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Rewarding Good Performance

Employee receiving a bonus gift for good work

As any manager or team leader who has attended a business coaching course or session will already know, the rewarding of good performance is typically a vital component and tool in a manager's armoury for getting greater productivity out of the employees. Offering incentives, whether monetary or in another format such as a tangible gift for example, can increase the performance of workers who need to achieve a certain goal or target in order to acquire the reward.

Along with providing incentives for increasing productivity and achieving a future target, rewards can also be given out for good past performance when no incentive scheme was actually provided. In the same way that diners may be so impressed at the level of service or the quality of the food in a restaurant that they feel inclined to leave a tip, so too may managers be so impressed by the level of work produced, or be so grateful to one or more employees for going over and above the call of duty such as working a weekend to get a big project completed, that they feel inclined to reward them.

Potential Pitfalls of Employee Rewards

Rewarding good behaviour is a vitally important element of effective management, but can be extremely damaging if used too often, too little, or in an unfair way (either perceived or indisputable).

Rewarding Too Often

If bonuses and rewards are given too frequently, employees will start to expect them on a regular basis. Not only will this become expensive for the company, but can often actually result in lower productivity in the long-run as employees expect to receive more for doing less work. There will also be a significant decrease in morale, motivation and effort if these regular rewards were taken away.

Rewarding Too Little

Whilst rewarding too often can lead to complacency and high levels of expenditure over and above what is already paid in wages, rewarding too little can be just as damaging. Many managers may be of the opinion that employees who receive a good wage should do what they are told, and more specifically, should do it to the absolute best of their ability at all times. Whilst this attitude is understandable, the reality is that no employee will work to 100% of their potential every minute of every single day.

Not only will an incentive be required every so often to provide a temporary boost to performance, but it will most certainly be needed if a manager desires their employee(s) to undertake work outside of their contracted hours such as in the evenings or at the weekend when a deadline is looming and a project must be finished. Failing to provide this may mean the deadline is missed or the extra production required is not fulfilled, which may be extremely damaging for the company, and cost far more money than any bonus or reward would have done.

Rewarding in an Unfair Way
Colleagues and co-workers in a business arguing with each other

As shown in the paragraphs above, rewarding too much or not enough can cause major headaches for a manager, but the fairness of the rewards is an area which is fraught with danger as far as morale and motivation are concerned.

It is unlikely that every employee will receive the reward. Rather than company-wide bonuses, rewards are typically given to individuals or specific team members. This can obviously cause jealousy and resentment amongst others, especially if they have played some part in the successful fulfilment of the objective. A classic example is the winning of a big new contract. The sales team who won the order may be given all the plaudits and rewards, but the efficiency and professionalism of the administration department may be overlooked even though they projected a professional, efficient and competent image of the company which played a major part in the big customer choosing to work with them.

If the admin department feel aggrieved at their contribution being overlooked in such a way, their motivation and performance levels will drop significantly, possibly to the point of open rebellion if they feel especially angry. This can have serious consequences for the successful operation of the company.


Not only does a manager need to understand the importance of bonuses, including when to use them and when not to, but they must be acutely aware of how the rewards will be perceived by other people who are not receiving them. Otherwise, they could find that their attempts to reward and incentivise some staff members end up alienating and greatly upsetting others.

Be Careful Which Behaviours You Reward

Making Use of Rewards and Incentives to Change Behaviour

When it comes to managing a business, team or department the rewarding of good performance and behaviour can condition those workers to perform like that as a norm.

Reinforcing positive behaviour and actions can lead to a repeat in the hope of another reward in the future and has been a proven technique over the years for training of both workers and animals alike. It is one of the most effective and powerful strategies that can be employed in order to raise the performance of employees, which is why it is discussed on many business coaching and executive coaching sessions with those in charge as a means to overcome issues with the workforce.

Using This Method Too Often Can Lead to Problems in the Future

This power and ability to alter behaviours means that those in charge need to be careful to exercise caution and restraint in its use. Over-use leads to a loss of effectiveness and an expectation by employees that they should receive a reward or incentive every single time they are asked to do something at work, and can place a significant financial burden on the company as they need to fund these bonus and reward schemes.

Rewarding Poor Performance

However apart from the cost, one of the most potentially damaging consequences that can come with being too free and easy with reward schemes is that it may inadvertently reward poor or mediocre working practices and methods if bonuses are handed out without requiring too much effort or hard work to achieve.

This can be a particular issue with group or team bonuses, where some individuals may not be assisting the team as much as they could be - although in their defence it is often inadvertent - but are still credited with a reward. Without being told or pulled up on it, these workers are likely to carry on as they are and doing the same thing if they receive the bonus anyway.

Not Rewarding Can Be Just as Bad as Rewarding The Wrong Things

Utilising Rewards and Incentives to Change Employee Behaviour

Providing performance incentives and rewards for achieving certain targets can be a powerful motivator for employees to raise their performance levels, which can be especially useful when there is a particular need for this such as to fulfil a major order. The reinforcing of good behaviour and working methods can make workers more likely to repeat positive behaviour and working methods in the future, hopefully from the manager's point of view without the requirement for costly incentive schemes, although employees can become reliant upon and expectant of them.

Failing to Reward Good Performance and Achievement

Keep in mind though that the failing to reward good performance can sometimes be just as harmful to the long-term performance levels of employees as rewarding the wrong things or handing out rewards that haven't truly been deserved. Whilst rewarding undeserving work will likely cause a repeat of that level of performance, not rewarding good performance that does deserve it will in all likelihood give off the impression that exceptional performance or increased effort does not really matter much to management and will not inspire the employee(s) to put in such an effort the next time they are called upon and the business requires them to go the extra mile to fulfil a target.

Managers Need to Recognise the Achievements of Everyone

Sometimes this effort will be put in by the quiet workers who do not shout about their achievement. It is all too easy for managers to overlook these people and sometimes to forget that they are there, so it is extremely important to recognise their contribution to the success of the business, department or team.

Reward and Reinforce Good Behaviour

Rewarding Good Behaviour in the Hope of Repeat Performances

Whether it is an employee, dog, or performing seal, they all have something in common: rewarding them when they do something that is desired will reinforce the message that it should be repeated, with the potential prospect of receiving a reward the next time. For animals, the reward is likely to be a tasty food treat. For people this is more likely to be either a financial reward or a non-financial type such as recognition, job enrichment or more authority.

Rewards Can Lead to Expectation and Dependency
A dog receiving a treat reward for good behaviour

This method can change the behaviour and habits of both workers in an organisation and animals. The downside is that it can also lead to dependency and an expectation of a reward every time.

Whilst for pet owners this can mean getting through a lot of food (and possibly a fat animal), workers who expect and get a reward each and every time they perform a certain action can end up costing the business a lot of money or other resources.

Although animals will not know any better, workers should know that sometimes the behaviour that is expected of them such as the willingness to go above and beyond so that the company they work for can achieve a certain objective is something that they should be doing anyway as a condition of being paid a salary in the first place.

Stopping Rewards Once Started Can Result in De-Motivation

As far as animals and workers are concerned, both will be disappointed, de-motivated and begin to wonder what they did wrong if the reinforcing rewards stop coming. So for managers in a business, they need to weigh up the pros and cons of rewarding behaviour and actions. Whilst it can increase the productivity and motivation of their employees, they need to consider the consequences of making it a regular expectation. A little reward every now and again is a powerful motivational tool, but too much of a good thing can spoil workers and make them greedy.

Rewards, Resentment and Embarrassment

A team celebrating the achievements of an individual member

All employees are 'rewarded' for the work they do in the form of a salary. There are very few jobs in the world where a person would happily do it for nothing, and even if they would, they still need to be earning money in order to pay bills and purchase goods. They therefore require paying for giving up their free time, coming into work, and performing a function which contributes to the success of the company.

In most cases though, after an initial burst of enthusiasm and productivity when they first start and are trying hard to impress their new employer, most employees with soon settle into a comfortable level of working. They could do more if they really tried, and similarly, they could do less if they decided to, but instead there is a level reached at which both managers and the employee themselves feel is a calm yet acceptable level of production.

For most businesses though, the need for effort and completing tasks will not be uniform and consistent. There will be quiet periods, in which managers are likely to be more lenient towards workers taking things a bit easier if there is not much for them to be doing, and there will be busy periods when things are frantic and management require maximum effort in order to meet deadlines. In this busy time, additional rewards and incentives can be offered.

Rewards and incentives can be used to significant effect in motivating workers and employees to raise their performance levels. They can be a powerful factor when there is a requirement for improved output, for example to fulfil a large order by a certain deadline. However, as with anything of great power, they need to be used carefully.

Different Types of Rewards
Businessman gift reward concept

There are many different types of rewards available to managers to use. The most obvious, and by far the most common, is a financial incentive in the form of a bonus. Typically used in conjunction with targets, the monetary bonus is awarded if the set goal is reached or exceeded. This is ideal when the target goal is easily measured and defined, and the success or failure to accomplish it can definitely be decided e.g. “produce 300 finished units by 12th July”. There is little room for ambiguity in this; either the target was reached or it was not.

Other companies, however, may not have such clear cut targets. A prime example are those operating in the services sector rather than manufacturing, where output is not so easily measured as it is for a business that makes physical products.

For these companies, employee performance in areas such as customer service may be the focus for rewards. As well as a monetary bonus, there are also other options available, including:

  • Non-monetary items such as gift hampers, alcohol, flowers, gift certificates... The list is endless. Make sure it is actually something the person will like though. It is no use rewarding someone with a nice bottle of wine if they don’t drink alcohol!

  • Positive Feedback. This costs nothing, so will not create a financial burden for the company (see “The Financial Costs of Rewards” section further down). It is surprising how powerful this "free" reward is in terms of motivating an employee. If they feel they are slogging away and nobody cares they quickly become demotivated, whereas knowing that a manager recognises their efforts and appreciates their contribution can inspire them to work harder in the future. Positive feedback will allow the manager to explain exactly why they are so pleased with the employee, and be specific about what was done well, which can also be useful going forward, as the employee should carry on doing it.

  • Public Recognition. This is quite similar to the method above, but whereas positive feedback explains specific points, public recognition generally just confers praise upon a person in front of everyone else. The most common examples is an employee of the month award, or an end of year awards ceremony. Managers need to be careful though that the person receiving public recognition doesn’t feel embarrassed, and that everyone who should be is recognised. (See "How Will the Employee React to Public Recognition?" section below)

Of course, this is not to say that a manufacturing company cannot use any of the other rewards listed above along with production bonuses! A key management skill is being able to know which bonuses to use at what time, and what type would motivate an individual person the most.

How Will the Employee React to Public Recognition?
A female worker embarrased in a group

Managers also need to keep in mind when dispensing with rewards that workers are individuals and each will react differently to recognition which may be extremely different to how the manager would if they were in their employee's shoes.

Just like some people do not like a fuss made when it is their birthday, there will be some employees who will suffer embarrassment and hate the attention that comes with being praised in public and would much prefer to be quietly praised in private with the manager, such as a business coaching session where the achievements of the employee are discussed.

Conversely, there will be others who will be much more motivated to achieve great things if it leads to a great show of public recognition and the metaphorical spotlight being shone on them.

Does More Than One Person Need to be Rewarded?
Two employees sharing a bonus gift from their company

Rewarding and praising an employee can also lead to resentment from the other members of staff, especially if they feel like they helped to achieve the successful outcome and are not being given any credit for it.

A classic example is an account manager receiving credit for the successful gaining or retention of a major client when people in other departments such as administration put in a lot of time and efforts which helped everything progress in an organised and efficient manner which impressed the client and was a key part of winning the business.

A failure to recognise everyone involved can create resentment and divisions amongst departments or individuals which can seriously affect the future performance of the business entity as a whole.

The Financial Costs of Rewards
A surprised and happy company employee

Not only can rewards be financially expensive in terms of the cost of paying out bonuses or buying non-financial rewards for staff such as food/drink or flowers, but workers can become greedy and expect to receive a bonus every time they are asked to do a task. This can either become extremely expensive for the company if they do pay out each time, or if they do not, workers may become extremely de-motivated and wonder what they did wrong.

Managers must therefore use bonuses and rewards sparingly, only using them for truly exceptional performance or in times when meeting a deadline is critical. The more they are used, the lower their power in motivating employees, and the more dependent/expecting employees will be on receiving them.

When used sparingly and correctly, rewards can provide tremendous short-term benefits. But if overused or mismanaged they can soon cause expensive headaches for the company, reducing profits significantly and proving ineffectual in the future when they may be needed the most. The rewards also need to be meaningful if they are to have the desired impact.

Praising Success After or During Business Coaching

Encouraging for Repetition

When teaching animals tricks, praise is given in the form of food usually to reward them and let them know that they have done well. This encourages them to do it again the next time they are asked.

In a similar sort of way, it is important to praise employees when they do something right, usually with words rather than food, although some employees may like to be rewarded with food!

Praising an Action Should Lead to a Repeat Performance
A dog being rewarded for good behaviour with a treat

By doing this, just as with animals, you let them know that what they have done is what you wanted, so that next time they will do it again. Whilst in animals this will be a specific action in response to some sort of command, in people it will often be a way of working or acting upon the strategy and objectives determined.

This is why in business coaching it is so important for the coach to praise a person who has successfully acted upon the course of action which was discussed in the previous coaching sessions, so that it will greatly encourage them to continue this way of working in the future and for other suggestions.

By praising their success and providing encouragement in this way, an employee is likely to gain confidence and be much more likely to take the initiative in the future and attempt to sort out problems by themselves without taking up the time of the manager who probably has more important things to be getting on with than dealing with issues that they are primarily employing the person to deal with.

So whilst too much praise can begin to diminish its effectiveness, it is important that praise is given whenever it is necessary in order to make business coaching effective.

Why is it Important to Qualify Praise and Criticism?

Praise on its Own Can Have Little Meaning

When it comes to giving feedback to an employee when they have finished or are working through a particular project, praise or criticism has little meaning if it is not qualified with the reasons as to why the feedback is good or bad.

Providing Explanations Gives Employees Better Understanding for Future Tasks
A manager unhappy with the work of an employee

Giving criticism without explanation is worse than giving praise without explanation. If praise is given then the employee is likely to be doing things right and achieving the desired objectives, in which case they do not need putting back on the right track.

It is, however, extremely useful as it gives more weight to the praise and shows that the manager has taken a keen interest in the performance and efforts of the employee, instead of just setting them a task and letting them get on with it. It may also be the case that whilst the overall progress of the employee has been good, there may still be one or two very minor points which need to be worked on and improved.

However, criticism given without any explanation or reasoning can be extremely damaging to both the morale of the worker and the relationship between themselves and the manager.

Short criticism such as telling a worker they were ineffective or not good enough will more than likely make the person extremely defensive, whereas the provision of objective and non-judgemental critical points not only allows the employee to understand the areas in which they can improve, or provides a basis for productive discussion about future performance or the issues that the worker had which prevented them from doing a satisfactory job.

In either case, this will be extremely useful when it comes to delivering business coaching sessions and maximising the productivity of the individual.

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