Although not an exact science, we can broadly distinguish between employee rewards and employee recognition:
- Employee rewards: Refers to something of monetary value. For example, a cash incentive or a gift voucher used to reward employees for good behaviour.
- Employee recognition: Refers to an action that conveys a “thank you”. Usually, this has negligible or no cost involved. It is used to recognise employees for good behaviour.
Research, of course, shows most employees are not particularly motivated by money once they’ve reached a certain level. Where employees are on very low salaries and they maybe have to work two jobs to make ends meet, in effect, they are in survival mode. In survival mode, their main motivation will indeed be money. This is because they need it to pay basics like paying the rent and buying food. Where an employee has passed that threshold and they have more choices about money, motivation is often more about quality of work or being able to add meaning to their lives.
Today we are going to discuss less about salary packages, but more about more localised reward and recognition strategies. If done right, these can provide bonuses and appreciation for your employees.
Why employee reward and recognition strategies don’t work
If you need to attract and retain the best talent then you need an employee reward and recognition strategy that works. Get it right and you can become an industry employee of choice. Get it wrong and you could be bleeding talent and the cost of constant attraction and recruitment exercises can drain your budget and the goodwill of your people. So here are some reasons why your strategy might fail and what to do about it.
Rewards are generally one of the first “luxuries” to go when a company needs to tighten its belt. Removal of this perceived benefit could significantly demotivate employees, causing the desired behaviour to disappear as well. You have to consider very carefully your ability to sustain it in the long run (not just during the “good” times). This may mean planning any cost to your pay or recognition bill over the long-term and prioritising it through ups and downs.
2. Driving poor behaviours
The desire for the reward could drive employees to exhibit undesired behaviour. To be expedient about receiving an added bonus they may become adept at finding loop holes. This results in cutting corners or double-crossing their colleagues just to get to the reward. Your culture should be one of excellence. Employees are getting paid to do their job. Be very careful to not reward them for what should in fact be the standard. Reward behaviours as well as targets. So for example, someone who may have a long term goal to achieve a gain may temporarily have to miss targets. However, the end game is to achieve s a much better result then your reward strategy ought to embrace those kinds of behaviours.
Simply compare how that first drive in your brand new car felt versus how it feels when you drive it for the thousandth time – not as exciting anymore, is it? At some point in time, your reward will lose its ability to motivate the same kind of effort and excitement as it initially did, leaving you in a never-ending position of having to continuously increase the monetary value related to it (and we have not even broached the subject of keeping up with inflation). Your reward strategy not only needs to avoid depreciation but it should excite and motive your people to do their best in a myriad of ways.
4. Prioritising administration
Who is going to organise the availability of the funds, the purchasing of the gift etc. every single time? How intensive or complex is this organizing process? Will it be the first thing to fall behind when “more important” tasks loom? Can you guarantee that cash will always be available or that available funds will be prioritised for this purpose? How will this be accounted for in the accounts? How will you demonstrate your strategy is fair and open? The trick here is to make sure the administration of the funds and other recognition strands is not put at the back of the pile. Your employee reward and recognition strategy must become part of the company narrative and as such shouted from the rooftops.
5. Root cause identification
Consider very carefully why you are implementing a rewards system – what are you trying to achieve? And are you sure you can achieve it in this manner? A company sometimes implements an incentive scheme for their salespeople with the hope to increase their sales, when in fact sales are being hampered by the quality or price of the product and not by the effort of the salespeople. Now, instead of identifying and addressing the root cause, they effectively insult their salespeople by implying that they are not already delivering their best efforts and that their best efforts can only be bribed out of them. One example of this is where a company stopped rewarding their salespeople on sales, and switched it to reward customer satisfaction scores. This switch transformed the customer experience and the fortunes of the company.
Are you certain that the reward you have chosen will really be considered a reward by all of your employees? They live in different areas, have different interests and are motivated by different things. If, as an example, we are considering clothing, then the differences in shapes and sizes need to be considered as well. Choosing the wrong gift for the right person could significantly demotivate employees. Depending on the size of your business you may wish to consider a matrix approach whereby each region has reward and recognition schemes which suit that particular culture.
7. Selecting the right recipients
Who do you reward? The person who came up with the idea? Or the person who executed it? Is it the sales guy who closed the deal or the 100 employees involved in the manufacturing process? Is it the buying department that made sure that all the components were there on time? Or maybe even the despatch department made sure it got to the customer on time. Which team should be rewarded? Remember that in most instances every employee is only one link in a long chain that needs to work together to achieve the desired end result. So make very sure that your reward system encourages teamwork.
Consider very carefully your judging process – do you reward based on the idea being generated or the execution of the idea or the end result of it? Be very careful that you do not start sending a message through your actions that the small steps in the right direction are not valued. Many small things can make an incredibly huge difference. We would also caution you to be very wary of playing ideas off against each other. You are treading on very dangerous ground if an employee’s idea was not the best compared to the others this month but would have been the best compared to the others of last month or the next. Again this can demotivate employees or cause them to delay raising their ideas or executing improvements until such time that they believe they can “win”.
Non-financial reward must include similar principles
Non-financial recognition has much fewer pitfalls. However, one very important key to its success is that you must be honest when applying it! Make sure that you are consistent with your reward strategy. Make sure it feels personal. With handwritten or personal thanks and ways of appreciating people. Done right, it is a powerful mechanism that can also strengthen the relationship between the various management levels. Your recognition strategy should include all the principles outlined above and as much importance afforded to it.
We consider employee reward recognition to be one of the key drivers or enablers of continuous improvement. It can facilitate employee commitment and encourage participation. It is a cost-effective, valuable and appropriate way of recognising a wide range of “good” behaviours and you can have fun with it as well to celebrate a huge variety of successes.
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All businesses face continuous changes in the business environment. Long term business sustainability is directly linked to the ability to continuously improve and Adapt To Change. Along with globalization came increased competitiveness and in today’s economic circumstances one of the biggest pressures most businesses face, is financial pressure –the pressure to maintain or improve business results in the midst of increasing competitive forces. The downfall of many businesses lies in their attempt to address these pressures with strategies that proved successful in the past…in an environment that today no longer exists. The world is significantly different today and today flexibility and innovation are almost synonymous with business sustainability.
With more than 50 years of experience, the continuous improvement and supply chain experts at Adapt To Change are making businesses better! Adapt To Change is dedicated to transform, optimize and empower organizations and the individuals that work within them.