💰 Budget, Tax and Payroll
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      3. 💰 Budget, Tax and Payroll

      What is our Understanding of Rewards Allocation per % of Payroll?

      Determining how much you can invest in the overall program including the rewards budget will dictate the design of the program.

      Semos recommends companies to spend between 0.5%-3% of annual payroll on employee recognition and reward programs.​ According to SHRM study, companies that invest 1% or more of payroll in values-based rewards and recognition are 3x more likely to rate their program as excellent. 

      From the current recognition programs at your company, we need to understand what the rewards budget spent is (e.g. $XM for current fiscal year).  We would expect with the new platform and programs to maintain a relevant rewards budget.  According to salary benchmarks (example) in your country and in your industry, we will determine the average salary annually.  Then we take the total number of employees, and we determine the estimated total payroll spend.  If we take the minimum best practice of 0.5% allocation of payroll, we are looking at general recommendation of $XM to be spent on rewards.   At the moment, you as a customer may be allocating below 1% of payroll.   

      One of customer's program objectives are shifting toward 360 degree recognition is to enable all team members to be able to send a recognition.  This is relatively easy achievable with a non-monetary program on the platform.  However, we see more adoption and 360 inclusion happening when also regular employees can recognize colleagues in a monetary program with points that need to be approved by the manager(s).  The risk here is that the current budget may not allow for this option, if most monetary recognitions today at your organizations are done top-down from the managers.   

      Another option to consider is to set some budget away from the other existing programs and pilot such monetary peer-to-peer program for a specific time and until the budget is used.  This would allow to measure the impact and benefits from moving further along the 360 degree recognition shift within the company.  Topics like these will be discussed during the program design phase to best meet current and future aspirations for the new R&R platform. 

      If this article left your questions unanswered, please submit a Support Form, and we can clarify this topic.