Employee Reward Management

Employee reward management refers to the strategic planning and implementation of rewards—both monetary and non-monetary—to recognize, motivate, and retain employees.

It plays a vital role in improving job satisfaction, productivity, and loyalty. This glossary answers the most common questions to help HR leaders and employers structure better reward programs.

What is employee reward management?

Employee reward management refers to the systematic approach organizations use to design, implement, and evaluate reward systems that recognize and incentivize employee performance and contributions.

This encompasses a variety of compensation and benefits strategies, including both monetary rewards (like salaries, bonuses, and profit-sharing) and non-monetary rewards (such as recognition programs, career development opportunities, and work-life balance initiatives).

The main goal of employee reward management is to align employee interests with the organization's objectives. By effectively managing rewards, companies can motivate employees to perform at their best, thereby enhancing overall productivity and job satisfaction.

Why is employee reward management important?

A strong reward system can boost morale, drive high performance, and reduce employee turnover.

Motivates employees to meet or exceed expectations
Reinforces organizational values and culture
Builds trust and strengthens employee loyalty

Who is responsible for managing employee rewards?

HR teams typically lead reward management, but collaboration with leadership and department heads ensures relevance and fairness.

HR handles strategy and policy
Managers identify deserving employees
Finance teams ensure budget alignment

When should rewards be reviewed or updated?

Reward systems should be reviewed regularly to stay relevant and competitive in the job market.

Annually or bi-annually during compensation reviews
After major business changes or restructuring
Following employee feedback or engagement surveys

Where should reward policies be documented?

Reward policies should be documented in accessible HR manuals or internal platforms to ensure transparency.

Employee handbooks or intranet
Onboarding materials and HR portals
Performance review guidelines

How does employee reward management work?

It starts with setting clear criteria, followed by tracking performance, offering appropriate rewards, and evaluating outcomes.

Define objectives and eligible behaviors
Choose a mix of financial and non-financial rewards
Monitor impact through surveys and retention data

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.

eNPS:

eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.