Providing rewards and punishments to employees is a strategy to improve employee performance.
The quality and competence of human resources is very important in achieving company goals.
Then, what are the right examples of reward and punishment? What is the strategy for setting up the system appropriately?
Read Also : What are Securities? Definitions, methods, and Tips
Definition of Reward and Punishment
Reward is a form of recognition or appreciation to employees as a response to achievement or behavior according to company regulations.
The existence of rewards aims to increase employee motivation, improve performance, retain outstanding employees, and increase job satisfaction.
Meanwhile, punishment is a punishment or sanction for employees in response to inappropriate behavior or rule violations.
Punishment aims to reduce or prevent unwanted behavior, increase discipline, and ensure employees comply with organizational policies and procedures.
Therefore, companies usually use reward and punishment in a balanced way.
Focus on giving rewards as a form of recognition and positive motivation. Meanwhile, the implementation of punishment is an effort to comply with the rules and overcome behavioral problems.
Read Also : HRIS System: Definition, Functions, Features, and Examples
Reward and Punishment Functions
The existence of a reward and punishment system has several important functions in the context of human resource management and organizational management in general:
1. Encourage good behavior
The reward and punishment system helps direct employee behavior in accordance with the goals and values of the organization.
Through rewards, employees are encouraged to achieve appropriate results, improve performance, and behave according to company expectations.
2. Increase motivation and job satisfaction
Rewards that are fair and in accordance with employee contributions can increase motivation and job satisfaction.
Employees feel valued and are properly rewarded for their efforts, which in turn can increase their desire to do a better job and stay productive.
3. Maintain discipline and obey the rules
Punishment serves to maintain discipline and increase adherence to organizational rules.
With clear negative consequences for unruly or unethical behavior, employees tend to reconsider their actions and comply more closely with established rules.
4. Increase employee retention and development
Furthermore, good rewards can help retain high performing and potential employees. Employees who feel valued and have career development opportunities tend to be more satisfied with their jobs and more likely to feel comfortable in the company.
Sees contribution to good employee retention and enables the development of a strong internal workforce.
Read Also : 4 Tips Effective Daily Saving
5. Encouraging healthy competition and collaboration
Reward systems can stimulate healthy competition between employees to achieve better results.
On the other hand, punishment can encourage collaboration and teamwork, because employees realize that behavior or decisions that harm the team or organization can face negative consequences.
6. Maintain a balance between reward and punishment
In addition, a balanced system ensures that employees feel valued for their contributions, but are also aware that breaking rules or unwanted behavior can result in unintended consequences.
There are many benefits of an effective reward and punishment system. Starting from clarity, transparency, consistency, and recognition of individual differences within the organization.
Example of Company Reward System
Here are some examples of rewards and punishments by companies:
1. Performance Bonuses
Companies can provide performance bonuses to employees who achieve or exceed work targets.
This bonus can be in the form of periodic additional financial allowances, such as an annual bonus or a bonus based on a specific project.
2. Salary Increase
Salary increases are a common form of reward for employees who demonstrate good and consistent performance.
Salary increases can be given periodically, based on annual performance appraisals or after achieving certain targets.
You can also find out how to calculate a raise according to previous salary and job skills.
3. Non-financial Awards
In addition to financial rewards, non-financial rewards are also important.
For example, companies can provide awards in the form of certificates, trophies or public recognition to outstanding employees.
Read Also : 5 Ways to Manage Household Finances
4. Promotion
Next there is a promotion as an example of a reward in the form of a promotion or higher responsibility.
Employees who have shown consistent performance and have the appropriate qualifications can receive promotions to higher positions in the organizational structure.
5. Career Development Opportunities
Career development opportunities to attend training or skills development programs, participate in strategic projects, or assist in achieving individual career goals.
6. Welfare Allowances
Forms of welfare benefits such as health insurance, life insurance, or lucrative retirement plans.
This can help improve employee welfare and provide long-term financial certainty.
Company Punishment System Example
Following are some examples of punishment by companies:
1. Oral or Written Reprimand
If it’s a minor violation or unwanted action, the company can give a verbal or written warning to the employee concerned.
This warning aims to provide a warning and provide awareness of the violations that have been committed and encourage behavior improvement.
2. Postponement of Salary Increases
If the employee does not meet performance standards or commits a serious violation, the company may decide to delay or refuse the increase in salary that should be given.
These sanctions encourage employees to improve their performance or avoid future violations.
3. Bonus deduction
Bonus deductions can be applied to employees who commit violations or do not reach targets.
In addition, giving financial consequences can affect employees and encourage them to do better.
Read Also : What is Opportunity Cost? Definition, Purpose and How to Calculate
4. Transfer or Demotion
As previously explained, in cases of serious violations or actions that are detrimental to the company, the company can remove or remove employees from their positions.
This action is intended to provide a significant penalty and demonstrate that misconduct will not be tolerated.
5. Dismissal
Termination is the final action taken when an employee commits a very serious or repeated violation of the rules, and other actions fail to correct the behavior.
Moreover, dismissal implies termination of the employment relationship with the company and is a serious consequence of unlawful or harmful behavior.
So, those are some reviews regarding examples of rewards and punishments for employees. However, it is still a challenge when companies will conduct employee performance appraisals.