Recognition - Making it Real ... and Appreciated!

In composing my previous post about the new research on recognition published by WorldatWork, I was reminded of something that a former colleague used to say when discussing recognition programs.

It was:

Never give a plaque to an employee who has no wall!

The point?  Make sure that you recognize employees in a manner which they value and appreciate.  For example, not everyone likes to be called out in public; employees on the shy or reserved side might find this to be an uncomfortable experience.  In fact, lack of care for how employees prefer to be recognized can torpedo an otherwise positive and well-directed recognition effort.

Case in point:  An organization I once worked for had an "employee of the quarter" award, based on peer nomination.  Every quarter, right before the quarter-end all-staff meeting, an email would be circulated asking for votes for the employee who most deserved recognition that quarter.  The employee who received the most peer votes would be called to the podium during the all-staff and presented with a nominal award (gift certificate, if I recall correctly) and made to stand there while the office head gave a silly memorable speech about their accomplishments over the past quarter.

Now I'm certain that this whole effort started out just fine, but by the time I had joined the firm, the peer nomination process had been tainted with practical jokes and even minor acts of revenge.  And if you had a hint that you might be among the top runners for employee of the quarter, well you made it your priority to be out-of-town at an unavoidable client meeting that day.  Just to avoid the embarrassment.

And yes, folks, this was at an HR consulting firm.  Big shame on us.

The lesson?  Recognition can be a powerful and effective tool, particularly given its ability to accomplish a lot on a relatively small budget.  But recognition plans can have extraordinarily limited shelf lives.  You have to keep 'em fresh and keep 'em real, and you have to watch carefully for signs that they are fraying around the edges.

Forewarned is forearmed!

New Research - and Good News - on the State of Recognition

Recognition continues to be a popular and effective tool in the overall reward portfolio, according to newly released research from WorldatWork. 

The WorldatWork glossary defines recognition programs (clearly and helpfully, I think) in this way:

A policy of acknowledging employee contributions after the fact, possibly without predetermined goals or performance levels that the employee is expected to achieve. Examples include giving employees clocks or other gifts on milestone anniversaries, granting an extra personal day for perfect attendance or paying a one-time cash bonus for making a cost-saving suggestion.

Note that recognition programs, when defined this way, differ from incentive plans in that they tend to be reactive, rather than proactive, in nature.  Rather than laying out pre-determined performance measures and goals, and then communicating specific awards that will be paid if those goals are reached, recognition plans are more about catching someone in the act of doing something great.  As such, they can make a unique and powerful contribution to your overall reward toolkit, addressing organizational objectives that are hard to reach and/or reinforce through other types of pay programs.

Some key findings from the WorldatWork research, which features the responses of 554 participating members:

• The popularity of recognition programs continues, with 89% of respondents reporting recognition programs in place and 53% considering implementing new or additional recognition programs in the next 12 months.
• The top goals described for recognition programs are -
  • Creating a positive work environment (77%)
  • Motivating high performance (71%)
  • Creating a culture of recognition (69%)
  • Recognizing years of service (69%)
• And it seems as though most participants feel that their recognition programs are getting the job done, with 71% indicating that the program is accomplishing its objectives.

For more information on the research, contact WorldatWork (note that copies of the research report are available to members).

On the Fear of "Overpraising" Employees

Thank you to Liz Ryan, author of the Career Insight column for BusinessWeek online, for hitting an important nail right on the head with Is Praising Employees Counterproductive?

I run into the puzzling phenomenon she describes, fear of overpraising employees, on a far-too-regular basis.  Managers and supervisors consciously hold back praise and verbal recognition, or dole it out in a careful and sparing fashion, for fear - I guess - that it will undermine employee work ethic, or worse.  In her article, Ryan addresses some of the most common fears (yes, fears) associated with praising employees, and explains why they are unfounded, including:

• If you praise an employee too often, s/he'll get spoiled.  You should mix praise with constructive criticism. (Wouldn't it be motivating to have every single compliment of your work paired with a dose constructive criticism?)
• If you praise an employee a lot, he or she will slack off.  (Ever heard of the concept of positive reinforcement?)
• If you praise an employee, s/he'll expect more money.  (Let's face it.  Everyone wants and expects more money than they are making these days - so a frank and factual discussion of how an employee brings value to the table, and what it takes to augment that value, is not something you can avoid by simply holding back praise.)

I have personally found that almost nothing motivates me like a healthy hit of specific, well-deserved praise - from a client, a boss, or anyone whose opinion of my work matters to me.  My conversations with employees about performance, rewards and recognition would suggest to me that most people feel the same way. 

Have we lost our appreciation of the value and power of a well-aimed compliment?

Reward Lessons from the Fast Food Trenches

Jerry Newman, author of Compensation and My Secret Life on the McJob: Lessons from Behind the Counter Guaranteed to Supersize Any Management Style, conducted his study of rewards in the fast food industry by working undercover for seven fast food establishments in three states during a 14-month period. In a two part article for WorldatWork's workspan magazine, he shares some of the lessons gleaned from this experience, not the least of which is how to reward workers when pay dollars simply aren't available. As Newman puts it: "In a world where 25 cents is a big pay increase, obviously money can't be the central motivator" and fast food managers don't have the luxury of substituting financial incentives for good leadership.  A few of his insights are excerpted below:

Informal Recognition

My best managers all used role models for recognition.  Atith (not his real name) was a Cambodian with halting English.  But he was very meticulous in his mopping.  All new crew members learned about mopping from Atith.  And the manager made great ceremony of announcing how good Atith was, and that we would be learning from the best. A manager at Krystal used the same tool, telling me to watch Marge put burgers on the grill and flip them over.  "She is the best in the store," he said loudly and proudly announced.  It costs nothing and reaps huge jumps in self-esteem to reinforce good work in this way.

Social

There is growing evidence that people who get up in the morning and look forward to work do so because they like the people they work with.  No great surprise, right?  But good leaders don't leave this to chance.  My best managers spent an hour interviewing me.  My worst spent five minutes or less.  In one job I had no interview.  I was hired sight unseen.  What did these good managers spend time on?  They wanted to know what mattered to me and how I approached what did and did not matter.  When I asked my best managers if my interview was typical, universally they said yes.  Find people who fit.  Creat opportunities for fun and growth in friendships.  Social networks are the glue that ties workers to their jobs in a positive way.

Hours of Work

Fast food allocates hours of work as a reward.  Do a better job and you get more hours, if desired.  On a broader scale, some of the best managers I've seen understand that sometimes hours of work need to be flexible.  Even in environments where flexibility isn't the norm, good managers make exceptions for good employees.  Favoritism, you cary.  Yup, say the good managers.  Work hard and you too can become a favorite.

Practice is Mixed Regarding Tax Gross Ups of Cash Spot Awards

Results of a recent WorldatWork QuickQuestion survey revealed mixed practice among the 366 responding members with respect to tax gross ups for cash spot awards.

In response to the question "With cash spot awards, does your organization increase the amount of the stated award amount in order to offset the tax impact (also known as grossing up the award)?", responses were as follows:

• Sometimes, depends on the size and type of spot award - 43.7%
• Never - 33.1%
• Yes, always - 23.2%

The #1 Non-Financial Employee Motivator

According to a recent survey of 536 full- and part-time office workers by Accountemps, the thing (other than cash) that emplyees find most motivating is having their accomplishments at work recognized (see also earlier post on non-financial rewards).  Coming in at a bit of a distant second, but definitely worth noting, is regular communication (see also earlier post on the strong connection between frequent communication and employee engagement).

A full listing of survey results, which reflect employee responses to the question "Other than financial rewards, which one of the following is the most effective means of motivating employees?", is shown below:

• Frequent recognition of accomplishments - 35%
• Regular communication with staff - 20%
• Giving employees increased responsibility - 17%
• Off-site team building and social events - 10%
• More time off/holidays/paid time off - 1%
• Flexible work schedule/flextime - 0%
• Something else - 5%
• None/nothing else (but cash) motivates - 1%
• Don't know - 11%

Max Messmer, chairman of Accountemps and author of Motivating Employees for Dummies (John Wiley & Sons, Inc.), says it well:

No amount of team-building events or other perks can compensate for a manager personally thanking employees for a job well done.

Search the latest diversity careers at DiversityJobs.com.

Putting Merit Back in Merit Pay

With all the focus on executive compensation these days, its nice to see a bit of attention paid, particularly by CFOs, to the challenge of rewarding top performers of the nonexecutive variety.  This month's CFO magazine features a great article titled Just Rewards (by Roy Harris) which examines the steps that companies are taking in this tightening labor market to redesign their nonexecutive pay programs in order to better attract and hold on to top performers.

In addressing this topic, the article takes a well-deserved shot at merit pay, a program which the author asserts "represents a missed opportunity for rewarding top employees".

Rather than allocating money according to well-defined and carefully reinforced achievement rankings, many companies simply apportion merit raises evenly (or close to it) across the entire eligible population.  The reason?  'Managers aren't interested in doing things that are going to have a negative impact on people's morale,' so they rate employees higher than they should, says David Sirota, founder of Sirota Consulting and co-author of The Enthusiastic Employee (Wharton School Publishing, 2005).  The national average for merit-increase budgets is less than 4% of payroll, making the actual amounts at stake relatively small.  'Still, the reaction of top people is to ask why, after all their excellent work, they get, say, only 2 percentage points more [than the average],' he adds.

The article describes steps that three major corporations (Excel Energy of Minneapolis, True Value Company of Chicago, and Agilent Technologies of Santa Clara) have taken to improve the performance of their merit pay programs -- as well as the overall link between top performance and rewards.  At True Value, the CEO himself took the organization's pattern of "rating inflation" to task:

Things began to be reassembled in 2005, when veteran Sears executive Lyle Heidemann became True Value's CEO.  Joining the company during midyear performance reviews, he saw how ineffective the system was.  'His message to employees was the he himself had often been rated as a 3 [strong contributor], and he wasn't ashamed of it,' says Mysel [Senior Vice of Human Resources].  'He said that in his entire career he'd worked with only a couple of 5's.  That sent a strong signal.'

Sometimes it takes a strong message from the top of the organization to convince managers to take the performance assessment process more seriously.  What's at stake is no less than the organization's ability to reward its top performers. 

Of course, adhering too strictly to a "bell curve" mentality can backfire, too.  I have worked with organizations where managers are telling their eager employees things like "nobody here can earn a '5' (or whatever the top rating happens to be) - we don't give them out unless an employee is perfect, and no employee is perfect".  Isn't that a motivating message?  Better to set that bar high - really high even - and then say "I'd love to see you take a shot at accomplishing that - what can I do to help you get there?"

Putting merit into their merit pay program remains a challenge -- but, I'd submit, a worthy one -- for most organizations.  Check out this article to learn more about how a few organizations are facing that challenge head on. 

Non-Financial Rewards

David Maister has a good, thought-provoking post on his blog today, on the topic of using non-financial currencies, particularly in situations where a boss is unable to reward a good performer with a raise (or presumable other cash-based alternatives).  He shares a list of fifteen common non-financial rewards and asks "which of these are best?" and "are some of them dangerous?"

At the top of the list are things like approval (well done) and gratitude (thank you).  I believe that these are powerful and underutilized rewards, at least in some of the places I have worked.  Further down the list I start to get a little nervous.  Access to information?   Rapid response by manager?  I worry that you would risk creating more problems than you would solve with some of these.  And, of course, there's #11 titles (official and unofficial);  how many of us have dealt with the aftermath of that type of reward?

Check out the post and share a comment.  It could be an interesting discussion!

Lack of Organizational Respect Leading Cause of Employee Burnout

Time to stop putting all blame for employee burnout on the jobs and the employees themselves; a Wharton study shows that lack of respect and recognition from the organization can be a leading cause of this problem.

The article More Than Job Demands or Personality, Lack of Organizational Respect Fuels Employee Burnout featured in today's issue of Knowledge@Wharton tells us that it is often the organization, more than job demands or employee personality characteristics, that lead to burned out employees.

According to Sigal Barsade, Wharton professor and co-author (along with Lakshmi Ramarajan, doctoral student) of the research paper on which the article is based:

One of the biggest complaints employees have is they are not sufficiently recognized by their organization for the work they do.  Respect is a component of recognition.  When employees don't feel that the organization respects and values them, they tend to experience higher levels of burnout.

Among the research findings noted in the article:

• Organizational respect influences burnout above and beyond the effects of job demands and negative affectivity.  Because existing studies conceptualize burnout as stemming from the job or the individual, rather than the organization, "the 'problem' from a managerial perspective is the person," the authors note.  "Succumbing to burnout becomes a private affair of the employee, and not something of concern to the organization as a whole ... This ignores the contextual sources of the problem."

Incentive and Recognition Plans: A Classic Pairing!

I had a great discussion today with a CEO group that I was invited to speak to about employee incentives; we talked about the manner in which an incentive plan and a recognition program can really complement each other.  I wanted to share a bit of that conversation here.

This group of executives was particularly interested in the topic of broad-based group incentive plans.  I am a passionate fan of these plans as I believe that, when designed and implemented well, they provide a great vehicle for creating -- and then sharing -- the rewards of organizational success.  While incentive plans can certainly be, and often are, designed with a combination of individual and group performance measures, the most classic and popular broad-based design features a structure by which employees work together to impact a group performance measure (such as profit or net income), and then all are rewarded when they collectively reach that goal. 

The objection that is frequently raised to to this classic group incentive plan structure is that it doesn't provide a way to single out and reward the exceptional individual.  This objection is well-founded, this is not the purpose of a group incentive plan.  That's where a recognition program can enter the picture in a complementary way.  A recognition program (and I define recognition as "rewards, cash or non-cash and typically smaller than incentive awards in value, which are delivered after-the-fact to reinforce valued outcomes"; think movie tickets, spot bonuses or gift certificates) can provide you with a vehicle to celebrate and reward the accomplishments and contributions, to complement the "all or none" nature of the group incentive plan.  Of course, most merit increase programs (to the extent that they are functioning well) are designed to reward individual performance as well.

I encouraged this group to think of their "reward program" (or "total compensation package") as a portfolio of different plans.  Each plan element (like, for example, a group incentive plan) should serve a particular purpose in service of the overall "attract, retain, motivate" objective that complements, but doesn't overlap with, the other plan elements.  A "balanced" portfolio, so to speak.  In fact, taking the balanced portfolio approach to analyzing and reviewing a reward program can be helpful in picking out any "gaps" or "double dipping" that may suggest we are not spending our reward dollars in the most effective way.