Factors Driving Change in Employee Recognition and Reward System

The onset of widespread social media adoption has democratized and enhanced the functions of human resource management. Today, many factors lead to changes in compensations, employee reward systems, and employee recognition strategies. 

Reward and recognition strategies are often subject to internal and external work environments. Factors that drive change in rewards systems and employee recognition can be separated into internal and external contexts. 

Internal Factors 

To understand the internal factors, you have to know about the organizational culture. This culture consists of shared values and assumptions. These influence the way you interact with each other in the workplace. In reward systems, it is very important to take note of the organizational values when you are developing reward systems and considering employee recognition software

These values revolve around the desired behaviors of organizational culture and goals. In an organization, there are typically two types of cultures. The first type of culture is entitlement-oriented, while the second is contribution-oriented. 

Entitlement culture focuses more on employees as a part of their family members. It gives way to more personal rewards and heartfelt recognition. The contribution culture shifts focus on the individual and their contribution towards the business’s growth. Both of these are factors that shape the reward system and set it out to particular directions. 

Organization Type – Bureaucratic and non-Bureaucratic  

An organization will likely follow a bureaucratic system or a post-bureaucratic system. In the bureaucratic system, organizations and employees have to adhere to stringent policies and rules. Not to mention, they are also subject to vertical hierarchies. This means that their path to rewards and recognition is standard, and requires overcoming milestones. 

In this type of business, workers have to face rational decisions where rules are followed. On the other hand, organizations that adhere to a post-bureaucratic system have much different company dynamics. In this system, there are fewer hierarchies within employees, and this leads to more transparency between managers are workers. 

In a bureaucratic organization, managers have to set up recognition strategies that are based on compliance and control. This means that the reward system will be focused on adherence to company rules, procedures, and policies. Alternatively, a post-bureaucratic culture endorses reward systems that recognize the individual capabilities of workers, and recognition is much more fluid. 

In the bureaucratic organization, multi-grading structures and pay spans take place. This means that employee salaries may increase due to the longevity of their service. In post-bureaucratic organization, there is a much broader graded structure; employees earn rewards according to particular achievements.  

In addition to that, the post-bureaucratic system also applies compensational benefits that reflect the needs of the individual employee. Hence, in this organizational culture, the types of rewards can also vary accordingly. Overall, the bureaucratic system is much more standardized, while the non-bureaucratic system is more open-ended and involves the aspect of networking. 

Business Sector 

The industry sector in which a business operates is also a key driving factor that shapes employee recognition and reward system. Each different business sector has its own set of values and ethos which reflect deeply in the employee recognition program. Furthermore, each sector also has its own rules and based on those rules, HR representatives and managers have to implement reward strategy practices. 

Work Environment 

Work environment is a factor that plays an over-arching role to enhance the performance of an organization. Some areas of a business require good cooperation and teamwork, while other areas may require individual achievements. You have to focus on piece-rate systems, along with multi-skilling strategies when implementing a reward system in that company. 

When implementing a new employee recognition system, you are more focused on attracting high-quality workforce. These are usually workers that have the knowledge of technologies which impact grades and pay structures. 


People’s occupation is another important factor that can determine grades, pay structures, incentives and rewards. There are different types of employees in a business. Some work in sales, while others may work in support or production. For instance, a sales representative focuses more on commissions and incentives, while others are more focused on getting salaries and climbing up the hierarchal corporate ladder. 

Business strategy 

This factor refers to a business’s intention, and goals. It keeps a tab on what the organization plans to do in order to fulfill their core value. If the organization is focused on attracting high-quality people, then they may use a competitive reward system that leads the market. Similarly, other values will lead to different strategies that positively reinforce workers to work towards that value. 

Final Thoughts

As you can see, these are core factors upon which employee recognition and reward systems experience change. As the workplace is moving towards digital applications, factors such as business types and strategies have also changed, which manifests a completely different reward and recognition system. 

Written by Lara Harper