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Reward & Recognition Policy

A well-designed recognition and reward policy, that creates a work environment where employees feel appreciated for their efforts and contribution, serves to attract, retain and motivate employees. 

Establishing your policy and process
When establishing your policy and process, consider the following aspects of recognition and reward:

Recognition and reward should be aligned to organization values
Clearly identify what you want to reward, such as:

  • Ongoing excellence in performance
  • Performance over and above job requirements
  • Client compliments on service
  • Outstanding one-time achievement
  • Contribution to team effectiveness

Recognition and reward should become part of the organization’s culture
How will you foster informal and formal recognition and reward?

  • Encourage supervisors and peers to say thank you – one of the easiest and most underused recognition tools
  • Encourage informal recognition on the job, at meetings, etc.
  • Establish formal recognition programs, based on a specific organizational goal or value

Determine the most effective types of recognition and reward.
Recognition is as simple as saying thank-you or as elaborate as a formal presentation at a company event

  • Ask employees what kinds of rewards they would appreciate (within the limits of the organization’s budget) – possibly provide a “suite” of rewards that employees can choose from
  • Rewards can be cash or non-cash
  • Establish a budget for rewards (preferably allocated quarterly, so achievement early in the year doesn’t get over-rewarded compared to achievement late in the year)

Who makes the recognition and reward decision? And how?

  • Organizations usually encourage informal recognition to be given by anyone at any level in the company, peer-to-peer, supervisor-to-subordinate, subordinate-to-supervisor, etc.
  • In order to manage costs and ensure equitable and objective decision making, organizations should establish specific processes for nominating and awarding individuals or teams for rewards; nominations can also be peer-to-peer, supervisor-to-subordinate, subordinate-to-supervisor, etc. but final approval, particularly for rewards of significant value, is usually done by a reward and recognition committee or senior management. 

Rewards and tax implications

Rewards with a monetary value may be considered a taxable benefit by the Canada Revenue Agency. Your organization needs to decide if you will top up the reward to mitigate tax implications, or not. In either case, you need to inform employees when the rewards they receive are taxable benefits.