October 12, 2019

Effect of Rewards and Recognition On Employee Lifecycle

“In the arena of human life, the honours and rewards fall to those who show their good qualities in action”

  - Aristotle

The above quote might be centuries old, but it still holds true today. Employees who keep doing “good work” deserve to be honoured and awarded regularly. Unfortunately,  aligning the right rewards and recognition system with the right employee have always been a pain point for many companies, especially their HRs. The process of building, managing and evaluating an R&R program that is in sync with employee expectations is crucial for the growth of any successful organisation. Still, some companies would rather opt for rigid industry norms and rule their employees with an iron fist, than finding ways to make a difference in their employee’s life. This article will attempt to show how an employee lifecycle looks like and how R&R can make a difference at each of its stages.

The lifecycle of an Employee

The employment cycle, also known as employee lifecycle, is complicated and may vary from organisation to organisation. To keep it simple, employee lifecycle can be defined as the different stages of an employee/employer relationship. In general, it's a series of phases an employee goes through while being employed by a company, institution, government or a non-profit organization. The cycle comprises of 7 segments/phases (these may overlap in some cases).

Stage 1: Attraction: When a particular company posts an ad for hiring and candidates apply for the job role.

Stage 2: Recruitment: After profile screening, preliminary tests and interviews, a candidate are chosen.

Stage 3: Onboarding: Through this process, a candidate becomes an employee. This involves agreements, documentation, salary negotiations, etc.

Stage 4: Enablement: This stage involves orientation, employee’s alignment with personal and company goals, team building and team interaction.

Stage 5: Development:  At this stage, the employee is well aware of what is expected of him/her and starts performing. He/she might hone an existing skill or acquire new skills in the process.

Stage 6: Retention: Some employees may reach their saturation point. Company culture and employee engagement strategies play a key role in retaining employees for the next tenure.

Stage 7: Separation: Some employees will leave because of retirement or a better job. Exit interviews, employee experience surveys and feedback helps both employees and organisation to understand what went wrong or what could be done better.

Importance of Rewards  

If attraction, recruitment, onboarding, enablement, development, retention and separation are employee lifecycle stages, then reward and recognition is the glue that ensures that the life cycle is a continuum.

Keeping employees happy and engaged is crucial for building a loyal and productive team. This happiness and engagement cannot be sporadic. Regular evaluations, praises and appraisals are good incentives for employees to continue their career in a particular company. Here a few R&R activities that will ensure growth and development throughout their lifecycle -

  • Spot Awards: This award is to recognize special contributions, as they occur during a specific project/task. They are immediate and are used for instant gratification.
  • Service award: This award recognizes an employee’s hard work and loyalty by rewarding the time they have served in your organisation (like 1, 5, 10 years).
  • Occasion award: Such awards recognise special events in employees' lifelike their first day on the job, birthday, marriage or work anniversary, etc.
  • Monthly award: It’s a type of reward that is given to employees who exceed expectations and show excellent workmanship, at the end of the month.  
  • Annual awards: It’s a type of reward that is given to employees who exceed expectations and show excellent workmanship, at the end of the year.
  • Value-based recognition: A kind of reward that is given to an employee who perfectly understands and demonstrates the company values.
  • Non-monetary: Recognition, praise or reward given to employees which do not involve direct money.  This can also be in the form of convenience or security.
  • Peer to peer This kind of reward is given to employees by their peers, colleagues, and team members.

Story Of Alex Pritchet

Alex Pritchet - a mother of two years old, finally took the decision to go back to the workforce. She was a seasoned saleswoman before pregnancy and hence had no problem in finding a new job. She took a job in a renowned e-commerce company, which was thankfully just a few blocks away from her home.

The first half of her first day went on orientation, meeting team members, signing agreements and documentation, etc. In the second half, she was guided to her cubicle, where a “Congratulations! On new job” card and a $20 gift card on Hamleys were waiting for her. This kind of reward is called Occasion Award. The personalisation of gift card based on her ‘mother status’ connected Alex with the company emotionally.  Alex felt welcomed into the fold right away, while the employees around her cubicle, got to know about her and broke the ice immediately.

Such a positive start motivated Alex to work hard, and she was able to exceed her sales goals within 2 months. Her manager decided to nominate her for Spot Award. One of her colleagues even nominated her for the peer-to-peer award as she helped him with complicated paperwork. Both the awards make her feel appreciated. This helped in building her trust in the company. It also reinforced a positive image of her colleagues and company in her mind.

A sudden increase in work (post 6 months) started making her feel overwhelmed. She was spending less time with her family and was having difficulty in maintaining a work-life balance. Meanwhile, the employee of the month award went to another deserving employee who did excellent work that month. It would have made other employees feel jealous or disheartened. But, it did the opposite of Alex. She knew the company was being fair so instead of blaming others, she started doing some introspection. The problem was - she was racing against time. Alex decided to find a solution to this and worked on some strategies that helped her manage time. Once she mastered the skill, she looked around and found out that her colleagues too were suffering from a similar issue. She started having informal gatherings and shared what she learned. Everyone started calling her company’s in-house time management guru. Her Superiors and HR head were super impressed by her initiative and decided to reward her with a value-based recognition award. It was gifted to her in the form a badge that said, “Girl with Galactic Gratitude”. This kind of award rewards employees who understand and demonstrate values core to the company culture. And Alex’s zeal to not only help herself but also others helped her getting respect from peers and helped her become a “team player”.

At the end of the year, she received the annual award. It was expected because she was the model employee every company wants. She is not only a great performer but also a good team player. The annual award was a cherry on the top to all the award she collected over the years. She realised the company was fair and supportive, where she can learn and thrive. This ultimately made her stick for more years and helped the company in keeping their high retention score. During the fourth year of the company, she got promoted and became the head of the sales team. The same year,  she also received non-monetary rewards in the form of gym membership and creche facilities for her child who had turned six.

Alex is now a VP of sales. She has finished 11 years in the company and received a long service award. Her child is now a  high school senior. She will be working for 5 more years and retire early.

Moral of the Article

A happy employee is not a myth. They exist and thrive in companies that understand their worth and cherish them. Hope this article has made you understand the importance of rewards in the life of an employee and the effects it can have in your organisation. Now everything depends on you! What are you going to do about it?

Xoxoday Team

Xoxoday is a SaaS commerce company with products for employee and channel management.

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