What's Wrong with Points-Based Rewards Systems?

Points-based employee reward systems have become very popular in modern organisations. Its simple system satisfies many organisations who want to create a comprehensive employee recognition programme.

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What is a points-based employee reward system?

A points-based employee reward system functions by enabling a sender to give points to a recipient. The recipient, who are employees, can redeem these points for merchandise, gift cards, or travel incentives from an employee rewards catalogue.

Though it sounds like a good system, it has its flaws.

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What does this system accomplish?

‍Low maintenance

This system is a convenient choice if you want a low-maintenance employee recognition programme. Since it's centralised in one digital platform, you can enable managers to give points anytime and anywhere.

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High frequency

This system gives you the flexibility to reward employees in a larger range depending on your company's finance. For example, if your organisation has a limited monthly budget for an employee recognition program, this system will let you spend smaller amounts of money more frequently. This way, you can save money while still keeping up a stable employee recognition programme.

Point-based employee rewards is flexible when it comes to rewarding employees.

The problems with points-based employee rewards

It takes too long for the employee to receive the reward

Suppose an employee is rewarded in small point increments. In that case, it will take a long time to collect enough points to choose a big employee reward from the catalogue. For instance, an employee receives 15 points every time they do something positive, but the desired reward is not available until 250 points. This will force the employee to wait to collect enough points before they can redeem their reward.

When this happens, it's hard to tie the specific behaviour the employee received points for to the employee recognition moment. It's because the process for receiving the reward took too long. You need an employee recognition program that quickly connects the recognition moment with the reward and a clear tie to the behaviours shown. It will lead to increased performance output and workforce engagement.

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Your investment gets backlogged

The points-based system forces employees to hoard points to save for bigger rewards, which takes a long time. During this process, one of two things will happen:

1. When the employee finally redeems the points, it's for a sub-par gift like an RM50 Starbucks gift voucher, which can be disappointing.

2. The employee will end up forgetting about the points they were collecting. As a result, more money is wasted because they end up not redeeming the points. When rolling out new initiatives, you want your employees to talk about the rewards and what they chose, which will not happen if they don't spend the points.

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The system promotes a transactional relationship

Do you think an employee recognition program should feel like a compensation or a "thank you"? Many companies prefer the latter. The problem is that these points can end up feeling transactional as they're just another form of currency.

Transactional rewards also trigger feelings of security and guilt if not spent towards "necessary" things like food and shelter.

 

In summary, an organisation has to select an employee recognition and employee reward system that matches their needs and is a true reflection of their culture. Try to look past convenience and consider what type of program will truly be impactful to your employees. Reward your employees with what they deserve.

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Source: BlueBoard

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