The tide is turning for company rewards, with the end-of-year bonus no longer reigning supreme, says Sodexo Engage’s Iain Thomson
As tempting as it might be, bigger isn’t always better. The way staff want to be rewarded is changing and SMEs need to pay attention.
Our research has shown that only 30% of employees feel motivated by receiving one big reward at the end of year. Companies paid out a record total of £46.4bn in bonuses in 2016. However, our findings suggest that the traditional end-of-year bonus no longer cuts the mustard.
Only a quarter of 18-24 year olds and 27% of 25-34 year olds feel motivated by them. That figures rises to 35% of workers aged 55 and over. Instead, the results showed smaller and more regular rewards would have more sway. More than four out of 10 (41%) of those asked preferred this approach, with the number climbing to 47% among 18-34 year old workers.
Small businesses should use this shift in attitude to create smaller, more manageable objectives for staff. That way, they can keep their workforce motivated and improve overall productivity. And let’s face it, we certainly need it. The latest figures show productivity in the UK is on the slide. We now rank 17th in the world league tables, languishing behind competitors like the US and Germany.
The reality is, there’s a disconnect between what many businesses think will change behaviour and what their people actually want. But for those who do understand what makes their staff tick, and develop the right strategies to boost them, there’s a whole new world of opportunity.
While the phrase “behavioural economics” might be fairly new, the basic thinking behind it isn’t. People want to feel appreciated, recognised and valued. And they want more opportunities to be rewarded. By rewiring their relationships with employees, businesses can create meaningful connections – and smash their business goals in the process. For small businesses looking to grow to the next level and retain talent, this is key.
Praise over prizes
SMEs need to catch on to the fact that, for many employees, rewards are less about the prize and more about the recognition.
With each passing day, the mental connection between work and the reward fades. If it’s all left to that end-of-year bonus, the likelihood that the employee will even remember what the recognition was for, is pretty low. Having regular rewards that value an employee’s contributions throughout the course of the year will keep people more motivated month in, month out. It doesn’t need to be complicated – it’s just about regular appreciation for a job well done. According to research by Deloitte, high-recognition culture organisations have a 30% lower voluntary turnover than those who just “push people to perform.”
Think outside the box
It’s important to remember that cash isn’t always king, which is great news for start-ups on a budget. Financial rewards can be predictable and there’s a danger employees will come to see them as just part of their salary rather than a reward. Money can also be easily lost in among all the household bills, so employers should think of alternative, more effective rewards.
The key here is personalisation. We’ve all had that moment when we’re not listening and suddenly hear our name mentioned. That ‘snap back into focus’ moment is what employers need to home in on and create with their rewards strategy. But they need to be careful not to make the mistake of broadening the personalisation too much and falling into stereotypes – for example, giving certain rewards for certain age groups. Influencing employees’ behaviour and building engagement requires subtlety, understanding and relevance. Businesses need to know their staff as people, not labels.