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7 Total Reward Spends In An Employee Lifecycle

March 21, 2017

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It’s the dream of every organizational leader to keep his/her employees motivated, productive and consistent at work. A properly designed Rewards and Recognition (RnR) program makes for an effective way to boost employees’ morale. Companies go by numbers in reward spends too and segregate these spends across the employee life-cycle.

Basis a recent research that attempts to quantify average reward spends in organizations, we look at the total reward (TR) spends made by companies and their importance across the employee life-cycle:

  • Talent Acquisition via Employee Referrals: Companies acquire talent in the company via various sources such as consultants, hiring portals, employee referrals and even social media. Employee referrals are considered to be the most efficient medium of hiring as employees understand the company culture and the referred people are likely to fit in better. Typically, an organization sees 35 new faces in the company out of 100 every year.

The usual spend for every successful referral ranges from INR 5,000 to INR 50,000. This is calculated as 5000*0.3X = 1500X (where X is the number of employees).

  • Performance-based: Employees with a track record of good performance attract both rewards and recognition from their leaders. Good performers are recognized on a spot, weekly, monthly, quarterly or annual basis. If the organization has implemented a rewards point system, these winners are awarded points which can be redeemed against rewards such as experiences, activities and vouchers.

Typical average spends are INR 300 per employee per month and are calculated as 300X*12 months = 3600X.

  • Peer-to-peer rewards: In addition to the manager-to-employee recognition, good organizations encourage employees to appreciate, reward or gift their peers who have helped them on multiple occasions or performed well on a consistent basis. Such organizations often own a culture of genuine appreciation. Such small but important gestures help organizations in building employee engagement and increasing productivity.

  • Rewards for personal occasions: Every employee has personal milestones such as Birthday, Marriage, Anniversary and Parenthood. They feel special when their moments of happiness are complemented by congratulatory messages and personalized gifts at work. Such rewards often comprise experiences, activities and vouchers that not only engage employees, but also give their family members reasons to cheer about.

These rewards are usually calculated as 100X*12 months = 1200X.

  • Team awards and bonding activities: New and existing employees are often involved in ice-breaking experiences and activities along with their teammates and other employees. These activities are tailor-made for employees to connect with their colleagues and get in depth knowledge about the business and the people. They get acquainted with key people in the organization, and get better aligned with the structure and the culture of the company.

Spends on overall team awards and bonding activities are typically calculated as 200X*12 months = 2400X.

  • Employee Wellness Spends: Good organizations extend wellness programs to their employees in a planned manner. They let their employees know that their contribution means a lot and that their wellness is valued. These spends could include the setup of a health app for employees as a part of the existing HRMS, or giving the employees incentives to join a wellness or a fitness program at a gym or a fitness center.

Spends on overall employee wellness are calculated as 100X*12 months = 1200X.

  • Long Service Anniversary (LSA) Awards: It’s not a small achievement when an employee completes 5 or 10 years with an organization. These years of work reflect an employee’s loyalty and commitment towards the company, and implies that he/she understands the company culture well and is an asset for the organization. Organizations thus recognize long service by rewarding and recognizing their employees via cash rewards, vouchers and/or experiences and activities. In general, 10% of the employees complete 3+ years in a company and so, appreciating them and recognizing them becomes crucial.

Typical spend on LSA is INR 10,000 and is calculated as 10,000X*0.1 = 1000X.

Summing up the reward spends across the stages of an employee life-cycle, the total reward spend comes out to be INR 10,900X per year. The nature of these spends varies according to the stage at which the employee is, however the intent remains the same – to appreciate and motivate. Well thought out rewards make for a perfect way to communicate this appreciation and engage employees better throughout the life-cycle.


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