Many leaders in the HR industry believe that employee rewards is about general employee well-being. One leader put it this way:
The primary objective of any employee rewards and recognition program is to keep employees happy, motivated, and engaged. In recent years, organisations have realised the importance of making gamification elements such as reward points an integral part of their rewards programs to enhance their effectiveness.
The statement emerges from a focus on the state of individuals, while missing larger systems concerns.
Due to missing the big picture, policies that focus merely on employee happiness are bound to fail, and potentially cause harm to the organisation.
Let's start with the basics. What is the purpose of rewards in organizational and team settings. Or rather, what should really be the purpose of rewards?
To survive and thrive, the organisation must always remain concerned with its overall effectiveness, how fit it is in the business environment. Hence, the overarching priority is organizational fitness, to compete, to win, to succeed against opposition as a group. That requires cultivating efficient teamwork, high productivity and disciplined execution.
Clearly, merely appeasing everyone, making them happy, or "motivated" or "engaged" through rewards doesn't necessarily lead to competitive fitness at the organisational level.
For example, a culture cannot celebrate comfort and challenge at the same time; it is impossible. If the culture is challenge-driven, then the work environment is setup in a particular way. If the culture touts comfortable living, then you build the culture in a different way. It's quite difficult to cultivate both properties in the same culture.
Another example could be made in the area of speech vs action. If the culture rewards impressive words, and flowery speech, more and more glossy presentations will be made. The people who act, who get things done, will become sidelined. While this may make a lot of people happy since life is less painful now, the long term challenge-avoidance renders the organisation unfit to compete.
Fitness depends on cohesiveness and commitment. The business can obtain commitment from its people by having a sharp mission, a clear-cut focus and a crisp culture. So, if a company doubles down on building a challenging environment, many people will leave. And such people leaving will contribute to increasing the fitness of the organisation.
Therefore, the agenda is not merely retention; the agenda is to retain the right people, it is ensuring there's no unnecessary flab in the organisation. It is like with the body, some parts are muscle, other parts are just fat. Excess fat harms the fitness of the organisation in a competitive environment. The only purpose of rewards is to increase the fitness of the organisation, while simultaneously discouraging elements that harm fitness. By trying to make everyone happy, policies may inadvertently end up causing damage.