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6 Useful Tips for Setting up an Effective Employee Rewards Program

Most business organizations today know the importance of rewarding their employees to enhance their satisfaction and loyalty. Here are a few valuable tips for setting up an effective employee rewards program: 

How to set up an Effective Employee Rewards Program?

Although all organizations today are aware of the importance of rewarding their employees, when it comes to actually building an effective employee rewards program, most organizations are unaware of where to begin.

Discussed below are some valuable tips for setting up an effective employee rewards program:

6 Useful Tips for Setting up an Effective Employee Rewards Program

1. Learn What Motivates Employees


Employee temperaments and personalities can differ significantly. This means that what they value and derive motivation from can be distinct.

Despite these differences, employees from the same business unit or team share common motivation factors.

Learning about these general motivation factors can help in establishing a strong base for designing an effective employee rewards program. 

The organization could analyze the data collected through an employee survey to understand the most common motivation factors.

2. Set Meaningful Rewards Criteria

Committed Employees

Importantly, a successful rewards program is based on meaningful criteria to avoid biases or random actions.

Employees would only be considered for the reward if they fulfilled clearly defined criteria.

Employees with good relationships with their managers or team leaders should not be favored for the rewards.

Most importantly, each employee should be able to receive recognition, irrespective of their level and role within the organization.

3. Form a Review Committee

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Regardless of an organization’s size, forming a committee to oversee the employee recognition program is highly advisable.

To begin with, the committee may consist of just a few senior and mid-level managers.

The members of the committee must be known for their honest and unbiased decision-making capabilities.

Organizations must also promote the idea that serving on the committee is a matter of privilege and pride.

4. Involve Team Leaders and Line Managers


The feedback of their team leaders matters the most when assessing employees’ overall performance, contribution, and achievement.

Hence the organization needs to ensure the involvement of the team leaders in any rewards program to make it truly effective and successful.

However, most organizations seek input only from HR and ignore the opinions of team leaders and line managers.

However, when combined with the strategic viewpoints of HR and line management, it can add much value to the program.

5. Know the Characteristics of a Good Rewards Program

Fun Awards

Here are a few critical points of a good recognition program:

1. It should be timely, as any delay in rewarding and recognizing diminishes its value.

2. It should follow a regular schedule integrated with the business operations.

3. Should be specific, which means that it should aim to acknowledge some particular achievement or contribution of the employees.

4. It should have some tangible value so the employee feels motivated even after receiving the reward.

6. It should be value-based to motivate employees to work towards common objectives.

6. Make the Program Multifaceted and Diverse

Employee Benefits

Additionally, creating variety in the rewards and recognition program keeps the concept fresh and exciting.

However, care should be taken to ensure that variety is not achieved at the cost of hurting the sensitivities of specific workforce members.

This can render the whole program ineffective and even make the employees feel demotivated.


An effective employee rewards program can help organizations in engaging and motivating the employees, which in turn can give them a competitive edge.

Developing such programs is not as difficult as it may seem, especially if organizations follow the above-discussed tips to enhance the program’s business impact.

Sagar Chaudhuri

Lead author: Sagar Chaudhuri, the Co-Founder and CEO of HiFives. He is an HR Tech Evangelist with over 25 years of corporate and entrepreneurial experience. In the past, Sagar has worked in leadership roles with companies such as Genpact, Infosys, and ICICI Bank. He has an engineering degree from IIT Kharagpur and an MBA from IIM Lucknow. Connect on LinkedIn

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HiFives is a global employee rewards, recognition and engagement SaaS platform that enables organizations to digitize, automate and transform their employee experience. It is used by 100+ large enterprises, small businesses and startups in manufacturing, retail, technology, financial services and media, across 25+ countries.