Employee Rewards and Promotions

Motivate employees by offering stock options, bonuses, vacations and more
By Linda Formichelli, Freelance Writer Retaining talent is one key to growing a successful business. To do so, you need to reward them for great performance. By giving your employees special rewards, you can:

1. Foster a positive, productive workplace.
2. Encourage loyalty and a sense of ownership in your business
3. Surprise employees without creating a feeling of entitlement.
4. Keep your customers happy — because happier employees do better work.

 

Have employees take stock

Employees care more about the success of their employer when they own part of the company. Stock options, which allow an employee to purchase a certain number of shares at a certain price, have been the historic model for employee ownership; aside from stock options, you can also offer employee stock purchase plans (ESPP, which give employees a discount off the current stock price) or restricted stock (which retains value even when the stock price drops).
Try: To set up an ownership plan, hire a financial services company such as Charles Schwab, Mellon Investor Services or CitiGroup/Smith Barney. Work with your accountant to determine how these plans will affect your taxes.

Give them bonuses when your company does well

Bonuses come in many flavors: profit-sharing (typically divvied up as a percentage of each employee's salary), gain sharing (rewards for productivity gains), task bonuses (at the end of an assignment) or spot bonuses (given when an employee deserves special recognition). Companies that provide bonuses generally create bonus funds worth about 2.5 percent of total salaries and wages.
Try: For advice on how much of a bonus to give, use Archer North's performance-related bonus scheme. Not sure which bonuses will inspire employees? Turn to a consulting firm that specializes in designing bonus programs, such as Archer North, Fox Lawson & Associates, LLC, Compensation Resources Inc. or Personnel Systems Associates. (And if you don't already have an accountant, visit CPADirectory find a CPA near you to consult with on bonus plans, as the tax repercussions aren't always clear.)

Send them on a trip

If employees deserve special recognition — for instance, as a reward for beating their sales quotas — consider a travel package.
Try: Travel companies offer special deals that are perfect for rewarding employees. Recognition Rewards Enterprises, for example, offers sports getaway packages and cruises, while Vacation Together offers ski packages in the U.S. and international trips for both individual employees and groups.

Schedule playtime

Employees are often motivated by competition or contests that allow them to earn non-monetary rewards. Sports-related rewards are popular. If you listen to water-cooler talk around the office, you'll know which sports everyone likes.
Try: Sports rewards can take different forms, from travel to sports events — such as these packages from Premiere Sports Travel, Corporate Sport and Target Sports Incentives. For smaller rewards, or gifts to go along with travel packages, try autographed sports items (Steiner Sports and ItsAlreadySigned4U.com) or engraved Louisville sluggers.

Let employees choose

Instead of trying to select an appropriate reward for your employees, you can instead let them do the choosing.
Try: Companies such as Loyaltyworks, Zlimit, Select-Your-Gift and Bright Rewards provide special reward catalogs featuring products from HP, Canon, Whirlpool, John Deere and other big brands. Employees can skim through the catalogs and select their own reward — which they either receive immediately or once they reach a goal that you've set.

• Make sure the reward fits your workplace culture and values.
• Reserve rewards for special occasions; employees who constantly expect rewards won't appreciate them as much when they do arrive.
• Money sometimes makes the best gift, but instead of cash you can hand out gift cards or savings bonds.
• Consider using time as a reward, such as a three-day weekend or a shorter workday.
• Remember that rewards must be accounted for on tax forms.