1) Promoting good work culture:
An effective employee reward system goes a long way in promoting an organization’s work environment & thereby ensuring greater job satisfaction among employees.
It boosts the morale and confidence levels of employees while strengthening their belongingness to the organization (Making them feel that they are important for the growth & development of the organization).
Employee rewards programs also help develop an emotional bond between employee and employer, i.e., there is a sense that I am part of something bigger, something more than my individual role.
2) Fostering trust:
When employees feel that they are a part of something bigger, they take pride in their association and promote the organization’s growth & development.
Rewards programs recognize and reward employee performance, thus building an atmosphere where employee involvement is valued (thereby helping build greater trust among them).
According to Maslow’s theory, “when we satisfy lower-level needs such as basic survival, security, etc., higher-level needs such as self-esteem or esteem from others becomes important for us”.
Thus, if an organization considers the need of its employees by developing good relations with them through rewards programs, it can achieve this purpose successfully, i.e., higher levels of trust among employees.
3) Enhanced Communication:
An employee rewards program goes a long way in improving communication between management & employees. It helps the organization develop more manageable data by tracking performance and time spent on projects to get judicious information regularly.
This allows organizations to effectively communicate with their employees and address concerns over salary/bonuses, promotions, etc.
4) Developing desired talent pool:
employee rewards program help organizations utilize the right mix of talent available on the market, i.e., it enables to identify the best employee (the one who is very talented but has been underutilized so far due to low salary scale).
It attracts them to the organization by offering required salary/incentives sufficient enough for retaining them until the organization achieves desired results from their experience and knowledge base.
5) Improving internal communication:
Employee recognition is a powerful tool in boosting employee motivation. Well-designed rewards programs help organizations communicate effectively with employees, enabling them to address concerns over salary/bonuses, promotions, etc.
6) Improving employee retention:
employee recognition programs helps improve employee retention and reduce attrition rate (Sometimes, the organization loses its best talent due to the high cost of recruitment).
It also motivates employees by giving them a sense that their work is being appreciated (an emotional satisfaction), thereby promoting long-term relationships between employee-employer.