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Disadvantages of Employee Rewards Programs

written by: •edited by: Michele McDonough•updated: 11/2/2010

Every business wants to improve morale and may feel the easiest way is to set up an employee incentive program. Before you start handing out the cash, there are disadvantages of employee rewards programs if you implement them incorrectly. HR expert Jean Scheid offers some insight.

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    Defining Your Rewards Program

    Trophies Can Fall Flat Morgue File Diversity can play a big role in any employee rewards program. During my career in the human resources world, time off with pay is more appreciated than cash to some cultures. A gift one can use again and again may be better than offering cash to some.

    Before you begin any employee incentive program, take a close look at your employees as a group. What will motivate them or improve morale? If it’s an outing to a sports event, why hand out cash?

    Take an office poll to see what employees want to avoid the disadvantages of employee rewards programs.

    Image Credit: (FreeDigitalPhotos)

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    Employee Incentives – What Can Go Wrong?

    Cash Is Not Always Best Any business that doesn’t thoroughly research an employee incentive program may find there are many disadvantages to implementing one that doesn’t produce the desired result. You want your employees to feel the reward or incentive means you appreciate them in order to motivate them, keep lifelong employees or improve morale.

    Here, are the top 6 disadvantages of employee reward programs that can go south fast:

    1. Cash – Many HR managers and business owners make the mistake of thinking all employees want is cash. Often the cash gift is gone in seconds on an elaborate night out or used to pay off debt. Once it’s gone, the employee often doesn’t feel like they’ve gained anything and in fact, may think they should be paid more money. Cash is not always the best idea.
    2. Lottery Tickets – Believe it or not, this is something employers think employees want. This is just a cheap way of telling your employees you don’t appreciate them.
    3. Unrealistic Goal Rewards – You may have top people that can hit their goals every month, but for the most part, if you set the same goals across the board, the slow to get there won’t benefit from these goal-setting incentives. Be fair about what each employee can do and base it on their job duties.
    4. Stop & Start Programs – If you start a program such as employee of the month that includes a plaque with names, make sure you don’t’ do it randomly. This is actually a hard program to follow through with unless you have someone dedicated to keeping it up.
    5. Parties – While company picnics and holiday parties are nice, don’t consider them employee rewards. You should offer them above and beyond rewards and really get to know your employees and their families.
    6. Promotions – This is a very bad idea and some employers actually do this. To offer any employee the chance for a higher position via an employee rewards program is not prudent. Promotions or raises in salary should come during performance review times. More often than not, this can also cause dissension among employees.

    Image Credit: (FreeDigitalPhotos)

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    Getting It Right

    Make Rewards Count There are many ways to implement employee incentive programs and avoid the disadvantages of employee rewards programs. Talk to your supervisors and staff to get their opinions—even if it’s a blind questionnaire or survey.

    Avoid the common and be inventive to avoid the cons of reward programs. Make sure you’re fair and don’t offer rewards the low person on the totem pole will never achieve. Sometimes, group or departmental rewards are better than individual awards.

    Finally, if you start an employee reward program, don’t suddenly stop it. Make sure the program you design is one you plan on following through with year after year.

    Image Credit (FreeDigitalPhotos)