Why might a company choose to reward only key employees rather than all employees?

A company may choose to reward only key employees to retain essential talent and drive company performance because these individuals are often critical to the organization's success. Key employees typically possess unique skills, knowledge, or experience that contribute significantly to the company's strategic goals. By focusing rewards on this group, the company aims to motivate and incentivize these individuals to stay with the organization, thereby reducing turnover and cultivating a stable, high-performing workforce.

Rewarding key employees can also help reinforce the desired behaviors and performance outcomes that align with the company's objectives. This selective approach allows the company to create a culture of excellence where top performers feel acknowledged and valued, which can lead to enhanced overall performance for the team and the company as a whole.

In contrast, while reducing costs and aligning rewards with market competition may seem like valid reasons, they do not directly address the strategic purpose behind rewarding key talent. Additionally, complying with regulatory requirements typically does not drive selective reward strategies; rather, it ensures that all employees are treated fairly according to laws and regulations.