys, and supports alignment through goal setting and feedback.

WorkTango is built for the workplace we all want to be a part of – where priorities become clear, achievements are celebrated, and employees have a voice. So if you’re ready to make work lives better, schedule a demo today.

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