Tangible Rewards

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What are tangible rewards?

Tangible rewards are defined as rewards provided to recognize a job well-done and show appreciation. These can be either cash or non-cash rewards that can be assigned a monetary value. 

Tangible rewards create psychological empowerment for employees, leading to discretionary behavior, such as improved job performance and morale. For example, an employee is given a cash bonus for helping a high-valued customer in a difficult situation. 

This reward reinforces the employee's decision to go 'above and beyond' their usual call of duty as part of their normal behavior. If an employee feels well-rewarded for showing this behavior, then they may display the behavior more regularly, as well as other positive behaviors, such as increased creativity. 

Direct and Indirect Tangible Rewards
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What are the types and examples of tangible rewards?

  • Salary or wage increase: A fixed reward that increases the employee's regular wage or salary.
  • Bonus: Awarded in the form of cash. Can be awarded annually or as a one-time payment. 
  • Gift cards: A gift card or voucher the employee might find useful. Tailor the type of gift card to the employee's preference or interests.
  • Company-branded merchandise: This could be a company hoodie or laptop, for example. 
  • Lunch: Paying for an employee's lunch or providing them with a lunch card to use at the work cafeteria.
  • Miscellaneous rewards: Sporting event tickets, electronic gadgets, clothes, etc. 

Tangible vs. intangible rewards

Intangible rewards refer to non-material awards provided to an employee. These rewards do not have inherent financial value but are used to recognize and appreciate an employee's efforts and performance. Some examples of intangible rewards include: 

  • Public praise from a manager
  • Thank you notes
  • Praise on social media
  • Flexible working hours
  • An extra day off
  • Letting an employee work a 'half-day'
  • An employee recognition trophy

Great organizations provide employees with tangible and intangible rewards, contributing to employee happiness and satisfaction. Only using intangible rewards may lead to cynicism, while only using tangible rewards can result in overly competitive behavior.

Why use tangible rewards?

Tangible rewards form a significant part of any successful compensation strategy for an organization. Some of the benefits of tangible rewards include:

  • Motivating employees to reach a specific goal: Employees are likelier to work harder when a tangible reward is linked to a particular outcome.
  • Reinforcing motivation and company values: Employees are rewarded for demonstrating positive behaviors. 
  • Additional financial rewards: It's a great way to celebrate employee accomplishments and provide additional financial rewards beyond an employee's usual salary or wage.

Potential downsides of tangible rewards

Not every employee will receive a tangible reward at the same time, or even at all. As a result, the following negative repercussions can occur: 

  • Feelings of jealousy or unfairness among employees: Even if an employee is undeserving of a tangible reward, they may still feel a sense of entitlement or resentment, leading to a loss of productivity.
  • Employees focus primarily on receiving tangible rewards: This might create a narrow focus and compromise the quality of work less likely to be rewarded.
  • Managing a rewards budget: If tangible rewards are the main form of employee recognition, costs can add up quickly. Your tangible rewards must vary in form and financial value. 
  • Low performers feel undervalued: As tangible rewards are predominantly rewarded to top performers, it may isolate low performers who may feel that their efforts are going unnoticed.

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