How to Create a Sustainable Successful Reward System for Employees

Indisputably, organizations are only as successful as their employees. That’s why so many business leaders have written about how to motivate employees in order to attain their goals.

Against this backdrop, how can businesses motivate workers to perform better, improve efficiency, and drive productivity? Reward systems can help companies accomplish this critical objective. In addition to earning a salary, individuals appreciate being acknowledged for a job well done or a goal reached. After all, everyone wants to feel like they do a good job. Recognition like this, if done right, can encourage employees to stay focused on contributing as much as possible to the company’s success.

Organizations have access to several types of rewards for their employees. Depending on the end goal, rewards can drive huge successes and create a productive, dynamic work environment. With that being said, certain reward systems are not impervious to drawbacks. Let’s further examine rewards, their advantages, and downsides.

Rewarding Employees

There are a variety of ways of rewarding employees beyond their regular paychecks. Employers may use one or a combination of these to recognize their employees’ accomplishments.


Sometimes, certain cash rewards are set in place if employees, either individually or as a team, meet or exceed pre-set thresholds or goals.


Leaders may announce the employee’s outstanding performance to others in the company. They may also create special groups for high performers, such as “Diamond Club” or “Winners’ Circle”, that recognize top performing employees.

Extra time off

This type of reward accords some time off work to employees who accomplish certain goals. It can be an afternoon of golf, a cruise, or simply an added vacation day, to do as they please.

Gift cards or gifts

A job well done may earn the employee a gift card to a coffee shop or even a nicely wrapped present.

As you see, rewarding employees can take myriad forms; it can be earned either as individuals or as a team unit. Either way, knowing that a reward is in play can motivate employees to make that extra effort to attain the goal.

Why Rewarding Employees Is Important?

Employees obviously get paychecks for the work they perform, so why is that not good enough? That is a good question, but organizations of all sizes across all industries have realized the importance of using rewards to enhance productivity. Most employers are cognizant of the fact that offering a reward to employees yields powerful results. Offering rewards might:

Increase motivation

A de-motivated workforce is not only a drain on efficiency, but also an impediment in the attainment of its maximum potential. Giving employees something extra to work toward helps fight the “same old, same old” pattern that can seriously damage work performance. Equally, a fresh perspective with a tempting reward may be just the strategy that perks up employees who have performed their roles consistently for several years.

Expand morale

Receiving a reward can help employees feel like what they do matters. The recognition that goes along with it makes them feel good about their job, and is likely to inspire them to surpass their own standards of excellence.

Promote greater work satisfaction

It is a known fact that companies with high-performing employees don’t want them to leave for greener pastures. Rewards are sagacious ways of indirectly combating turnover. Workers who feel appreciated and are offered opportunities to earn extra money in addition to other perks are less likely to seek employment elsewhere.

So, all this sounds like planning and using a robust reward system is a no-brainer and practically every business in the world should shout “Sign me up!”

Is that really the case? Well, not so fast. There is a distinct downside to the reward system we just laid out.

How Rewards Turn into Drawbacks

Unfortunately, consistently implementing rewards might cascade into an unplanned scenario that does little to contribute towards the company’s long-term success. There are a few negative “side effects” of such a reward approach that must eventually be addressed.

Short-term motivation

A juicy bonus, fat gift card, or fancy recognition dinner might make employees push themselves to attain the goals set for them. But this is a small-picture plan. What happens once the contest concludes or the goal is attained? Employers will either need to offer a more expensive or better reward system, or feel disheartened at seeing motivation and job satisfaction dwindling to pre-reward levels, or even lower.

Rewards turn into expectations

In the beginning, a reward strategy prompts employees to strive for something extra. Eventually through, the “What have you done for me lately?” attitude can grow out of a consistent reward culture. Instead of looking at the extra bonus or a day off as a valuable perk, employees often start viewing them as the norm. Once that happens, the compelling advantages of offering rewards begin to diminish dramatically.

POINT: A reward structure, while highly effective and outcome-driven in the short-term, will offer up little long-term gain. Over time, it can actually become an expensive drain on the company’s resources.

Amidst this quandary, how can companies create a more sustainable, higher performing reward system and move away from short-term rewards? What will keep employees determined to put in their best effort for the long term – day in and day out? The challenge is in departing from a reward-based culture that isn’t returning the best investment and forging one that does. The good news is that a reward strategy that does pull this off is possible.

Creating a Sustainable Reward Structure

Instead of short-term rewards, managers would do well to think about adopting a bigger picture, longer-term initiative that drives sustainable success. Change out inconsistent perks to ones employees can depend on. Being able to move ahead in their jobs is one of the biggest rewards employees can enjoy. This is aptly referred to as a career advancement reward strategy, and taking the time to put it in place is a win-win for both managers and employees.

As opposed to setting short-range goals, managers need to establish practical ways for employees to scale new heights within the company on a permanent basis by creating multiple hierarchies within each department; higher the level, the higher the pay. Team members start at level one and grow from there by consistently achieving performance goals laid out in advance. Instead of focusing on one part of their job to earn a bonus or other incentives, employees are more likely to commit to performing well overall, so they can move up the career ladder.

Benefits of a Career Advancement Reward System

Change is good, but it’s not always popular. Few people welcome change without a bit of trepidation. In fact, re-vamping the way employees are rewarded is expected to run into a few roadblocks and challenges. But, it’s definitely worth the effort in the long run as it delivers strong results for the company’s success, its long-range viability, and the employees’ careers. Here are the main benefits of a career advancement reward system.


Unlike other reward systems, a career advancement system is viable as an ongoing plan. For example, creating three levels within a team with goals as well as milestones set to move up advances the careers of high-performing team members. Level two has a higher salary than level one and so forth. This reward system entails both a monetary gain and a status payoff, thereby outperforming a one-time bonus or another traditional reward.

Increased stability for employees

While rewards such as extra money for a job well done or the recognition for goals reached are welcome, they do little to build and/or solidify a person’s financial future. A career advancement reward system is different in that it offers real opportunity for an increased salary alongside a larger role in the company as a valued employee. In addition, employees who are performing at peak capacity are more likely to help “move the needle.” Notably, a profitable company will stay in business, which means that they can keep their jobs.

Provides career advancement

When a person who has been employed at a company for a number of years gets used to receiving big bonuses at regular intervals, they begin perceiving those rewards as an extension of their paychecks. Changing the reward system because of cash flow issues or other reasons can frustrate and de-motivate the long-termers. As a result, the employee may even decide to find work elsewhere. Thankfully, a career advancement reward system will not pose such a challenge. Since it’s an ongoing system, employees always have another goal to reach or initiative to conquer in order to progress toward the next level.


Reward systems are powerful tools for companies to get the most out of their employees’ work whilst fostering employee growth. Bonuses, extra time off, recognition, and other reward programs might light a fire under employees for a period of time, but they do little to keep them engaged and motivated in the long run. To achieve sustainable success, it’s paramount for companies to move their reward programs toward a career advancement-based process. Laying out a consistent reward path that employees can follow after meeting certain goals leads to greater stability and job satisfaction in employees. In return, it forges better relationships between the employee and the company, decreases turnover, and improves morale. The result is a more successful, higher-performing company that remains relevant, competitive and profitable for the long term. After all, don’t we all want to stay in business for decades to come?

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