How Much Should You Budget For Employee Rewards & Recognition?

Pat Walls

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Updated: October 8th, 2022

How Much Should You Budget For Employee Rewards & Recognition?

The average budget for employee recognition is 2% of payroll, and the median amount is 1%. (source)

Considering these statistics, an employee recognition and rewards program will cost you ~$100 per month per employee. (calculation based on average $60k yearly salary per employee)

Benefits of Giving Employee Rewards

Companies give their employees rewards and recognition because of the following reasons:

Better customer service arising from better employee engagement
Employee retention that lessens recruitment cost
Enhanced adherence to protocols that reduce absenteeism and workplace accidents
Improves organizational culture and employee well-being
Increased productivity due to employee motivation

Steps in Creating a Reward System

To create a reward system for company employees, management undertakes certain steps, as follows:

Identification of group or company goals that's supported by the reward system;
Naming the desired worker performance that will strengthen the company's objectives;
Determination of main performance measurements founded on the person's or group's earlier achievements;
Determination of proper rewards; and,
Communication of the program to the staff.

Business Reward Cost Factors

There are many factors that will increase the cost of employee rewards:

The design or nature of the reward and recognition program.
Age of workers. (A firm with older workers may have increased health costs).
Gender of workers (Women may have higher insurance premiums than men).
Lifestyle of Employees

Examples of Rewards Most Preferred by Employees

Rewards and recognition can be anything from a simple pat at the back of the excelling employee. Other than that, there are some other forms of rewards that employees appreciate getting from their immediate supervisor or the company, such as:

Clothing or stuff with company logo
Free monthly subscription of magazines or consumable products
Company-paid online course to learn a new skill
Premium or upgraded office products
Company-sponsored yoga classes
Lunch coupons
Tickets to concerts, movies, sports games, or a festival
Sponsor a team or employee in a marathon or a contest
Giving a transportation budget for a week or month
Free team lunch
Spotify or Grammarly Premium subscription
Paid day off
A long lunch break
Cash or gift checks
Dinner with the immediate supervisor
Parking space
Get free training as preferred by the staff
Tech accessories, such as a headphone, tablet, speaker, or smartwatch
Company-paid weekend holiday with the family
Healthy snacks at work

Employee Recognition Software Platforms for Rewards Programs

Considering that we are in the digital age and businesses would like to cut costs, there is now a growing demand for employee recognition software. These were created to assist companies in retaining talent, building culture, and measuring essential intangibles like staff morale.

Factors to Consider when Choosing an Employee Recognition Software Platform

Since the software platform recognizes employee attainments and even provides gifts for birthdays and other special occasions, companies should consider the following when choosing which platform to use.

Compatibility with company systems
Clear identification of recognition against rewards
Security
Ease of use and scalability of the software

Best Employee Recognition Software Platforms and Rewards Programs

kazoo

Motivosity

15five

Elevates the performance and engagement of employees by continuously asking questions and starting the right conversations.

Pricing: Freemium
Twitter: @15Five
Website: 15five.com

Businesses using 15five:

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