A tangible reward is a type of appreciation that employers give their employees to recognize a job well done. These rewards have either a monetary or non-monetary value that the employees can use to their benefit.
Such rewards are used to motivate employees to bring more of the desired outcomes to the company and the team and go above and beyond for them. They help boost morale, a positive attitude, and job performance by creating psychological empowerment.
What are the Types and Examples of these Rewards?
Generally, two categories of tangible rewards exist: direct and indirect. Different types of rewards exist under both categories, including compensation and raises, rewards of varying forms, endowments, benefits and insurance, and promotions.
1. Direct Rewards
Direct rewards involve material things that have monetary value to an employee. Examples include:
Salary increments for promotion or other reasons;
Monetary compensations; and
2. Indirect Rewards
Rewards that are tangible but indirect don’t pose direct monetary value to the employees. However, these exist in other forms and act as direct investments of the employer to boost employee morale. Some examples include:
Transportation and accommodation arrangements from the company;
Merchandise such as laptops, t-shirts, and shoes;
Tickets to a game or a movie; and
Various gadgets to boost productivity.
How are they Different from Intangible Rewards?
Unlike tangible rewards, intangible rewards consist of things that are non-material but are used to motivate employees through words or actions. Some examples of intangible rewards include:
Recognition across the company;
Public praise from the manager;
Praise on virtual media;
Flexible working hours;
Allowing extra day-offs;
Lunch or dinner offered by the company; and
Why are these Rewards Important for an Organization?
Giving employees rewards in tangible forms besides intangible ones has many advantages for organizations. These can range from achieving specific goals to strengthening company value. The importance of these rewards, along with their benefits, are discussed below.
A tangible reward offered to employees boosts their productivity. They are motivated to achieve a specific set of goals when such rewards are tied to the final results. Through this, they also focus on performing adequately in their jobs.
These rewards motivate employees to work well in teams and be collaborative. Frequent meetings, presentations, and displays of positive behavior can also be seen among employees, especially with team members.
Tangible forms of rewards encourage employee loyalty toward their employers. This happens mainly when the managers motivate their subordinates, increasing employee retention rates actively.
Managers rewarding their subordinates with monetary rewards encourage employees to work harder towards reaching their goals and reinforcing company values.
Are there Potential Drawbacks to it?
Although tangible rewards offer many benefits for the company, there are also a considerable amount of drawbacks. Issues such as jealousy, burnout, and the feeling of discrimination may arise. Such issues are discussed below.
In the race to have the best rewards in a specific industry, companies may face an increased amount of business costs in terms of their rewards budget, affecting the net profits they make.
Jealousy may arise among employees, especially within teams. Resentment may arise even in those who aren’t much deserving.
Even if some employees aren’t deserving enough of the rewards, they may feel unfairness towards them, thus feeling demotivated, affecting their overall performance negatively.
Well-performing employees can face burnout if they solely focus on monetary rewards. This way, they’ll lose focus on the company values and may compromise the quality of their work.
How to Implement Plans for Tangible Forms of Rewards?
Companies can lay out their reward systems with many things in them. However, four things should remain as the core rewards: recognition in any form, compensation, appreciation, and benefits and perks. Companies should ensure a formula for the rewards system so that employees don’t feel that others are preferred more based on their personal characteristics.
The following things can help implement a properly laid out plan for rewards that are tangible.
1. Involve the Employees
Employees often have the best ideas in mind when designing a rewards program, which is why taking their suggestions into consideration is important. They’ll also know that their opinions matter.
2. Examine Rewards Across the Industry
Competition can be fierce among companies in a specific industry, making the rewards plans competitive. Surveying the best possible options is essential to stay competitive or on top of the rewards.
3. Decide Who Will Distribute the Rewards
Many companies distribute rewards through the hands of the management board, while the rest allow the managers and leaders to hand over the rewards. Therefore, deciding who distributes these is necessary, whether it’s a recognition, monetary award, or benefits.
4. Define the Reward Strategies
Tying the rewards to performance and end results has been the benchmark for a long time, which has also been proven to bring positive results to the table. Defining the reward strategies based on the specific goals will give the employees a clear picture of how they should work towards the goals.
5. Address the Potential Challenges
A well-made reward plan comes with potential challenges that may harm the company on some level. That’s why it’s essential to discuss what drawbacks a company may face and how the employer and HR can handle them.