Maximising our rewards and incentives budget

by 15 Dec 2008

Q We have a limited budget around rewards and incentives, and want to maximize this as much as we can in order to improve employee engagement. How much do we really need to spend per employee to get maximum engagement?

A. It’s not the size of the prize – it’s what you do with it that makes the difference. With so much gloom and doom in the media, employees will not be surprised if some things change. However, there are a few basic things to consider to make sure that you don’t throw the baby out with the bathwater. If you have been working hard on employee engagement, now is the time to consolidate, not abandon the plan. If you haven’t been formally rewarding or even recognising people, now is the time to standout and be different.

From our experience in dealing with our corporate clients, the top-performing firms are spending at least 5 per cent of their payroll expense on engagement and recognition activities. While we recommend this level of investment, we have many great success stories with clients who have spent far less.

HR and operational management need to show an ROI just like the marketing team but their spend needs to be treated as an investment, too. The question is: what is disengagement costing you? The Gallup Institute research shows disengaged employees cost Australian businesses $32.7 billion per annum.

Four things to consider:

1. Do a few small things often. Notice people, know who they are and what is important to them. A personalised message or handwritten note can mean way more to them than expensive trinkets.

2. Make sure you communicate the program. If you are spending your entire budget on the prizes and none on letting them know about the program, you won’t have the opportunity to influence behaviour.

3. Don’t let Christmas get crunched. To finish off the year, an acknowledgement is needed. Instead of a lunch it could be drinks, or instead of a big hamper a $30 lolly-shop-in-a-box experience.

4. Many people are challenged by increasing work loads, working harder, faster and longer just to keep their jobs. A token of thanks is essential

5. Maximise what you do by following up the winners and getting them to share their stories. Manage the prize giving-process with the same dedication as you do working out who is going to be a winner. It doesn’t cost anything to put their photo and story in your newsletters or intranet.

There is no doubt that you reap what you sow; but it’s not always about how much you spend so much as how you spend it.

By Naomi Simson, CEO, RedBalloon Days. Contact: 1300 85 09 40, email: or visit: