Advantages and Disadvantages of Reward System for Employees

Your workforce always feels more motivated and engaged when a reward system for employees is functional within the organization.

In addition to their standard salary, compensation like stock options, pensions, and bonuses encourage your employees to perform at their best.

Other incentives include:

  • Free or low-cost meals.
  • Remote work.
  • Flex time.
  • Other work-life balance advantages.

A reward system for employees is largely beneficial for any company. However, the lack of proper implementation of such a system sometimes makes it counterproductive.

Fortunately, maintaining a reward system for employees is not very difficult, if not very easy. And it can be achieved in a few different ways that guarantee that your reward system continues to serve the intended purpose and keep your company going forward as well.

That said, we discuss some of the primary benefits of reward system for employees that a company can use to boost employee engagement levels. Along with that, some of its disadvantages of reward system in organization are essentially the consequence of improper implementation and lack of relevant and suitable practices are also mentioned.

Advantages of Reward System for Employees

What Are Some Examples Of Rewards

While advantages of reward system for employees are various, some of the main advantages include:

1. Increased productivity:

Employers can motivate their staff to do better by offering incentives. A rise in output follows as a result of this development.

2. Higher profit margins:

Inevitably, a company’s earnings rise as output goes up after the employees are recognized. As a result, the firm saves money on each unit sold (for example), so the selling price remains low, leading to higher profit levels.

3. Improved productivity:

When employees lack enough incentives, they are more likely to idle away their time in a company.

On the other hand, your workforce becomes more time-conscious when given appropriate incentives: So less time is spent by the employees being idle, leading to more productivity, improved performance, and better results.

4. No issue with supervision:

Workers become more conscientious about their responsibilities when offered appropriate incentives. As a result, there’s no reason or need for their close surveillance.

5. Efficient workers can earn better:

High-performing employees might earn more through performance bonuses, increased commissions, and so forth.

6. Easy of ineffective employees:

If an employee is only earning the minimum pay despite a reward system in place, this may suggest that they are only barely performing in their job. 

So it becomes clear which employee needs to be retained at all costs. Also, involuntary employee turnover may be considered resultantly (as a last resort).

7. Employee turnover may decline:

Your workforce may not feel dissatisfied if appropriate incentives are given to them. 

The probability of your employees staying with the company may also increase due to job satisfaction. As a result, workforce turnover (voluntary) will be at a minimum.

8. Reduced number of grievances and complaints:

Employees may not have a reason to be dissatisfied as long as the company provides them with appropriate incentives. So, there are a few instances of employee dissatisfaction.

Read More: A Few Ways Of Reward System For Employees

Disadvantages of Reward System for Employees

Disadvantages of Reward System for Employees

A reward system’s biggest (assumed) disadvantage is that it leads to increased costs, which is untrue.

Company expenditures may increase as a result of employee rewards. However, it is only the case when a company only considers a system that holds high monetary value against it to be effective.

Another widespread misperception about employee awards is that they need to be of extravagant value.

Additionally, it is wrongly believed that incentives only serve their purpose when they have some sort of monetary value. 

Although employees do respect financial gifts, it is incorrect to overvalue them and see them as the only choice in a reward and recognition system.

As a matter of fact, utilizing non-monetary awards has a greater impact since it enables an employee to be acknowledged right away for their outstanding performance. 

Contrarily, a monetary incentive like a bonus typically takes some time, which eliminates the key component of effective recognition: immediate appreciation.

Non-monetary incentives save money since they need little or no expenditure. Therefore, the idea that rewarding an employee will result in higher expenditures for the business is nothing but a misunderstanding.


It is obvious that you enjoy unlimited benefits of rewards system for employees.

It comes with no significant or substantial disadvantage of reward system for employees. But there is definitely a hoax surrounding it that rewards add to your costs, which is untrue, as explained in this article.

The lesson here is to implement a system that aids in employee recognition.

Relevantly, BRAVO enables a company to adopt a method that is effective and economical at the same time.

It includes a variety of non-monetary incentives that your business may use to motivate the workforce and perform timely employee recognition.

You can schedule a free demonstration of BRAVO here to find out more.

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