How Companies Use Reward Management Systems for Their Employees


Companies use a variety of reward management systems for their employees. The goal is to reward people for their hard work in an equitable way. The reward can take many forms such as a bonus, time off, a gift, and so on.

This Wikipedia entry goes into detail on the history of reward management and different motivation theories. In order to have an effective reward management system companies need to make sure their employees know what the task they are asked to do entails, they have the necessary skills to do this task, and they are properly motivated to complete it successfully.

Reward management is an easy topic to understand when it comes to theory but applying it in a practical way is another matter entirely. Companies often comes up with a reward system to encourage one type of specific behavior only to see later on that it rewarded some other type of behavior instead. An example of this is one company that wanted to incentive its employees to perform at a higher level. They gave low performers a 3% wage increase, average performers 4%, and the best employees a 5% increase in pay. Since the percentage difference was so low most employees chose to start slacking off instead of working harder.

Rewards can take many forms. Bonuses are often used, paid out typically at the end of the year. Increases in salary are another very common way of rewarding employees for doing their jobs well. Gifts are a type of short-term reward. They’re generally given as a token of appreciation but don’t really tend to motivate employees very much. Promoting someone to a higher position in the organization can also be a reward for doing a job well.

Some companies have tried to gamify their reward system in order to motivate employees as this article relates. They bring in game design elements to encourage certain behaviors and make participating in the reward system more fun and motivating to employees. The goal is to drive engagement and make employees more likely to do things that reward them and the business they work for.

Many companies use a points-based reward system which they use as a type of checklist. Not all companies agree with this approach, though, as illustrates. The author of this article worked with making improvements to employee reward programs for four years and came away with the idea that a points-based approach isn’t the right answer when it comes to motivating employees.

He wrote that there are four benefits to points-based programs which includes that they are low maintenance and flexible. If a company has just a limited budget for employees’ rewards than a points-based system allows them to give small amounts of money on a frequent basis. One of the big problems with this system, though, is that there isn’t really a clear line between having an achievement and earning a reward. It often takes far too long to build up significant points meaning they can’t be redeemed for months after earning the points. Employees often end up forgetting about the points and the whole system because it’s all just too long-term.

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