How to Set Up an Employee Reward System

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Employee reward systems are structures put in place by companies to recognize their employees’ hard work and results by encouraging them with different kinds of gifts, praise or appreciation, and both monetary and non-monetary incentives. In this article, we talk about how employee reward systems work and discuss types of rewards and how to choose the right rewards for your employees.

What is an employee reward system?

Employee reward systems are structures put in place by companies to recognize their employees’ hard work and results by encouraging them with different kinds of gifts, praise or appreciation, and both monetary and non-monetary incentives.

An employee reward system usually takes the form of a platform or recognition program and is not merely aimed at rewarding employees but also at helping them master their work habits and set themselves up for success. They are designed to increase workplace engagement, improve employee retention and satisfaction, boost collaboration, and reduce absenteeism — besides the more evident goal of making sure employees feel appreciated for their efforts.

Benefits of employee systems

As hinted at above, installing an employee reward system can do much more than just show appreciation to your employees (not that that isn’t a worthy goal in and of itself, already). 

Recognition structures can influence different areas of your organization and have a lot of impact on internal processes and dynamics. Let’s look at a few main benefits you can draw from installing a fully functional employee reward system:

  1. Increase internal motivation and productivity. Employee recognition structures such as employee reward systems allow employers and managers to reward their teams in whatever way best motivates each individual: this includes setting up tailored rewards based on individual motivators but also rewards on a team level. Acknowledging the growth of an employee or a team can significantly increase motivation – giving a sense of accomplishment, satisfaction, and personal development — and thus productivity.

  2. Foster cross-department collaboration and self-management. Reward systems can often work on a peer-to-peer basis. This means that the organization isn’t only awarding rewards from the top down, but team members and colleagues are horizontally recognizing each other’s efforts, showing a deeper understanding, interest, and involvement in other departments’ efforts. Which, in turn, favors teamwork, cross-departmental collaboration, and, on a different level, self-management.

  3. Enhance employee engagement and ambassadorship. Employees who feel valued for their contributions and efforts tend to feel and be more engaged with their company and the rest of the workforce. Any relationship is a give and take, and an employer who shows interest in and appreciation for their employees and isn’t afraid to recognize them will foster a deeper sense of belonging, involvement, and, indeed, engagement in its workforce. Consequently, employees who feel engaged and involved in their company’s business and initiatives will be more likely to act as external ambassadors for that company.

  4. Increased employee retention and satisfaction. Employee satisfaction is not the same as employee engagement. Employee satisfaction is much more closely related to retention and turnover rates, which can also be directly impacted by employee recognition and reward systems. These become key differentiators in a company's ability to maintain a stable and motivated workforce. By implementing effective reward systems, companies can tangibly express appreciation for their employees' work, leading to increased job satisfaction and loyalty.

Employee reward systems and employee advocacy

The topic of ambassadorship and employee advocacy  is actually very crucial in the discussion about employee reward systems. As a matter of fact, they are powerful and pivotal tools for fostering employee advocacy by recognizing and incentivizing employees who actively promote and support their company's brand.

When companies implement reward systems, they not only acknowledge the valuable contributions of their employees in amplifying the brand's message but also motivate others to participate in advocacy efforts. Actually, they play a central role in stimulating the engagement and interest necessary for employees to want to become brand ambassadors in the first place. 

Within Ambassify, for example, the employee reward system is part of the gamification plan: this includes a point system with leaderboards and rewards. Based on their activity and interactions, employees gain points and are able to exchange those points for rewards. 

Related read: Let’s talk gamification and rewards

These rewards are fully customizable: the important thing is they align and conform with the company’s culture and values. They can vary from public recognition, exclusive perks, donations, and professional development opportunities to monetary bonuses, all aimed at appreciating employees' efforts in representing the brand positively outside the workplace. 

By aligning rewards with the goals of employee advocacy programs, companies can create a culture of enthusiastic brand ambassadors, creating a win-win scenario where both the brand and its employees benefit from increased visibility and a strengthened employer-employee relationship.

Choosing rewards for your employees

Appreciation and recognition are a daily staple in a solid employee advocacy strategy, but a lot of companies have a hard time installing the right reward system for their employees because they don’t know how to choose the appropriate rewards for them.

Here are some types of rewards that might be suitable for your company: the one thing to keep in mind is that these are supposed to align with your company culture and values, so something that works for one company may not work for yours.

Monetary rewards

These are often seen as weaker motivators, but they can work very well for some companies and their employees. They don’t have to be handed out in the form of bonuses, but they can be anything that has monetary value: vouchers, discounts, gift cards, etc. 

Social recognition 

This is a non-monetary employee reward and usually works as a more powerful motivator for the smaller kinds of recognition. From a simple “Thank you” to a shout-out during staff meetings to a nomination as ‘employee of the month’, social recognition allows employees to feel valued for their work. This can also perfectly work in a peer-to-peer reward system where it’s not only dispended from the top down.

Seeing your efforts, growth, and competence publicly recognized and acknowledged is enough to motivate even the toughest of employees. Appreciations provide you with the psychological support and motivation needed to excel on the job and are a source of productivity and energy. 

Rewards informed by employee feedback

When building an incentive or reward program, a deeper understanding of the types of rewards team members want is called for: that’s why I suggest surveying your employees about what they wish to see as part of the reward system. 

Your people leaders can ask team members about their thoughts and preferences or just voice their opinions and wishes about it. Especially in the context of employee advocacy, collaboration on these kinds of infrastructure is a very important pillar to build a solid relationship and ensure the program’s success.


If you want to finetune your employee reward system, then there is no better way to do that than by asking the employees themselves for feedback. Are they driven by monetary rewards? Are they driven by personal growth and development opportunities? Social recognition?

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