How Much Should You Spend On An Employee Rewards Scheme?

It's not always easy getting sign-off on your big ideas – particularly when they're likely to demand a substantial chunk of your company's budget.

Perhaps you already have a reward scheme in place, but it's not quite achieving your targets, and you have some exciting new ideas to transform your company's approach to recognition. You've done the research and understand the value of rewarding positive behaviour.

So far, so good. But when it comes to funding, the decision-makers in your business may require a little more convincing...

To build a strong case with the keepers of the purse strings (and create a program that brings in a tangible return on investment), it's essential to map out the foundation of your reward scheme and then come up with a realistic figure that aligns with the outcome you're aiming for.

Check your reward scheme strategy

Establish what a successful reward scheme looks like and what it means to your organisation. This will help to introduce recognition as a continuous organisational commitment – not just the latest company buzzword, set to fizzle out in due course.

Start by taking a look at your industry and check whether your current corporate values align with your people. It’s at this point you may also find that there's a bit of work to do on your company culture.

If your reward scheme aims to motivate employees to meet the aspirational vision you have for your business, it's essential to build milestones and frameworks that will promote the behaviours you're trying to encourage.

If you've identified that gratitude and positive affirmation from management makes a significant improvement in how employees feel about their roles within the business, then your reward scheme has to support a "thank-you" culture. This implies that allocating budget to monetary rewards alone may not have the same impact.

Which pain points are you tackling?

A reward scheme is a progressive and positive approach to building a happier and more productive workforce. Not many businesses start off with a reward scheme in place, though. Often, companies only incorporate a recognition model in response to a recurring issue they are trying to address and being reactive, rather than proactive.

If this is the case for your organisation, stakeholders will be looking to see how an investment in a reward scheme offsets the loss the business incurs through negative behaviour or lack of recognition infrastructure. It's important to identify the challenges you're facing so that you can demonstrate how the proposed strategy will transform your company culture and affect that all important ROI.

Common pain points:

  • High turnover rate of staff: Are you trying to boost retention and lower the cost of recruitment? Are you constantly having to replace staff who don’t seem keen on sticking around long-term?

  • Low productivity: Is a decline in output prompting your business to seek ways to motivate and re-engage employees with company values?

  • Lack of adherence to protocol: Are you trying to ensure that employees comply with health and safety procedures? Or is there an abnormally high accident and absence rate in your business?

  • A decline in innovation: Are you in a creative industry that requires more ingenuity and high levels of performance from staff?

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A reward and recognition scheme can help you address each of these pain points strategically, but it's essential to clarify your aims so that you can choose the right incentives. From then on, the costs become a little more transparent, and the value that you hope to extract from your efforts will make a lot more sense to decision-makers.

It's worth noting that a high maintenance reward scheme can quickly turn into a pain point too. You should select a centralised recognition platform that will minimise the amount of time you have to spend managing the scheme, while still providing you with valuable insights on how your initiative is performing and helping you to draw accurate progress reports.

How to allocate budget per employee

So, you've worked out what your company needs and how a reward scheme can support your mission - what next?

It's very likely that you've decided to incorporate a program that offers a mix of rewards; service awards, peer-to-peer recognition and management awards all have their place in a well thought out reward scheme.

An annual bonus or award may be a more clean-cut approach to working out how much money to set aside per employee; however, this won't help you to establish continuous feedback and improvement - plus, cash bonuses are generally only effective as a short-term measure.

Incorporating more regular interactions that reinforce positive behaviour throughout the year will achieve more consistent results. You should take a look at all the different reward types you'd like to give out and work out how much budget you can put behind each one – some rewards may have no cost at all.

Here’s a simple overview of what your recognition budget could look like:


Cost per employee

Annual cost

Number of available awards

Colleague High Fives

No cost

No cost

No limit

Annual recognition awards – criteria-based




Peer-nominated awards

Each employee can give £10 worth of points every quarter to be used towards vouchers/rewards


800 ( figure based on a company with 200 employees )

Management initiated awards

£100 awards given to high performers on a quarterly basis




While this example won’t include the costs of implementing and maintaining your platform, it demonstrates that a company with roughly 200 employees can allocate an average of £92.50 per employee. When you put this figure up against what it costs to recruit and onboard new staff, or what a productivity decline could be costing your organisation, it’s easy to see the advantages of investing in your people.

Working out your budget will require some investigation into your long and short term goals for incentivisation.

It's good to have a ballpark figure for what you'd like to allocate per employee; however, it's also important to pair up with a reward scheme provider that offers the flexibility to only pay for what is redeemed and used.

Many factors come into play when structuring your reward scheme, but once you've balanced the books and found the reward formula that fits your business, you'll see the benefits of a more engaged team that delivers excellent results.

At Sodexo, we specialise in helping organisations create healthy corporate cultures that are based on years of experience and study into what makes individuals more productive and integrated employees.

Give us a call to discuss your requirements and allow us to show you how our tailored reward platform can fit into your company and pay long term dividends for years to come.

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