Reward system – how to appreciate employees and build loyalty?

Work is work, salary is salary, but… who doesn’t pay attention to benefits, bonuses, and little rewards? It’s well known that recognition at work has a positive effect on morale. But what if the targets are set so high that they seem unattainable? The promise of a potential reward starts to feel like a myth, and the only thing the boss brings at the end of the month is the news that once again, the KPIs haven’t been met? Motivation and engagement plummet. How can this be prevented?

Every employer who cares about achieving company goals while minimising the risk of high turnover in teams asks themselves how to boost employee motivation and engagement. This is especially crucial as Gen Z enters the workforce—a generation that not only values work-life balance but also seeks self-fulfilment in the workplace, the development of their skills, and a sense of purpose. They understand that work efficiency relies on motivation, engagement, and loyalty to the company, so the right strategy is to focus on people. A well-constructed reward system facilitates this. Recognising employees not only boosts morale but also strengthens long-term relationships, which in turn contributes to the stability of the company.

A properly designed reward system helps to build organisational culture, encourages development, taking on challenges, and putting in extra effort to achieve the company’s goals. A reward sends a clear signal – I am seen and appreciated. On the other hand, the lack of a reward system can lead to frustration, feelings of unfairness, and being overlooked. So why do rewards often have a negative association? Mainly due to subjective criteria and unclear rules. Employees who feel that rewards are given based on favouritism or internal politics lose trust in the company. Another mistake is favouring only the best, record-breaking results. Those who may not achieve such spectacular outcomes but put significant effort into their work, where results are often beyond their control due to the nature of the job, will feel frustrated. Although automating this process can simplify things, human judgment remains essential—engagement and creative approaches to tasks should also be acknowledged.

At Echo Analytics, we believe that every improvement deserves recognition, as we are all ultimately striving towards the same goals and shared KPIs. Monthly targets provide a good example. In many companies, a reward is only given when 100% of the target is achieved. However, in individual cases, this isn’t always feasible. An employee who sees halfway through the month or towards the end that they won’t meet their target might lose motivation and only perform the bare minimum. Yet, their daily progress, even if small, contributes to the overall result. Thanks to transparency and scoreboards, we can observe that it was this very employee and their 2% improvement at the end of the month that enabled the whole team to meet the KPI. That’s why, at Echo Analytics, employees are rewarded proportionally to their results. If 100% of the target earns 100 coins, achieving 90% of the target will earn 90% of the reward, which is 90 coins.

What else is important? Understanding the needs of employees—by knowing your employees’ preferences and needs, it’s easier to tailor rewards to their expectations. Here, it’s important to maintain a balance between material and non-material rewards. While pay rises or bonuses are significant motivational tools, they aren’t always the most effective form of reward. Let’s not forget that besides these, we can reward employees with flexible working hours, training opportunities, or remote working options. The reward system must operate regularly, not just on special occasions. Regular recognition and rewards, even in the form of small gestures, make employees feel noticed, appreciated, and supported. Request our DEMO to better understand how personalised dashboards allow employees to take control of their productivity and how you can reward their efforts.