Setting up a traditional reward scheme can be an extremely time-consuming and costly task – which is why more and more employers are choosing online alternatives.
These schemes can range from online flexible benefits systems, self-operated by staff, to loyalty schemes, where points awarded for performance can be traded in for an ever-growing selection of rewards.
Online reward schemes are certainly quicker to implement, says Geraldine Tosh, managing director of Ipoints, an online loyalty programme.
“We have a number of clients whose online reward schemes went live within four weeks of agreeing a brief,” she says.
Cost is also a factor, as Richard Morgan, head of flexible benefits at global consultancy Watson Wyatt, explains. “These schemes are becoming much easier and cheaper for employers to set up. The most difficult thing is establishing the basic platform and then linking it to flexible benefits or total reward systems.”
And by linking online reward schemes to other HR systems, such as performance management programmes, managers can ensure they reward staff in line with performance. In turn, workers can see how reward links to their performance, so the whole process is more transparent, according to Patrice Barbedette, founder of software provider Jobpartners.
Resist temptation
However, the temptation with an automated reward system is for employers to apply the same criteria to everyone, regardless of seniority or performance.
Employers need to be able to provide rewards that are motivating to a broad range of individuals with different needs, says Tosh. “The ‘one-size-fits-all’ approach can be seen as very demotivating to staff.”
Simply putting an online reward scheme in place does not guarantee automatic buy-in, either. To engage staff from the start, there needs to be a significant communication and marketing effort, according to Morgan.
“The key is to offer rewards that genuinely add value for employees, unlike a lot of voluntary benefits schemes which have a scatter-gun approach and are of questionable value,” he says. “The ‘big-ticket’ items tend to work better than fiddling around the edges with insurance-based benefits.”
And just because they are easy to access and manage, it doesn’t mean that online reward schemes will suit all staff.
Craig Kinnersley, account director at online rewards provider InspirePlus, says: “Internet-based reward schemes are a great idea in principle, but in practice they are often poorly implemented, managed and maintained. The same people will receive rewards every time, while other staff members are overlooked.”
Be fair
In fact, making your reward programme more transparent could alert staff to its failings. Research by Jobpartners found that 80% of staff felt reward programmes were unfair.
Paul Marsden, chief executive of recruitment consultancy Astbury Marsden, has been using a reward scheme from Inspire-Plus for a year now. “There is something for everyone,” he says.
Rewards include holiday vouchers, flights, Ferrari racing days, iPods, computer systems, TVs, hot-air balloon rides, pampering days, spa weekends and up to 4,000 others.
Staff earn points based on performance, giving leads to other recruitment areas of the business and employee referrals. “Giving an employee money to buy a flat-screen TV makes a lot of business sense if they introduce a new employee,” observes Marsden.
Big savings
Clients pay an implementation cost, but no licensing fees or other ongoing costs. And if staff save up their points, this delays payment.
“There is a good sense of reward for having done something, but no immediate financial outlay from us,” says Marsden.
“The system is easy to use, and it doesn’t take up administration time. It has made us money and saved us money,” he says. “It influences and changes our business for the better.”
So how will the internet shape future reward schemes?
“The delivery of benefits online will get slicker and better integrated and so ease the burden of administration,” Morgan predicts.
And using technology to link performance to benefits also takes away the emotional element of rewards, according to Barbedette.
“As a result, managers are less likely to reward employees based on gut feeling, as they can objectively compare and contrast different members of their team when analysing performance information.”
Online reward: benefits
- Flexibility of content. Unpopular rewards can be easily removed and new ones quickly added.
- Provides a consistent, single-branded delivery for staff benefits.
- Reward is kept ‘live’, so employers can respond quickly to changes.
- Staff can tailor their rewards.
- Online surveys can be used to find out what rewards are most motivating.
- Reward distribution can be compared, making the process fairer.
- Much of the day-to-day management can be outsourced.
Case study: healthcare locums
In 2004, healthcare recruitment firm Healthcare Locums launched a loyalty scheme to attract and retain temporary staff for NHS and private hospitals. Its VIPpoints loyalty scheme, set up in conjunction with Ipoints, aimed to recruit 1,000 locums in the first 12 months and raise revenue by 10%.
The agency chose an internet-based platform to deliver the scheme, allowing fast and easy balance checks, accreditation and redemption of points by users.
Locums earn points according to the work they perform for the agency, while members can also earn extra points by recommending colleagues.
VIPpoints’ online catalogue lists a wide range of rewards, including leisure items and business tools, such as training and lab coats. The scheme was extended to internal employees in 2005, resulting in a 40% increase in staff productivity.
The scheme now has 2,600 locums registered – 73% over target – while revenue targets were exceeded by 4%, and staff turnover decreased by 9%.
Pre-paid cards in the workplace
Reward in the public sector
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