Recognition in an Ailing Economy

In their current newsletter, “Fresh Milk from Contented Cows,”, employee engagement guru Bill Catlette (half of Contented Cow Partners along with Richard Hadden) reports on his experience at the recent Recognition Professionals International conference in California. He calls out a couple of reasons recognition program providers such as Globoforce continue to experience success, even in a down economy.

“It seems likely that an ailing economy will cause many organizations to ‘lean down’ their spending in the traditional comp and benefits areas for awhile. We will be more reticent than usual to add to the fixed cost structure. With growing acceptance of the notion that a focused, fired-up workforce really does lead to improved outcomes, we will, however, likely see enhanced focus on performance-based recognition and reward programs.”

Bill is right. We’ve seen this proven out in our own customer base and it makes sound strategic investment sense for companies during tough economic times. When employees feel overworked and underappreciated, they will no longer give their best – consciously or unconsciously. Saying thank you, showing appreciation and rewarding employees in a personally meaningful (if not expensive) way is a simple and highly effective way to improve employee engagement in their roles and in the company during stressful times.

“As potent a tool as recognition and rewards can be, their effect is vastly diluted unless administered on a customized, highly personalized level. In other words, we’re beginning to realize that one size really does just fit one, and thus, people are best recognized in the manner, frequency, and currency of their choosing.”

Again, Bill is right on the money. Check out eBay and search for service awards or company awards. I just did and saw nearly 200 pins, watches, glasses, plates and other tchotchkes obviously of no lasting value to their owners. Giving people the reward of choice and letting them shop, dine or play in their own backyard or anywhere in the world for a meaningful item that they will remember is a far more valuable investment for a company.

For more insights from Bill and Richard, check out a webinar they presented with Globoforce not long ago on “Work Is Contractual – Effort Is Personal: Discretionary Effort, Employee Engagement and Your Bottom Line.”

RPI, Microsoft and Basics for Successful Global Recognition

I recently had the pleasure of attending the Recognition Professionals International (RPI) 11th Annual Conference in California. Mary Kennett, Amgen’s senior manager of human resources, presented with me on how the Fortune 500 biotech company orchestrated the successful conception, development, implementation and global launch of its strategic employee recognition program. Mary will co-host a webinar with us on June 11 (join us by pre-registering here).
I also had the opportunity to attend several sessions at the RPI conference as well. I particularly enjoyed the presentation “Big Company Love: Basics for Planning Global Recognition in the Enterprise” given by Michael Norried, an agent engagement manager at Microsoft.

I couldn’t agree more with the basics Michael presented:

1) Culture is always first – Michael very emphatically discussed the importance of the company being dedicated to a recognition culture, “beginning at the executive level, through the management level, down to the last person hired,” and then ensuring executives and senior management become evangelists of the program with a clear understanding of the impact on the bottom line.

2) Build something innovative – Tips Michael offered included defining recognition goals, keeping the platform flexible, including options for team and group recognition as well as individual recognition, being sensitive to diverse groups and cultures, considering offline workers, setting a budget for recognition, and making sure to have visibility into total spend and spend patterns.

3) Leave no one out. Period. – Again, Michael is spot on with recommendations to include even low performers in the recognition program to encourage them to become top performers, and that any company with international locations cannot be focused solely on the country where headquarters are based.

4) Listen to others (tips I have learned) – Michael offers several additional tips such as “don’t have a million dollar platform and give out stress balls.” It’s critical to give people the reward of choice with meaningful, memorable, and culturally appropriate rewards. And “don’t embarrassed when asking for large, non-traditional budgets.” Best practice shows 1-2% of payroll is the minimum for fully effective programs. WorldatWork’s recent Trends in Employee Recognition survey reported a budget of 2.7% of payroll for recognition as the average.

What tips have you learned that we could all benefit from knowing?

Are We in a “Psychological Recession?”

Judith Bardwick recently published a very interesting article on “The Psychological Recession” in the May/June 2008 issue of the Conference Board Review. Ms. Bardwick defines a psychological recession as “an emotional state in which people feel extremely vulnerable and afraid for their futures [such that they] are too exhausted to be creative and innovative. They expect the worst to happen, so they see no reason to give their all.”

With today’s fears in a slowing economy, mergers and acquisitions seemingly more and more common, and outsourcing only growing, it’s easy to understand why employees may be fearful for their jobs. It is up to management to clearly communicate the value those employees have for the organization and what the company is going to continue to do to maximize their value, input and performance. To do so is even more critical after, for example, a reduction in force. To keep the remaining employees from entering into a “psychological recession,” they need to understand without a doubt that they are an asset to the firm.

One way to do so is through strategic recognition. To increase employee engagement in their jobs and with the company during tough times, employees need to be frequently and appropriately appreciated for their efforts. As Rich Wellins, a VP with Development Dimensions International, pointed out in a side-bar in the article, it’s also important for leaders to reinforce and model the company’s vision and values so the employees have clear expectations.

A strategic recognition program that incorporates the company’s values and is built around the company’s vision can help to accomplish these communication goals with frequent and timely recognitions.

What is your experience with “psychological recession?” If you’ve found yourself in that state, what did it take to renew your commitment and restore your performance?

Big Money Bonuses Make Performance Suffer

I recently stumbled across PsyBlog, a very interesting blog on a wide range of psychology studies. A particularly intriguing entry for me was “Do Big Money Bonuses Really Increase Job Performance?”, based on a 2004 study titled “Large Stakes and Big Mistakes”*

The study leaders hypothesized that the anticipation of big bonuses for job performance may actually be counter intuitive by placing too much emphasis on money and not on the task at hand. To test their theory, the behavioral economists tested people in a low standard-of-living market (rural India) and in a high market (students at MIT). Both groups were given tasks to test problem-solving, concentration and creativity skills, with various levels of monetary reward offered for success.

The results were surprising to the researchers – according to the blog entry “in eight of the nine tasks, the promise of a bigger bonus actually significantly decreased people’s performance.”

Globoforce has long advocated the value of non-cash over cash rewards for performance. This research further supports our position in this area as well as our best practice recommendation that employee recognition take precedence over reward. Far greater benefit to the company and to the employee is derived when the employee is frequently recognized for desired efforts – even with a simple “thank you” – than with a single large monetary reward.

Have you evaluated or measured the impact of large infrequent or annual bonuses vs. frequent and timely recognition? You may be surprised with the results.

* Reference: Ariely, Dl, Gneezy, U., Lowenstein, G., & Mazar, N. (2004), CMU Working Paper.

Uniting Company Cultures and Goals during Mergers & Acquisitions

In my last post, I discussed the fears that employees usually experience when an M&A is announced and the importance of maintaining consistency for employees throughout the process. These needs for validation, consistency and a clear plan for the future can all be addressed through a strategic recognition program, easing the transition period and keeping employees engaged and performance high. My five steps to smoothing the M&A transition process through recognition are:

1) Merge the two companies’ vision and values into a new statement that is meaningful to employees from both organizations. Then use the strategic recognition program as a positive communication tool of the vision and values to all employees. When done correctly, recognizing behaviors, actions or attitudes that are tied to a specific value will help those values come alive for all employees, creating a more meaningful and memorable impact. Designate recognition ambassadors within both merging companies to encourage and demonstrate appropriate use of the recognition program.

2) As with any strategic program, secure executive sponsorship of the recognition program, but be sure to include key senior leadership from both companies in the initial roll-out. By seeing familiar and trusted leaders encouraging positive appreciation moments throughout the merged organization, employees from both companies will begin to notice and acknowledge the valuable efforts and contributions from their colleagues in the other company.

3) Any strategic program requires measurable goals to track success. Frequency, timeliness and appropriateness of the rewards are critical in recognition programs. In the special case of M&A, specific goals should be included to track the progress of the merger of the two cultures into one of appreciation across the global workforce.

4) Prior to program launch, confidentially survey employees on current job satisfaction; engagement level in their current roles; level of concern with the M&A relative to job retention, potential culture change and leadership; understanding of the values of the merged entity; and how those values translate to daily behaviors. Conduct the survey again periodically to measure improvements in these and other predetermined critical-to-success areas.

5) Launch the program soon after the M&A is announced to engage all employees in this new culture of appreciation, help them understand their continued value to the merged organization, and unite all employees behind the new vision and values.

What has your experience been during an M&A? Was it successful? Did you feel left out of the communication loop? If you were a leader during the process, what worked well and what would you consider doing differently next time?

Using Recognition to Sustain Performance through Mergers & Acquisitions

It seems to me that the possibility of a merger or acquisition is on the lips of more and more people today. Any major change in the workforce is disruptive and frightening for employees, but M&As typically dramatically affect the performance of the merged organization, which usually falls short of projections. This can largely be attributed to the fear and uncertainty the average employee feels when an M&A is announced. Employees fear their positions may become redundant, the new organization will not appreciate their skills and contributions, or that the company culture will change drastically. These fears lead to reduced employee engagement in their daily tasks and lost productivity as people become consumed by worry.

To allay these fears and positively impact employee engagement during a time of upheaval, leadership of both companies must look beyond the technology, departmental and other functional integrations and focus on the emotional and psychological needs of the employees for validation, consistency, and a clear plan for the future. The need for validation is rooted in employees’ fear that a new boss from the “other” company may not appreciate their expertise or efforts or even fully understand the value of the job function being performed. All employees in any situation need validation that their efforts are appreciated and valued, but this becomes more true in the uncertain atmosphere surrounding M&A.

Maintaining a consistent work environment during the M&A transition process is equally critical to employees. While maintaining full consistency in job role, supervisor or even job location may not be possible as the details of the merger are finalized, employees require consistency in communication and company culture to remain productive in their current role.

Employees fearful of culture change or job loss often try to regain control of their personal situations by preemptively resigning. Top performing employees who may feel trapped between the two companies never fully engage in the merged entity, resulting in reduced productivity. By establishing and communicating a clear plan for the future of the merged organization, leadership will also manage these retention challenges more effectively.

In my next post, I’ll give five steps to smoothing the M&A transition process through recognition. You may also want to check out a recent webinar we co-hosted with Terry Cain, vice president of operational excellence for Avnet, which is grown through dozens of mergers and acquisitions in recent years.

State of Employee Engagement 2008: Make It a Priority for Success

BlessingWhite recently issued their 2008 State of Employee Engagement North American Overview. This report found that only 29% of employees are fully engaged and 19% are actually disengaged. One of the strongest bottom-line impacts of employee engagement is reflected in retention and the cost of replacing employees. BlessingWhite found that 85% of engaged employees intend to stay with their current employer through 2008, whereas 29% of disengaged employees do. Some have argued that they don’t want disengaged employees to stay, but the cost of investing in those employees to help them become engaged is far less than the cost replace them entirely.

Key conclusions drawn included the very important “align, align, align.” In the most successful organization, “everyone understands the bigger picture and how they can contribute to the organization’s success.” BlessingWhite suggests starting at the top by aligning the executive team and then communicating “clearly and tirelessly.” Not surprisingly, 28% of disengaged employees (as compared to 13% of engaged employees) said that greater clarity about what the organization needs them to do and why would improve their performance. For the disengaged employee, this clarity around what and why was the biggest factor that could contribute to their improved performance. This is a prime reason why Globoforce advocates tying recognition to behaviors and company values. When employees – even disengaged and typically underperforming employees – are rewarded for efforts that do align with what the company wants (the values), then they will learn and remember far more effectively what the organization needs them to do – and why.

Another key conclusion was to “pay attention to culture” – to build a meaningful culture and then invest in the managers to sustain it. Critically, “make sure that systems and processes work in favor of – and not in contradiction to – the aspired culture.” We advocate establishing a culture of appreciation reinforced by appropriate, timely and frequent recognition. This directly targets BlessingWhite findings that showed 41% of disengaged employees felt their managers recognized and rewarded their achievements. One the easiest ways to help disengaged employees advance along the path of productive engagement is to acknowledge and reward their efforts to show them the way.

And a final key conclusion – “develop a measurement strategy that provides actionable insights.” We introduced to this industry the concept of strategically managing recognition programs and I've blogged on the importance of setting clear objectives and measuring success regularly against those objectives. Only when a measurement strategy is in place can the success of any program be understood in the short or long term.

Where do you stand on the spectrum of engaged to disengaged? Do you feel your manager recognizes your efforts? Do you know what your organization needs to you do and why? If so, how is this clearly communicated to you?

Praise as Good as Cash: Feed Their Need for Psychic Income recently published an article on research out of the Japanese National Institute for Physiological Sciences that showed “paying people a compliment appears to activate the same reward center in the brain as paying them cash.”

As we’ve promoted at Globoforce since our founding, simply saying thank you can go a long way in motivating people to achieve more than even they thought possible. A quick “thank you” costs nothing buts pays innumerable dividends. We call this feeding an employee’s need for Psychic Income™ -- social acceptance, increased self-esteem, and self realization – that can never be achieved through compensation. This backs up additional research from a 2004 University of Chicago study that found non-cash incentives were more powerful at boosting performance than cash incentives

So what does this mean in today’s workplace? Employees at all levels – senior leaders, managers, staff – need to actively look for behaviors, actions and attitudes in their colleagues, superiors, and subordinates that are deserving of acknowledgment – even a simple thank you. When expressed frequently, in a meaningful way, saying thank you can transform a company’s culture into a culture of appreciation – a topic I’ve written about in the white paper: Designing Your Company's Social Architecture: Five Steps to Build a Culture of Appreciation across Borders.

Does you company have a culture of appreciation? Do you hear “thank you” frequently for your efforts? Do you thank others on a regular basis for their efforts? Have you seen the impact of this on your workplace?

Retain Workers with Employee Engagement * Stanford Business School Case Study

Employee rewards and retention typically brings to mind office parties and one-off gift certificates – efforts that often involve discretionary spending and no measurable outcomes or business impact. In a global context, the effort is even more fragmented and tactical, with each country or division offering various types employee recognition – none of which roll up under a strategic corporate initiative that has the potential to motivate employees, shape an organization’s culture and influence its bottom line.

As I’ve blogged before, this type of tactical employee recognition is precisely the model that Globoforce has turned on its head with our approach to global strategic recognition. And now research out of Stanford’s Graduate School of Business is proving the value of the strategic approach.

Intuit’s management viewed employee recognition as a major opportunity to create excitement and momentum within the organization’s culture and ultimately impact the company’s performance. After scuttling a catalog-based rewards program that failed due to the inflated costs of catalogue items, outdated electronic products, broken merchandise, long delivery time, and an inability to effectively deploy the system outside the U.S., Intuit chose to make recognition strategic at all of its global locations.

Adoption of “Spotlight” immediately went through the roof, soaring to 20,000 rewards given in the first year and 26,000 the following year. The program touched 90 percent of Intuit’s employees each year, and employee opinion surveys showed that employees felt their accomplishments were recognized by the company.

Read more about how Intuit achieved such rapid success.

Tell me, do you have an employee recognition program in place? Is it tactical or truly strategic?

WORLDatWORK Trends in Employee Recognition -- The Importance of Strategy!

WorldatWork issued its latest Trends in Employee Recognition Survey last month. According to this survey of US-based WorldatWork members, the most common recognition program objectives are to create a positive work environment, motivate high performance, and create a culture of recognition. From my perspective, in organizations where a culture of recognition (or appreciation) is in place, employees are motivated to perform at a higher level and a positive work environment will result.

Contributing to these results are two of the newest types of recognition programs: those that motivate specific behaviors and peer-to-peer recognition. Surveyed companies reported these two programs as having been in place less than five years but with relatively high impact on employee retention. These types of programs specifically are part of the innovation that Globoforce has brought to the employee recognition industry. Our best practice of values-based recognition is designed specifically to encourage behavior that reinforces or exhibits a company’s stated values or goals. And we firmly believe that 80-90% of any company’s employee-base should be recognized regularly and frequently – which is only possible when peers are encouraged to acknowledge the exceptional efforts of their colleagues.

Shockingly, only 48% reported that their company has a written strategy behind the organization’s recognition program, which is 12% less than was reported in 2005. Moreover, 36% (the same as in 2005) report not measuring success of recognition programs at all. These statistics are staggering to me as we strongly advocate a strategic approach to recognition to ensure program success and bottom-line results through increased employee engagement. Perhaps these low percentages of strategic planning and measurement account for the equally low 46% of senior management who view employee recognition as an investment (again, 9% less than in 2005). Executive sponsors will not buy into any program that is not planned or measured – and HR initiatives of any kind will remain tactical until this is overcome.

Where does your company stand on these key issues? Are recognition programs strategic – carefully planned and measured – with executive support? Do you motivate the specific behaviors you want to see in your employees with your recognition programs? Do you encourage a culture of appreciation with your recognition program?

You Deserve It!

MSN/ recently published an article on getting the recognition you deserve. While I strongly believe that managers and co-workers should look for opportunities to acknowledge the efforts of their staff and peers, I also know that sometimes we need to help them see the value of the great work we do. This article does offer seven tips for getting you recognition you deserve at work.

However, I found comments in the article on “recognition that misses the mark” much more interesting. Direct quotes from real employees: “Please, not another t-shirt!” “I resent the money that’s spent to purchase doodads. It could be spent so much more wisely.” “Certificate of appreciation? I hate the damn things.”

While many surveys have been conducted that show that employees leave their positions because of lack of recognition, this article raises the point that many are also leaving their jobs because they aren’t receiving the kind of recognition they want.

As the researcher quoted in the article says, “One employee told me he would be happy if his boss even know he existed. Another told me how much harder she worked when she had the cubicle outside her boss’s office. She was intimidated, but visible. They want to know their work is meaningful.”

This quotation concerns me on two levels. First, both employees are describing a culture of intimidation in their workplace. Not only should these bosses acknowledge the existence of the employees, but more importantly they should foster a culture of appreciation in which the employees are very aware of the department goals, how their efforts help to meet those goals, and the individual value that they bring to the process.

And this brings me to my second concern – we all want to know that what we spend the majority of our time doing is meaningful. We choose to be at this workplace, away from our families and other commitments – we at least want acknowledgment that there is a purpose. And this is why it is critical for management to clearly communicate how the company’s values are demonstrated through every day activities of employees through a strategic recognition program.

Have you given up on getting recognition? Have you had to engage in self promotion to get the recognition you deserve? Or are you consistently recognized and appreciated for your efforts? Do you know the value of what you do at work every day?

Engagement Lessons: What Not to Do

In a recent article, Workforce Management recently tied the scandal at French bank Societe Generale to low employee engagement. Author Jessica Marquez observes that while only one low-level trader engaged in illicit trades, losing the bank billions, many back-office employees knew of the suspicious activity but “didn’t go beyond what was expected of them as laid out in their job descriptions.”

A €4.9 billion fraud could have been stopped, or at least mitigated, but many coworkers preferred to say, “It’s not my job.” This does indeed speak to the devastating ripple effects that disengagement can have in an organization – and ultimately in an economy. Since Societe Generale announced the fraud in late January, the effects of it continue to be felt in that banking institution, in France, and in the European economy. We may never know the full extent of the problems wrought by this one trader – and his many unwitting cohorts who assisted him through their decision to not act.

While the article highlights disengagement levels in France, it is certainly not a challenge limited to one country. Per Gallup studies, France and China have only 12% of employees actively engaged in their work; Germany has 13%; the UK has 16%; Japan has a very disheartening 9% engagement level. The US has 29% of employees actively engaged, but this is certainly nothing to brag about when the consequences of disengagement are so clear.

Are you one of the disengaged? What would you do if faced with a situation like that at Societe Generale? Or are on e of the engaged? What encourages you to go beyond your job description to look out for the best interests of your colleagues and your company?

Time to Engage Every Employee

Time Magazine recently published an article on “the burgeoning field of employee engagement.” The article author, Barbara Kiviat, highlights how the various research firms in this area view engagement drivers differently. She notes Gallup sees the main driver as direct managers while Towers Perrin focuses on executive-level vision setting as most important.

I believe these differentiators, while important, leave out the obvious critical factor – the employees. Yes, company executives need to set the vision for engagement and recognition and yes, direct managers need to communicate and implement that vision effectively. But we believe – and I have seen proven at our global clients – when the average employee can recognize his colleagues, anywhere in the world, for their efforts, then employee engagement soars. This peer-to-peer recognition naturally builds teamwork efforts and inspires trust in your fellow worker.

Kiviat goes on to highlight the significant bottom-line results of employee engagement, citing RBS’ savings of $40 million from increased retention and Towers Perrin’s study showing a 5.75% higher operating margin for firms showing high engagement scores.

I particularly appreciated a quotation from Alex Edmans, finance professor at University of Pennsylvania’s Wharton School, “People used to think HR was just a cost center and not a source of value creation.” I agree – HR can create significant value through strategic global employee recognition programs.

Does your company tout employee engagement? What initiatives have you seen being launched and what is the relative success of any such initiatives? Do you agree with Kiviat’s point: “Engagement is amorphous but critical – the unengaged undermine.”? What have you done about it?