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At a fundamental level, a business is operated by the staff on the ground whilst senior management play a more strategic role. This can lead to business owners and employers becoming detached from the day-to-day work of their staff and in turn, the potential for employees to become dissatisfied and demotivated.

Employee reward and recognition schemes are a great way to help combat this, enabling senior management to demonstrate their appreciation for the hard work of staff, encouraging loyalty and increasing satisfaction.

In this guide, we will work through exactly why your business needs an employee reward scheme, as well as how to create an effective one. Bookmark this page and use it as a reference source when working on your reward structure.

Why do you need an employee reward scheme?

We briefly touched on it earlier, but the primary need for an employee reward scheme is to demonstration your appreciation of your employees. Not only do effective rewards demonstrate a mutual respect between employer and employee, but they also amplify trust, dedication and general job satisfaction.

From a senior management perspective, these boosts to employee mindset result in significant benefits for the business as a whole, including:

Staff Retention

Rewarding your team for performing well helps staff to enjoy their time at work and feel appreciated. Staff that know their worth and feel wanted are much more likely to stay with your company - it’s as simple as that.

Recruitment Ease

When trying to recruit talent, finding the perfect candidate can feel challenging, so when you do find them, you want to keep them. The truth is, if you’ve noticed someone’s talent then other companies will too; you need to ensure your offer is the one that the candidate takes. To this end, an inclusive and attractive reward scheme (on top of a competitive salary) is essential to ensure that they sign on the dotted line.


Happiness and positivity breed a healthy working environment and in turn, drastically improve productivity. Creating a platform where staff feel appreciated and are recognised for the work they do, encourages better performance and greater focus - it’s an incentive for performing well.

In summary, an effective employee reward scheme will boost satisfaction, increasing work efficiency and ease of hiring, whilst simultaneously decreasing staff turnover. With this knowledge, it’s clear why you would want a good reward structure in your business – but how do you make one and more importantly, how do you make sure it’s going to be effective?

How to create a bespoke employee reward scheme for your business

Establishing a reward scheme that is tailored to your business isn’t easy. We see many different systems and approaches to employee rewards, varying greatly in both style and effectiveness based on the company sector, size and culture. However, there are a few aspects to consider that help to make your approach work better.

Multiple Reward Systems

Don’t select a single reward method and hope that it will work well for everyone. This is primarily because different methods appeal to different people, particularly at a generational level. It also limits opportunities for employees to achieve and be recognised. Use multiple reward strategies to create extra levels of recognition and achievement, giving your staff a reason to reach their full potential.

Design Advice

Another important aspect of creating a competitive employee reward scheme is to understand what other reward schemes look like in your industry. This is especially important for attracting staff and ensuring the best talent joins you instead of other businesses in your sector.

It’s very difficult to legally compile effective reward data from other companies, which is why most businesses take advantage of reward scheme design services to help them, like those we offer here at Paydata.

Given the vast array of options available to employers, designing a focused reward scheme tailored to your requirements is a challenge. Fortunately, having spent more than 20 years analyzing and designing pay and reward structures, the advice we offer is based on detailed understanding and decades of practice.

Employee reward scheme ideas

Don’t underestimate the power of simple, easy to implement reward methods, which can be used to complement a more structured reward scheme.

Thank You!

Whilst this isn’t part of an organised reward system, it’s still invaluable. A simple thank you can mean the world to a dedicated employee and creates a sense of respect that many large organisations lack. Never be afraid to thank your hard workers for doing a good job. Furthermore, a thank you serves as an instant reward and by our very nature, humans love instant recognition.

Celebrating Success via Email

Company-wide email newsletters are great for highlighting successes in different teams. These are especially valuable for connecting departments that aren’t usually aware of what the other does, producing a sense of community within the business. The best successes to highlight in these newsletters are individuals or teams that have benefitted the business as a whole, particularly if they have assisted in fulfilling the company’s mission statement or epitomise a core company value. This will encourage others to do the same, building a tangible ethos for your business.

Employee of the Month

The employee of the month is a classic approach that works, particularly if the employee of the month is voted for by other employees. Not only does this create a sense of respect between employees, but it enables a structured presentation in front of other members of the team. Presenting a positive reward in front of the workforce is a great way of emphasising achievement and good work whilst simultaneously increasing the reward’s value, as achievers know that their colleagues will be aware of their success.


Whether you host a dedicated awards evening at the end of each year or make them bi-annual events, awards based on employee votes are a fun way of giving individuals recognition for their work. Again, acknowledgement from management is one thing, but recognition from colleagues is another entirely. Employees that receive both are the happiest and most productive.

Long Service

Long-service awards reward loyalty to the business and show an appreciation for employee’s dedication. These rewards don’t even need to be expensive. A simple meal out is unique and requires little effort from senior managers, which is appreciated for a long-standing member of the company.

An example of a good reward scheme

To conclude, we will highlight a customer who has adopted an effective employee reward strategy that fosters dedication and company-wide growth.

JT is an experienced telecommunications company that came to us looking to shift their company culture towards a high-performance ethos. With a narrow job grading structure in place and a limited reward offering, we recommended three key solutions to help shift the culture in a more focused direction:

  1. An underlying structure of job families
  2. A pay matrix approach
  3. A company-wide bonus scheme

The job family structure allowed JT to reward the acquisition of competence and skill and provided employees with a framework for clear career planning and progression.

JT adopted a pay matrix approach that provided the biggest pay increases to high-performing individuals relative to their position against the market. Adopting a pay matrix approach allowed JT to use base pay to drive performance, which helped them foster a high-performance culture and supported the achievement of the business strategy.

Finally, we converted the previously manager-centric bonus scheme to a company-wide affair that combined individual performance with business success, benefitting all employees based on the business’ growth as well as their own. This enabled JT to recognise individuals and reward them based on their contribution to the business’ success, whilst simultaneously encouraging fairness through the inclusion of all staff.

Combining these approaches created a tangible, all-inclusive and company-wide reward scheme that gave everyone a clear path to improvement and recognition, with the new reward framework having a notable impact on driving performance across the JT Group. You can find out more about the JT reward scheme here. Overall, this is a great example of a successful reward scheme.

If you are ready to start looking at a new reward scheme of your own and ensuring your approach is effective, then make use of our expertise and get in touch with us today.

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