A well-designed employee rewards system can enhance productivity, growth, and profitability by motivating the workforce to go that extra mile. However, while developing such programs organizations are often faced with the dilemma – whether to reward employee performance or behavior?
We take a deeper look into this subject to help organizations address this concern:
Both performance and behavior of employees are critical to the success of organizations.
Employee performance is usually measurable in terms of the business metrics or output against predefined goals.
It has a direct linkage to the performance of the organization.
Since the ‘proof of the pudding is in its eating’. It is almost a no-brainer that traditional employee reward systems have always rewarded high performers.
As it is, organizations have regarded these top performers as the biggest contributors to business growth and profitability.
However, of late, organizations have also come to acknowledge the importance of good employee behavior.
They have understood that ‘the means to the end’ is as important.
This is because employee behavior can impact workplace culture and goodwill significantly in the long run.
This is why an increasing number of organizations have made desirable behavior an integral part of their reward systems.
Hence, by appreciating specific behavioral traits, organizations can motivate employees to align their behavior with the company’s core values and culture.
The performance of employees ultimately determines the success of the organization.
An organization with more high-performing employees is likely to grow faster, be more profitable, and garner higher market share.
The performance of individual employees, as well as teams, is measured against goals, defined in terms of business metrics or outcomes.
The following is a list of such key metrics that define the goals and performance of the employees:
1. Sales/Revenue
2, Customer Satisfaction/ Experience
3. Output/ Quantity Delivered
4. Quality of Deliverables
5. Timeliness of Delivery/ Productivity
6. Innovation/ Process Improvement
Unlike employee performance which can be clearly defined as KPIs and goals, it is more challenging to define desirable behaviors.
However, organizations today have understood the strong linkage between employee behavior, work culture, and long-term business success.
Employee behavior can impact the employer brand value of the organization and its ability to attract, hire, and retain top talent.
Here’s a list of key aspects of employee behavior that are strongly linked to the success of any organization:
1. Collaboration: Ability to work with their co-workers, peers, and supervisors in a smooth and coordinated way.
2. Initiative: Willingness to take up new challenges to bring about positive changes in the business or at the workplace.
3. Positivity: Ability to always stay upbeat and optimistic, even during a crisis.
4. Timeliness: Ability to stay focused and complete tasks on time, every single time, despite challenges.
5. Consistency: Strong will and persistence to deliver even under challenging situations.
Organizations have traditionally rewarded employees for their good performance.
However, this mindset has changed over the years as they realize the importance of employee behavior, company values, and work culture for long-term success.
Hence, many organizations have incorporated employee behavior as a key element in the employee reward systems in recent times.
Organizations are now looking at a more balanced approach to rewarding employees; considering performance as well as behavior.
The following are a few pointers for organizations in this regard:
1. Reward systems should give fair weightage to both employee performance and behavioral traits.
2. Organizations should ensure that these behavioral traits are in alignment with company values and desired work culture.
3. Employee performance should continue to be measurable against business goals in the form of key business metrics.
4. The employee rewards system becomes more balanced so that it rewards both ‘ends’ as well as ‘means to the end’.
Organizations faced with the dilemma of whether to reward employee performance or behavior need to take a more balanced approach of rewarding the contributions of the employees towards achieving business goals as well as towards creating a more positive work environment.
Lead author: Sagar Chaudhuri, the Co-Founder and CEO of HiFives. He is an HR Tech Evangelist with over 25 years of experience in the corporate world and entrepreneurship. In the past, Sagar has worked with companies such as Genpact, Infosys, and ICICI Bank, in leadership roles. He has an engineering degree from IIT Kharagpur and an MBA from IIM Lucknow. Connect on LinkedIn
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