We’re living through strange times in the workplace. It looks like recession might have been avoided, we’re still slowly pulling out of the effects of the crash, and more confident businesses are looking to expand and diversify while hovering their right foot over the brake just in case.

One effect of this excitable job market is that there’s been a boost in ads for employees as companies look to get more talent into their offices and factories. And employees are taking the bait. If you’ve not had a pay rise for five years, you’re going to be tempted away to do the same job for more money.

That puts pressure on employers, who need to retain staff while dedicating budget to growth rather than retention, as counterintuitive as it seems. But all is not lost. Strategies are being developed to help employee retention with the minimum of cost, and they usually fall under the title “rewards and recognition programs”.

Rewards and recognition: the differences

Rewards and recognition are usually lumped together as a concept, but they are not quite the same thing as each other.

Rewards are tangible benefits, or at least something with a direct financial value. They can include cash bonuses, weekend breaks, days off, meal, cinema or sports tickets or any form of physical gift. Pay rises don’t count as rewards – a reward is by its nature a one-off action or event.

Recognition is something less tangible, and any costs to the company are minimal. They are usually delivered in response to a job well done. It could be an “employee of the month” scheme, a mention in the company newsletter, kudos in the company project management suite, or even mention in a press release that aims to reach out to a wider public. Rewards can be a form of recognition, but the distinction is that recognition in this context has a zero or small price.

Designing a rewards and recognition program

The two most important questions to ask are: what is being rewarded, and who decides who gets the rewards and recognition? It’s vital that distance is placed between those making the decision and any personal relationships they have with the potential candidates. Decisions need to be made on performance alone.

Making sure similar achievements receive similar rewards is also crucial. Consistency is key to preventing accusations of favouritism. Rewarding someone for simply doing their job when everyone else does exactly the same has the opposite effect to that intended.

Small companies might rely on a single manager or owner to decide on reward recipients, but with larger companies, it’s better to have line managers nominate individuals for a panel of higher-ranking staff to judge.

The nature of the reward is also important. While it’s common to have a one-off reward like those mentioned above, some businesses prefer to set the threshold for a minor reward lower, or to have a token-based system. That is where employees collect reward tokens, which they can cash in for bigger and better awards as they accumulate. This method is good for securing longer-term motivation, as employees continually excel to attain the bigger prizes.

It might well be that a slap-up meal for two in an expensive restaurant is more attractive than a 1% pay rise.