Using points economies to facilitate a rewards strategy

Using point economies to facilitate a rewards strategy 

What is ‘the point’ of rewards? 

Scientific studies have consistently shown that recognition is the most important factor in motivation, even before tangible rewards or an incentive program. However, the most effective recognition strategies almost always include a reward component. 

Ask any behaviorist and they’ll tell you that humans are hardwired for rewards. Rewards acknowledge our actions and they motivate us to repeat those actions, reinforcing positive behavior and boosting performance.   

By recognizing - and rewarding - positive behavior, existing patterns are reinforced and new patterns of behavior can be established, bringing your culture in line with your overall strategy and business objectives. By actively tracking behavior, the overall effectiveness of the program can be measured. 

Turning points into rewards 

Points economies are an integral part of a recognition system because they provide the ‘currency’ that facilitates the conversion of a recognition into a reward.  

By assigning point values to various recognition types, employees score points every time they are recognized for satisfying the conditions of a particular recognition type.  

For example, certain conditions must be met before an employee is eligible for a ‘long service’ recognition – they must have worked for a certain amount of years. In this example, you could award different points for the amount of years served; five years gets you five thousand points, ten years gets you ten thousand points, and so on.  

Recognition types 

Long service is a recognition type and so is, for example, a work anniversary. They have different requirements, however, and they should be weighted accordingly. It’s much easier to get a work anniversary than a five- or ten-year-long service recognition. The one happens every year, the other one only happens once per career. 

There are multiple recognition types, each with their own requirements. They provide many avenues for employees to earn points. These accumulated points can then be redeemed against actual rewards.  

The reward dynamic and spending options will depend on whether your bountiXP program uses a fiat currency points economy or a virtual points economy. 

The difference between fiat currency points and virtual points 

There are two points-based economies built into bountiXP: A fiat currency points economy and a virtual points economy. Both let you amplify the positive psychological impact of a recognition with actual rewards. 

Fiat currency points 

In a fiat currency points economy, real money is used to buy corporate points that can be allocated to your program(s) on the platform. Corporate points are purchased and allocated by the program administrator during the program’s budget set up. Typically, managers are assigned a set amount of points that they may award during the course of the program, whenever the conditions of a specific recognition type are met, e.g. long service.   

In this case, the points awarded to employees have a real-world, cash equivalent. Consequently, fiat currency points economies allow for physical and online reward cards that can be used at a store’s point of sale and for online purchases.  

The advantage of this type of points economy is that the reward options are practically limitless. The cardholder has almost complete freedom of choice when redeeming points for rewards. 

The fiat currency points economy may not be available in your region if your local currency is not presently supported by bountiXP. If this is the case, only the virtual points economy will be available to you. We are constantly striving to expand into new territories, and you will be notified when your region is supported. 
(You will have seen a notification about your region’s availability in the sign-up process.) 

Virtual points  

Virtual points are not linked to fiat currency. Virtual points do not have a fixed cash equivalent, however, there may still be cost to company (CTC) implications that need to be calculated.  

The advantages of a virtual point economy: 

• No additional outlay of capital 

• Works with any type of program 
• Less complexity than fiat currency economies 
• No tax implications 
• Choice of rewards is limited to a selection of vouchers 

Simply put, bountiXP lets you create virtual vouchers (coupons, or whatever custom name you wish to call them) that serve as rewards. These vouchers are assigned a points value and can be ‘bought’ by employees who have earned sufficient points on the program. 

Calculating virtual voucher costs 

bountiXP includes predefined example vouchers to illustrate the scope of possibility when creating vouchers. You are encouraged to engage with your employees to get even more ideas for virtual vouchers – ask them what they would like as a reward. Many novel ideas will be easy to implement, some at low to no cost at all, but do be mindful that this will not always be the case. Some of the more popular options - although easy to pull off - may have hidden, real-world costs (for example, ‘time off work’ vouchers, in terms of CTC, amount to paid leave and this needs to be considered). 

In conclusion  

Based on the data we have gathered over 40+ years in the employee engagement and recognition industry, we recommend a fiat currency-based economy.  

For optimal return on investment, we recommend that the equivalent of 1-2% of annual payroll be allocated as a rewards budget. 

We also advise against short-term programs because an effective employee engagement and recognition program takes time, usually a complete business cycle, before it shows noticeable results. 

Find more about points, rewards, and vouchers in the Help Centre: