Rewarding employees has evolved both it terms of what’s on offer and how it should be given. The HR World’s Simon Kent investigates current thinking and how to keep rewards on track.
The question of rewarding people for the work they do has become more of a challenge in recent years. Organisations have faced increasing challenges in the form of the multi-generational workplace and adverse economic conditions – making it at once more important for employees to receive remuneration for their efforts and harder for organisations to give it.
“I have definitely seen a significant increase in employers wanting to improve and boost their employee benefit package for their employees,” remarks Hugo Gregory, Partnerships Manager at the Electric Car Scheme. “The cost of living crisis being one of the main contributors to this, as employers look at ways of helping an employee’s money go further without necessarily providing pay rises.”
“The world of work has changed dramatically since the pandemic,” agrees Stephen Knight, Chairman, utc.travel. “While many employers are pushing for a return to the office, they face resistance from employees who have embraced flexible working and, in many cases, found a healthier work-life balance. At the same time, we’re seeing a worrying decline in mental health and wellbeing – particularly among younger men.”
Knight says some organisations are tackling this with training, dedicated wellbeing support, and smarter benefits, including access to affordable travel. “Evidence shows that regular travel and short breaks not only boost mental health but also enhance performance, reduce absenteeism, and increase overall engagement. Our clients are already reporting higher satisfaction and stronger connections across their teams.”
We’re seeing employees increasingly drawn to organisations that compete on not just salary but on the quality and the relevance of their benefits.”
“I would say people today prioritise a good work-life balance,” says Hugo Gregory. “Whilst enjoying the role itself definitely still matters, there’s a growing focus on what their employer stands for and the benefits they have to offer. We’re seeing employees increasingly drawn to organisations that compete on not just salary but on the quality and the relevance of their benefits.”
The evolution of reward
Matt Norbury, CEO of Each Person, notes how reward and recognition has evolved far beyond monthly pay with employees now expecting benefits that not only support them financially but also enrich their physical and mental wellbeing too.
He argues that this shift reflects a deeper understanding that recognising hard work and dedication cannot be just a token gesture, but is essential for job satisfaction, morale, and retention. “When people feel that their efforts are valued and that their work has meaning, they’re more motivated and fulfilled, both professionally and personally,” he says. Getting these rewards right has a far reaching impact beyond personal wellbeing, ultimately helping to reduce stress and sick leave across the workforce.
“People dedicate a significant part of their lives to work, so when their workplace fosters positivity and appreciation, it makes a meaningful difference, not only to morale but to overall wellbeing and performance,” says Norbury. “Frequent recognition of hard work and dedication, alongside genuine appreciation for everyone’s personal contribution, creates a culture where people feel valued and motivated to thrive.”
For Norbury, this aspect of reward can be seen in the growing number of organisations looking for solutions such as automated long-service awards, milestone celebrations, and simple, everyday moments of recognition – all designed to show people that what they do really matters.
“In terms of the approach to recognition, we’ve found that the most effective recognition is timely, consistent, and fairly distributed across every level of the business,” he says. “Using an automated, virtual platform ensures that no birthday or work anniversary goes unnoticed,
while creating equal opportunities for celebration and reward. When everyone feels genuinely recognised, it builds a culture rooted in positivity, connection, and shared appreciation.”
The rewarding career
David Morgan, Chief Executive of the Career Development Institute believes the definition of ‘reward’ has fundamentally shifted. “While for some a competitive salary is the necessary baseline, for many a key way employers can appreciate employees is through supported career progression,” he says. The CDI’s ‘Valuing Careers’ research found that people who are positive about their careers are nearly twice as likely to be positive about their wider lives. Morgan notes that for HR leaders, the message is that a critical form of reward and appreciation is securing a relevant, fulfilling career path for every employee.
“Our data shows that while employees are able to develop their skills, only half succeed in changing their career path,” he explains. “This Aspiration-Achievement Gap is a crippling inefficiency. Learning and Development can be enhanced by being coupled with professional career guidance to build the confidence and mobility that employees desire.”
Investing in professional career development ensures staff feel appreciated and able to progress in their careers. This can be powerful driver of retention and organisational productivity.
A key issue highlighted by the CDI’s research is the sharp decline in career optimism among the mid-career workforce. “Positivity drops steeply to just 42% for 45-to-54-year-olds and is a severe warning siren for the aging economy,” says Morgan. “Current reward systems need to recognise career longevity. To maximise skills development and retention, reward should be redefined to include targeted ‘career re-evaluation and recovery’ interventions, helping secure an employee’s future relevance, not simply their current salary.”
A reward too far
But while organisations seek to build more effective reward structures, Mav Popat, Client Director at Kin&Co, sounds a note of warning to ensure such structures do not work against an organisation’s culture. He believes some employers are at risk of generating what he describes as ‘toxic rock stars’ through their reward structures: “These individuals in an organisation often bring in a sizeable portion of the money and work extremely hard,” he explains. “However, their success is often based on grit and pushing through and being technically brilliant but in a way that is counter cultural. In other words, these individuals achieve their outcomes in ways that do not align with the espoused behaviours of the organisation.”
Popat warns that toxicity can emerge if individuals are praised and rewarded above others because it demonstrates that if you do something ‘against’ the culture you will benefit. “This can be very damaging to a company’s culture because it makes other people in the organisation think they need to go against it in order to be praised and rewarded,” he says. “It can also raise baseline expectations across an organisation and make highly competent individuals feel inadequate by comparison. Ultimately, this can diminish the organisation’s overall resilience and risks losing talent.”
Reviewing performance frameworks and considering the ‘how’ and the ‘what’ that people do to get promoted or compensated via discretionary bonuses is important”
The answer to this, Popat says, is for HR to ensure their organisation’s behavioural expectations and competency frameworks reward not just the end results – regardless of how they have been achieved – but also the ways of working and other skills and competencies needed for the organisation to thrive, such as bringing new ideas to the table or taking an innovative approach in their work.
“Reviewing performance frameworks and considering the ‘how’ and the ‘what’ that people do to get promoted or compensated via discretionary bonuses is important to ensure that employees are not solely rewarded for technical brilliance or because they are working themselves to burnout to the detriment of their contribution and the company culture,” he says. “This is not sustainable. The ‘toxic rock stars’ also need to receive regular feedback against this behavioural framework to recognise what other qualities are also valued by their employer.”
Rewarding employees is without a doubt a complex and multi-faceted aspect of people management, and to a great extent this is the frontline where employees will be motivated or discontent, productive or less efficient, stay or go. There are increasingly diverse ways for HR to effectively recognise their employees – the key is to ensure such recognition always sends out the right message.
