Why hyper-personalising employee rewards & benefits calls for caution

Customising employee rewards & benefits is welcome, but organisations must manage and strategise the process with care, point out HR leaders.

The importance of rewarding and recognising employees cannot be overstated. A 2018 survey conducted by Achievers tellingly reveals that 63 per cent of employees who felt recognised were unlikely to look for a new job. Today, as organisations work to attract and retain talent, the balance of power has shifted towards employees, making the human connection intrinsic to the employee experience.

A 2021 survey by Gartner found that 85 per cent of employees felt it was important to be seen as a person or individual and not just as an employee. This is where hyper-personalisation of employee rewards and recognition plays a critical role. However, the pertinent question here is, to what extent can employee rewards and benefits be personalised.

What are the possible pros and cons of implementing hyper-personalised rewards and recognition (R&R) programmes? Human resource leaders provide some illuminating answers.

“Collective feeling of preferential treatment being meted out to a few co-workers is not a disadvantage of hyper-personalisation, but it calls for exercising caution”

Jayant Kumar, head – HR, Adani Cement

Creating value for the employee

According to Shailesh Singh, senior director & CPO, Max Life Insurance, employees should be given complete autonomy to decide how they wish to be rewarded and remunerated. “Doesn’t make sense to keep giving rewards which do not create value for the customer – in this case, the employee,” asserts Singh.

“If a company offers employees membership to a premium club located far away from their home, will it even be useful? They may prefer membership of a gym closer to home instead,” he adds, underlining the importance of personalising benefits.

Speaking of the merits of personalised rewards for employees, Singh says that the biggest is making sure workers feel appreciated, valued and recognised, leading to increased employee satisfaction and loyalty.

As far as the benefit for the organisation is concerned – other than improved retention – Singh cites a superior connect with the employees. “It becomes a win-win situation for both. Besides, generations are changing fast nowadays. With such rapidly-changing generational tastes, customising benefits helps organisations stay young and in touch with their employees,” he points out.

Kavita Dasan, vice president – people practices, ABP Network, enunciates a similar view. “Employee rewards and benefits must be personalised,” she stresses. “Since every company is dealing with a multi-generational workforce, customisation helps encourage employees across generations,” she offers.

“The rewards strategy should be so designed that the idea of earning a reward assumes universal appeal. It should not be seen as swinging in favour of only one section of employees”

Kavita Dasan, vice president – people practices, ABP Network

“Additionally, personalising R&R builds meritocracy and helps the organisation become more performance driven. It also aids in improving employee engagement, boosting morale and motivation”.

Dasan suggests creating a gamified R&R programme that creates healthy competition among employees, while giving them due credit and acknowledgement. “There can be a polling model in which the achievements of various employees are subjected to a vote. So, even as only one employee gets the actual award, it is a rewarding experience for all the others whose work is showcased and thus accorded due recognition,” she advises.

Role of technology

Technology plays an undeniable role in customising employee benefits.

“The R&R programme should be sustainable, fair and transparent. Technology plays a vital role in ensuring this fairness and transparency. Moreover, rewards and benefits must be timely,” Dasan notes, adding that tardy recognition is as good as no recognition.

Speaking at length on the role of technology, Jayant Kumar, head – HR, Adani Cement, says that it is technology that has enabled rewards and benefits to be administered in a customised fashion. “There used to be a structured reward system in the past, but nowadays there is customisation for individual employees, for instance, annual pay-outs or allocation of shares. All this information is stored in the human resources management system (HRMS), easing and simplifying the process,” he explains, pointing out that digital technology helps connect data points and analyse them.

Right rewards strategy

While hailing the trend of personalising rewards, Dasan warns of the possible demerits if it is not done right. She goes on to explain the importance of a rewards strategy in this regard. “The rewards strategy should be so designed that the idea of earning a reward assumes universal appeal. It should not be seen as swinging in favour of only one section of employees,” she points out, suggesting that the wrong rewards strategy may easily lead many to feel that the reward is not worth working for. “This can result in employee dejection,” she opines, underlining a potential demerit of hyper-personalising R&R.

Kumar also points out how customising rewards for worthy employees may easily create a sense of disenchantment among others. “This collective feeling of preferential treatment being meted out to a few co-workers is not a disadvantage of hyper-personalisation, but it calls for exercising caution. It has to be managed well,” says Kumar, emphasising the importance of transparency in the system to generate a sense of trust and equitability among the larger workforce.

Alluding to the cons of personalising employee benefits, Singh cites compliance, digital flexibility, and cost to the company as key conditions that must be met in order to make the process truly advantageous. “One, the personalisation should be compliant with the laws of the company and not cause any further complications. Two, it should be digitally adaptable and not create any additional manual work. Three, it should not cost the company more,” explains Singh.

“Generations are changing fast nowadays. With such rapidly-changing generational tastes, customising benefits helps organisations stay young and in touch with their employees”

Shailesh Singh, chief people officer, Max Life Insurance

Welcome trend

Describing hyper-personalisation as a ‘welcome trend’, Kumar says that it helps an employee play to their individual motivations and strengths. “The value of talent has risen in recent years. Today, a lot of emphasis is being placed on drivers of individual motivation and aspiration,” he opines. “Earlier, it was assumed that everyone wanted to be awarded in public. Scientific research now suggests that many people would rather be rewarded in private,” he informs, referring to differing employee preferences.

So, what’s the best way to customise employee rewards?

In Dasan’s view, it is a good idea for organisations to create a reward basket. She cites the example of her own organisation, where different types of rewards have been created, including spot awards as well as monthly, quarterly and annual awards. “We have also customised the benefits basket so as to give employees the freedom to choose. Therefore, people can opt from shopping vouchers, extra cash, extra points – that can be redeemed at a later stage – an annual vacation, or even dinner at a 5-star hotel,” enunciates Dasan, detailing the initiative.

Ultimately, according to Kumar, there is a need to design the customised employee rewards programme in a way that allows the best contributor to be rewarded, while encouraging everyone to play to their individual strengths. “The rules of the game, in other words, should be visible to and understood by all,” he says, conclusively.