If your employees are going to spend 40 hours per week with you, you'd better make sure they feel appreciated!
Recognizing their hard work with a spot award — an effort-based recognition program that rewards employees for exceptional performance — is an easy way to give your team the gratitude they deserve.
What are spot awards?
Spot awards are monetary or non-monetary recognition awards managers give employees "on the spot" for outstanding performance. They're the perfect way to say "thank you" when someone goes above and beyond the call of duty. And they give employees an extra incentive to do their best.
- Monetary spot awards — A cash award, gift card, bonus, extra paid vacation days, or another form of financial compensation your employee can use however they choose.
- Non-monetary spot awards — Recognition awards like company swag, certificates, plaques, or awards that come with special privileges like dinner on the company.
Not to be confused with spot bonuses, which are always monetary, spot awards are much broader. Like spot bonuses, however, they are immediate. Recognizing a job well done three a month or two after the fact would not be considered a spot award.
Why spot awards are important
Employee recognition is essential. It always has been and it always will be. The top-cited reason for quitting, according to a 2022 McKinsey survey, is employees "not feeling valued" at their company. Other data from O.C. Tanner shows us almost 80% of employees who quit do so partially (or entirely) due to a lack of appreciation.
Almost every year is worse than the last when it comes to employee turnover. From 2011 to 2021, the voluntary turnover rate doubled among U.S. employees. And quits accounted for 70% of all turnover in 2022.
There are a few reasons for this:
- Competitive job market. With the job market improving, more people feel comfortable leaving their current positions to find better opportunities.
- Supply and demand issues. There are about 0.6 unemployed people per job opening, meaning job seekers have more options than ever before.
- Widespread burnout. Many employees feel overworked and underappreciated — the perfect recipe for an exodus of talent.
- Less emphasis on financial benefits. Employees increasingly care about health and wellness, work-life balance, and career/professional development. They're always on the hunt for an employer that can promote employee well-being.
- Impersonal working environments. Remote work is convenient, but building strong relationships with colleagues is hard when you never see them in person. Many employers struggle to give remote workers the positive reinforcement they need to feel engaged.
There's a huge deficit when it comes to recognizing employees for their work. Spot awards can bridge that gap in a meaningful way.
When to offer a spot award
When you recognize employees with a spot award, you're showing them how much you value them. If your spot awards are monetary incentives or extra privileges, you're also promoting a healthy working environment by giving them the resources to take care of themselves or reach their personal and professional goals.
But it's not just about saying "thank you" — spot awards are also a great way to reinforce company values and desired behavior. Regularly giving immediate recognition for going above and beyond (or simply doing their job well) encourages them to continue that behavior in the future.
When deciding when to offer spot awards, look for situations where an employee or team:
- exceeds expectations.
- finishes a task or project early/on time.
- comes up with a creative solution to a problem.
- continuously goes out of their way to help others.
- shows initiative and ownership of tasks and projects.
- puts in longer hours to keep a project on schedule.
- is mentioned by name by a client/customer for providing top-notch service.
Ideally, you should match the award with the level of significance each accomplishment merits. If a team member put in extra hours to help the company hit an ambitious sales target, a $1,000 bonus might be appropriate. If you just want to show someone you appreciate their contributions, they'll be more than happy with lunch on the company and some new swag!
Most spot award programs have a healthy balance of both — higher-value monetary benefits with well-defined criteria and smaller spot rewards for everyday recognition.
Regardless of how you offer your spot awards, you should offer them consistently and fairly. You don't want to promote overly competitive behavior or create any kind of "favoritism" among your team.
Setting up your spot award program
Setting up spot recognition is pretty straightforward. But there is a right and wrong way to do it.
To increase employee motivation and promote a healthy work environment, follow these steps when creating your spot award program:
1. Conduct an employee benefits survey.
Spot awards aren't a substitute for annual bonuses, a reasonable salary, and other important employee benefits. If your team members are unhappy with your current compensation and benefits package, spot awards won't make up for it. In some cases, they may even seem tone-deaf.
Even if they are happy with their current setup, you still won't know exactly which types of spot awards would motivate them.
You need to conduct an employee benefits survey to understand how you can make your team feel valued. Ask them questions like:
- What are the most important benefits for you?
- How well do you think our current benefits package meets your needs?
- What other types of benefits do you think we should offer?
- What kinds of spot rewards would you most likely appreciate?
- What motivates you to do good at work?
Once you know what your team wants and expects from spot awards, you'll better understand how to set them up in a way that will make the most impact on employee performance.
2. Define clear criteria for giving spot recognition.
You don't want to give out awards haphazardly. And your program will lose impact if you recognize employees for every little thing they do. Setting clear expectations for reward eligibility will encourage your team members to strive for excellence.
Examples of spot award triggers include:
- Meeting or exceeding performance goals — sales figures, customer satisfaction scores, support tickets, marketing leads generated
- Achieving a specific milestone on time — bringing a new product/feature to market, completing a major project, completing a development sprint
- Going above and beyond expectations — helping out colleagues, taking initiative on tasks/projects
Be sure you also include how you'll measure success, whether it's through performance reviews, customer feedback, or other metrics. Going above and beyond can be difficult to quantify — in these cases, there will be other indicators, such as customer compliments or frequent employee shoutouts during town halls or midweek team calls.
3. Create additional restrictions to promote fairness.
Your spot awards should always be fair. To ensure everyone has an equal chance of being rewarded, create additional guidelines defining:
- how often the same employee can be recognized for the same type of achievement.
- who should decide when to award someone.
- what kind of behavior warrants a reward (and what doesn't).
Neutrality is important here. You don't want any employees feeling like they're being left out or discriminated against.
4. Put together a list of spot awards.
With a clear understanding of eligibility criteria, you can begin deciding how to reward exemplary performance.
The most popular types of spot awards are:
- one-time cash bonuses
- extra PTO days
- gift certificates
- company swag
But there are plenty of other creative ways to recognize employees. For example, you can reward a huge contribution or milestone with a weekend getaway, a small win with a cash award for health and wellness activities, or a team success with an office lunch celebration.
5. Set up communication channels to recognize employees.
Private recognition is nice, but the whole point of a spot award program is social visibility. Your team members want to be recognized in front of their peers.
This could come in the form of:
- a company-wide email announcing their achievement
- an article on the company blog featuring their story
- a LinkedIn spotlight they can repost to their profile
- recognition at town halls and team meetings
- a special Slack channel for spot awards and shoutouts
Depending on the level of achievement, you can use any combination of these. For everything from small wins to big project completion, you should have a Slack channel that allows everyone to recognize each other's hard work and accomplishments. A major milestone like job mastery might warrant a LinkedIn spotlight. You may collaborate with the marketing team on a special piece to highlight a massive goal accomplishment.
6. Get employees involved.
Peer bonuses can be effective ways to make your spot award program more fair and personal. Give your team the opportunity to recognize each other's successes through a peer bonus program, such as allowing employees to nominate co-workers for spot awards or give out small tokens of appreciation.
You can also ask your team members to come up with more creative reward ideas. That way, any new rewards you add to the list are meaningful and relevant to everyone.
Give your employees immediate recognition every time using Compt.
We make the whole process of giving spot awards a whole lot easier.
The most successful spot award programs give employees options. That's why Compt is vendorless. You can decide the award amount, then give employees the freedom to spend it how they like.
Compt supports manager-to-employee and peer-to-peer recognition, so you can customize your spot award program however you like. Since it's 100% tax compliant, you won't have quarterly back office nightmares, either.
If you're serious about spot awards, we can't think of a reason to do them any other way. See how it's done.