Mason

Dear Mason,

First of all, keep in mind that base compensation is a separate animal from recognition and rewards. At most companies, recognition and reward programs are part of their incentive structure, but only a part. Rewards and recognitions differ from other forms of incentives, such as sales commission or review processes, in that they do not follow a time table and function more as a pat on the back than as a formal part of the compensation system.

There are two general types of recognition and reward: monetary and non-monetary. Monetary may include one-time cash awards, extra paid days off or a share of the profit from a particular project. Non-monetary may include gifts, "employee of the month" posters, recognition at company meetings, exclusive parking privileges or a simple, heartfelt "thank you."

While non-monetary recognition and rewards are inexpensive, employers are tempted to rely on them heavily. But savvy employers understand that they can only do so much, and used incorrectly can depress, not lift, employee morale. If an employee feels that he or she has done a lot of work on a project and deserves monetary compensation, a token gift or verbal recognition may appear to be a slap in the face. Moreover, too informal of a reward structure makes it difficult for employees to gauge their own performance and reduces the incentive for them to excel at their work. Ultimately, employees work for a company in order to receive compensation, not to receive a pat on the back, and they will always see monetary compensation as a more sincere form of employer appreciation.

The best way to structure a recognition and rewards program, according to HR.com, is to create a two-tiered structure: one non-monetary, one monetary. Non-monetary rewards should be used discretionally, deployed as a sort of "easter egg" that employees do not count on but nonetheless know is out there. Monetary rewards, on the other hand, should be strictly defined and understood by employees, so they can know what to expect and when to expect it.

Good Luck,

HR Guy