What Mistakes To Avoid While Designing A Rewards Program?

Effective Tips that will help you run a Successful Reward and Recognition Program.

Reward and Recognition programs are a part of life for great organizations. One of the biggest battles HR needs to fight today after the global slowdown is to acquire and retain talent for the organization. HR department needs to focus on areas that enable employee retention and well being. Rewards and recognition is one such platform which provides an atmosphere of affinity and belongingness translating better performance and enhanced productivity of employees.


It is essential that we should be extra cautious while designing or implementing the rewards and recognition program for the organization as only a good design can define an implementable system that meets expectations of all stakeholders and achieves its goals.

There are many common mistakes that the organizations make while designing their Rewards and Recognitions Programs, some of them are:-

Not Getting the Positioning Right:

It is seen that organizations sometimes don’t spent too much time in analyzing & positioning the rewards & recognition program which will be applicable to their current set up. It is felt that any award or recognition is right and hence investment in studying the target audience is sometimes overlooked. I think as responsible HR Managers we must lay emphasis in figuring out which rewards and recognition program will suit the best to our organization.

Try answering the following questions which will make sense and help you know your target audience well and much more deeply.

  • What are my organizational demographics in terms of age, gender ratio, marital status etc?
  • What is the average tenure of an employee with my organization?
  • How much diverse is my workforce?
  • How are my people culturally different from one another?
  • What is the average age of people employed in my organization?
  • What will I reward and recognize?
  • What kind of employee behavior I should recognize?

Getting the right positioning plays a vial role in defining and deriving the desired result out of any new implementation. Hence in my view this is one the crucial and important aspect before starting off.

No Clarity in Communication

Clear, precise and enthusiastic communication is an important factor in determining the success of any new rewards or recognition program. The criteria of the reward system and what kind of behavior is being recognized must be clearly communicated to all the employees and stakeholders. The communication must be in line with the employee behavior, an organization wants to encourage and reward. Its alignment to the annual performance appraisal and personal development must also be well communicated. In case you fail to state clarity on the above aspects there are chances that your entire exercise falls flat with low employee participation.

Don’t ever think that the effect of a Collective Award is same as that of an Individual Reward.

Off late, we started recognizing exceptional team work within our organization. We used to facilitate the entire team by giving them a single appreciation certificate & shield on their contribution in executing and implementing the project well on time. However, we received feedback from the employees that every team member played a vital role in the project hence the reward must be given individually and not collectively. They would like to share their achievement and wanted to take back home a memento or certificate of appreciation to show to their families. This concern was very well addressed by us and from next year onwards we have introduced a system of recognizing and highlighting individual contribution in any team project of the organization.

Outsourcing Rewards

Who better than you would be able to best understand your organization and cater to its needs to the fullest. Organization these days prefer to outsource their rewards programs to an external agency or vendor and many times these agencies are unable to judge the needs of the organization. It is fairly simple and understandable that the organization’s requirement and people’s expectations can be handled and addressed effectively internally. If you want to outsource rewards then only outsource your merchandizing part and not your system.

Buying in and interest from the stakeholders is required so that one does not commit the above mistakes while implementing the rewards and recognition system. Further, if you would like to add or expand my list, or would like to share real life example on the common mistakes, kindly leave your valuable comments in the box at the end.

  • Excellent summary of the challenges of creating strategic recognition programs, especially on a global scale. Expectations for recognition vary drastically by culture – both geographic and generational. If you’re establishing your employee recognition practices based on the desires of your generation and your culture, you will insult a vast majority of employees in other parts of the world and from other generations. This international insult can have long lasting repercussions on employee perceptions of the company and on long-term loyalty.

    Workspan magazine published an article of mine on just this topic: “How to Reward a Multigenerational and Culturally Diverse Workforce.” I offer insight into engaging four generations of employees from global cultures by redefining recognition or the 21st century. The article is available here http://bit.ly/9HIjGj for those who may be interested.

  • Amit Bhagria says:

    Hi Derek,

    I have gone through your article. The place where I face challenge is on the measuring results part. We sometimes create systems and processes but quantifying the outcomes still remains a challenge for us. We give our best to ensure that the new initiatives are appropriately been received by our people. We can calculate the participation level, however the measurement of the impact of the system on the people in terms of behavioural aspects still remains a concern for us.

  • Amit, that is an excellent point. We MUST measure metrics that matter (especially to the CEO/CFO) and report on them in a meaningful and actionable way. We make this a critical element of our recognition programs, requiring our clients to define their metrics of success and structure measurements for them during the earliest stages of program design (of course, we help them figure this out). Behavioural measurement seems to be a stumbling block for many. That’s why we strongly encourage companies use their company values and strategic objectives as their “reasons for reward.” That way, if you let all employees notice and appreciate the behaviors of their colleagues that reflect the company values in contribution to a strategic objective, they begin to see those values/behaviors come alive in their own work and the work of their peers.

    Now, with measurement behind that (because you tied every recognition to a value/objective in a formal program), you can easily track at the company/division/group/team/even individual level what values may not be well recognized and then intervene as appropriate. Perhaps, for example, Division A shows excellent recognition participation for “Quality of Work” but little for “Innovation.” If Division A is your accounting department, this is good! You wouldn’t want your accountants becoming too “innovative” in how they report the numbers. But if this is your R&D department, you know you have a problem!

    I write a good deal about this on my blog in the “company values” section and the “measuring recognition” section if you’d like to read more.

  • Abla says:

    Hi Derek,

    This is a great discussion and one I am very interested in. I work with an industry that is growing strongly despite the economic challenges we face in the Middle East. This company however runs on a business vission of creating strategies that deliver success on low cost models. Hence, as an HR practitioner, whatever new ideas or improvements I need to implement they have to be impactful but low cost!
    The company I work with is very diversified, over 30+ nationalities, average age is almost early 30’s. I strongly believe in RR Programs and want to slowly implement this here. What are your suggestions for me, I would appreciate some direction. What should I bare in m ind whilst I start designing this program and where or what should I look at to measure and weight the successfulness of my program?


  • Amit Bhagria says:

    Hi Abla,

    The strategy followed by your organization on delivering success on low cost is not an exceptional one. Every organization in todays time want to have a great environment, talented workforce that too in limited resources (cost etc). The challenge that we face as an HR people is to match on the management’s expectations and also to keep our workforce energized by introducing low cost benefits.

    No company in this world would like to invest in an area where they don’t see or feel any future benefits whether it is tangible or intangible. The following can be done by you in the initial phases of R&R program to gain management’s support:-

    a) Start with initiatives which involves low cost but creates high impact on the employees: Family plays an important role in an individual’s life hence you can do certain activities for them like family get together, competitions in your compound which initially sets the platform. Take feedback from people on how did they like this and present to the management on what impact it has created. Recognize the employees in front of their children and see how much they will like it. I am sure these small activities will give a boost and build confidence of the management in you & ur dept.

    b) Next you can start transforming your systems and processes into employee friendly policies. If you have marriage or birthday recognitions, try to document that system and share it with people. Even if the system exists, a clear documentation will enable you to further make improvements or escalation. We used to have a system of taking employees with family on a holiday trip which was then documented and shared with people which was received with great enthusiasm and encouragement. Further to put some icing on the cake we then incorporated new elements in it.

    c) Now use all you past data to get the buyin of the management so that they can give u a go head for further investment which can be a long term strategic plan on rewarding employees.

    Look our HR department is a cost centre and we should be always aware of the financial health of our organization before expecting any investment to be borne by the management. My wife cannot expect me to buy her a Dolce & Gabbana suit when I am in debt or under heavy loss. She needs to understand this before expecting anything out of me.

    We should understand that our initiatives must be in line the financial goals of the organization. I find many people in HR are alienated from Finance and account dept. Either they are not interested or no body wants to share info with them. What I can suggest is to monitor your accounts regularly and make your action plan accordingly.

  • Abla, Amit gives very good advice. If you would like my perspective, I would direct you to a couple of white papers on this topic that more clearly outline how to structure a program and how to measure it. If you visit this page (http://www.globoforce.com/corporate/eng/innovation-center/whitepapers/), I recommend these papers:

    Issue 10: Measuring Recognition
    Issue 5: Designing Your Company’s Social Architecture
    and perhaps also Issue 1: Globoforce’s Top 10 Tips

  • Abla says:

    Hello Amitt, thank you for your inout. Im going through your notes and other notes i got through the iternet and ones i worked on in the past. I think this is all good, will need time until i build it up and later on present to the management so i guess i will update you guys if thats ok as i progress incase i look for more challenging inputs on my findings.

    Derek, thank you for the several references you proposed i go through. I will do so.

    Thanks again

    PS: I work for an airline, brand new airline, that maybe could explain to you why they run on a low cost model. BUT, they have very good initiatives. All i wana do since this is new to me is to measure how happy people are, what more can be done, how to measure, what new stuff i can bring at low cost wherever possible but still high impact. I dont think there is anythig wrong in their direction, they will invest wherever it is neccesdsary but i have seen companies waste so much money on things that never delivered results!

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