What a meaningful employee rewards system looks like in 2025

Employees may be skeptical when they hear the term rewards system. In a professional landscape marked by layoffs, a competitive job market, and high inflation*, the prospect of a gift card or a few extra days off may not seem like much; today’s professionals need to feel appreciated for their hard work in the face of uncertainty. 

These challenges actually make it an ideal time to prioritize your employee rewards system — but any old program won’t do. You must make an extra effort to understand team members’ needs, plan meaningful rewards, and put thought and care into how you recognize people.

This article explores why well-thought-out employee rewards systems are critical in 2025 and lists five top components you should consider including in yours.

*CNBC, 2024

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What is an employee rewards system?

An employee rewards system, sometimes called a rewards and recognition program, is an organizational initiative that allows employers to thank and recognize employees for their efforts. 

Companies award team members for different reasons within the framework of an employee rewards system. For example, some organizations may choose to recognize top performers who have gone above and beyond throughout the quarter, whereas others might reward those who meet specific key performance indicators (KPIs).

Employee rewards can be broadly categorized as monetary and non-monetary. Monetary rewards can include bonuses or the opportunity to invest in company shares. Still, some professionals prefer non-monetary rewards — like extra days off, flexible working arrangements, reduced hours on a particular day of the week (Fridays are a popular option), special learning and development opportunities, as well as trips and experiences.

The importance of a rewards scheme for employees in 2025

It’s not easy being an employee these days. A wave of tech layoffs started in 2022 still isn’t over, with well over 60,000 job cuts across 254 tech companies in the past six months. And in the wake of layoffs, those who remain employed often deal with feelings of uncertainty (not to mention a higher workload). 

The tumultuous economic situation is also causing many businesses to tighten their belts and offer lower-than-usual raises — if any. Indeed, in the United States, companies plan to give out 4% raises on average in 2025, down from 4.4% in 2023. That fact, paired with the increasing cost of living, is far from ideal.

So, you might be wondering why reward schemes for employees are worth discussing in the face of layoffs, lower raises, and a challenging economy. With so much uncertainty in the air, showing appreciation for your people is more critical than ever. Professionals need to know that their employers see the hard work they’re doing, recognize their efforts, and understand how they contribute to big-picture business objectives.

Where employee recognition comes from matters. In a recent Gallup report, 28% of participants shared that the most meaningful recognition they’d ever received at work came from their manager. Another 24% said it came from the company’s CEO. 

Those insights are key for managers and leaders who want to build a culture of appreciation within their organization. To support this kind of culture, many businesses implement employee recognition software that enables team members at all levels to exchange feedback and appreciation regularly.

5 top components of meaningful employee rewards systems

Whether you’re developing or improving a rewards system for employees, your priority should be understanding and addressing their needs. The following five components are an ideal starting point for any employee rewards system; you can expand, adjust, and customize according to your people’s needs and preferences.
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1. Praise & recognition

Praise and recognition should be the cornerstone of any employee rewards system. Of course, people enjoy receiving monetary rewards and other perks, but if they don’t feel appreciated in the workplace, they won’t stick around. Indeed, our 2023 Workforce Trends Report found that 3 in 4 workers want more feedback and recognition from their managers, and McKinsey reported that the top reason professionals quit their jobs is not feeling valued by their manager or employer.

However, knowing how to give employees appreciation and recognition can take time and effort. Here are some strategies to try within your organization:

• Set up a praise wall so coworkers can give each other public shoutouts and see all the great things team members have to say about each other.
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• Start a channel on Slack or Microsoft Teams dedicated to employee wins — big and small. At first, people may be reluctant to share wins, so managers and leaders must lead by example to get the ball rolling.
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• Highlight employee achievements publicly on social media pages like LinkedIn or your company newsletter.
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• Recognize team members who have embodied company values over the past month or quarter in department or all-hands meetings. Go the extra mile by collecting and sharing feedback from their coworkers. 
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2. Learning & development opportunities

Learning and development is a huge priority for professionals in the current world of work. Investing in L&D enables employees to do their jobs more effectively, become more resilient in the face of a changing labor market, and achieve raises and promotions.

But there’s a disconnect between people’s desire for development opportunities and their employer’s willingness to provide them. In 2023, 84% of professionals expected their organizations to provide training and education, while 51% of executives felt that their companies’ existing learning and development programs were “a waste of time.”

It’s clear that people-centered businesses need to prioritize professional development for employee engagement and satisfaction. But for learning opportunities to be considered “rewards,” they must go beyond giving team members the training they need to do their jobs effectively. 

Here are some examples of how you might integrate learning and development into your employee rewards program:

• Give team members access to high-quality courses and workshops (in-person or online)
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• Provide employees with quarterly or annual stipends to spend on learning and development initiatives that interest them
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• Send a team member to an exciting conference in another city or country — all expenses paid
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• Pay for an employee’s tuition for continued learning or a higher education degree
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3. Financial rewards

Financial perks are important, even though your rewards system shouldn’t revolve purely around them. Compensation is a crucial part of employee job satisfaction, and many organizations operate with increasingly limited budgets for raises; offering team members monetary rewards can help bridge this gap — you’re showing them appreciation and sweetening their compensation package without committing to a permanent raise.

Forbes suggests that employers “determine [their] business goals before making a decision, as incentives should serve a purpose and reflect the organization’s values, as well as benefit the employees.” So, consider why you’re offering financial rewards before you act.

These financial benefits may work as part of your employee rewards program:

• Different kinds of bonuses, like performance bonuses, spot bonuses, profit-sharing bonuses, or holiday bonuses
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• The opportunity to invest in company stocks
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• Gift cards for popular retailers and services (like online shops, grocery chains, drugstores, food delivery apps)

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4. Memorable team events

Team events allow employees to develop stronger relationships with their coworkers, which benefits both company culture and the organization’s bottom line. Indeed, a Gallup report explored how workplace friendships are linked with better overall business outcomes.

The Leapsome team organizes a company offsite every year — in 2024, we spent a few days in sunny Spain. However, the possibilities for team events are endless, so it's easy to come up with ideas that suit different organizational preferences and budgets. Besides team offsites and retreats, consider team lunches and dinners, holiday and summer parties, trivia nights, and group challenges.
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5. Flexible work arrangements

The positive impact of flexible work arrangements on job satisfaction and employee well-being has been widely demonstrated. In a recent Deloitte report, 94% of respondents said they’d benefit from work flexibility — especially in terms of less stress, improved mental health, and better work-life balance. 52% of respondents felt that CEOs and upper management had the greatest impact on advancing flexibility within their organizations; leaders must act as examples and use flexible working benefits to inspire team members to do the same.

Flexible work arrangements are excellent because they’re flexible — you can set them up in a way that works for your industry and organization. Here are a few ideas:

• Adopting a hybrid work setup, where team members come into the office for a set number of days and can work at home for the rest of the time.
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• Offering flexible starting and ending times. For example, team members may be expected to work 7 hours per day, but can do so anytime between 8 a.m. and 7 p.m.
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• Establish a work-from-anywhere policy. Some organizations allow employees to work remotely for a specific period (like a couple of months) every year.
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Recognize employees in a meaningful way with Leapsome

No matter what kind of employee rewards system you set up, appreciation should be at the heart of it. And no one will feel appreciated by a reward program that comes across as surface-level or transactional. That’s why it’s critical to have open conversations with team members, understand what kind of rewards align best with their needs and wants, andcreater a system that effectively communicates how much your people matter to your business.

Resilient, high-performing teams are made up of employees who feel valued and appreciated. And Leapsome can help you build a consistent culture of appreciation within your organization. Our Instant Feedback module encourages team members to share appreciation for their colleagues’ great work; our Compensation module can help you stay on top of monetary rewards like bonuses; and our Learning module’s marketplace provides access to top-quality learning materials and courses from trusted industry leaders.

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Frequently asked questions about employee reward systems

What are the biggest benefits associated with employee reward systems?

The benefits of employee reward systems largely depend on whether team members find them genuinely meaningful and how well they address their needs. These are some of the biggest advantages a successful employee reward system can bring your business:

• Happier employees — Increased motivation, better overall well-being, improved morale, greater empowerment
• Better job performance — Higher engagement levels, more productivity 
• Higher retention — Greater loyalty, more job satisfaction
• Improved employee experience — A more enjoyable work environment, a richer company culture