Reward Programs Not Aligned with Business Needs

Towers Perrin recently issued a report finding that there is a growing gap between reward programs and the business strategy they should be addressing.

Per Towers Perrin, despite the major upheavals in business in the last two decades – globalization, boom and bust cycles, technology advances, labor issues – most companies have not adjusted their rewards programs in any meaningful way to keep up with these changes. Just a few specific findings include:

Little customization of award outside sales – which violates one of our foundational tenets of strategic recognition – available to all. Elitist programs that target the top 10% or a particular function group such as sales ignore the valuable contributions of other groups and the middle 80% where, according to Jack Welch and others, the majority of the work gets done.

Limited measurement of ROI – which violates another foundational tenet – clearly defining goals and measuring for success. These basic principles of operational excellence certainly apply to recognition and reward programs that are implemented strategically. Numerous authorities on recognition and HR have offered measurement and metrics advice.

Reward programs do not link to business needs – which violates a third foundational tenet – tie recognition to company values. Using a strategic recognition program to reinforce the company values in the majority of employees only serves to strengthen the company at every level through a culture of appreciation while driving toward the delivery of key business goals.

Towers Perrin offers a key bit of advice as well – “avoid the ‘one-size fits all’ approach to rewards because it lacks focus and can marginalize the return on investment.” This is another foundational tenet – offer the reward of choice. Let your employees determine for themselves what they feel is valuable and appropriate, but never neglect to frequently, consistently and publicly tell them “thank you” for their efforts.

The “Neighborhood Effect” in Global Recognition

Larry Rohter of the New York Times recently wrote about how “Shipping Costs Start to Crimp Globalization,” discussing how expensive oil, global warming concerns, rich countries’ concerns over job loss, food safety issues, and the Geneva world trade talks collapse are contributing to a reversal of the old globalization model of manufacture wherever labor is cheap and then ship long distances to market.

“Globe-spanning supply chains – Brazilian iron ore turned into Chinese steel used to make washing machines shipped to Long Beach, CA, and then trucked to appliance stores in Chicago – make less sense today than they did a few years ago.”

This structure makes even less sense in global employee recognition programs. Old-school incentives companies that rely on merchandise catalogs and warehoused inventory of incentive items are fighting this same uphill battle of ever-increasing costs. It makes no fiduciary sense to buy, for example, reward items such as electronics built in China, ship them to the U.S. to warehouse, only to reship them to India as a reward for a participant in a company’s employee recognition program. However, this is still the model many of the large merchandise incentives companies still follow today, saddling their clients with exorbitant and unpredictable international shipping, handling and customs fees in the process.

As Rohter explains, ‘the recent surge in shipping costs is on average the equivalent of a 9% tariff on trade.” This is inspiring a “neighborhood effect” – an economist buzzword meaning “putting factories closer to components suppliers and to consumers, to reduce transportation costs.”

Globoforce pioneered the “neighborhood effect” in global STRATEGIC employee recognition programs. By offering direct access to thousands of merchants, restaurants, travel options and adventure outlets around the world, recognition program participants simply select the reward the want, then walk into their local neighborhood outlet or jump online. Inappropriate or potentially incomplete awards aren’t shipped around the world, saving our clients many thousands on their recognition programs while giving them a budget they can count on.

Are you ready to bring the “neighborhood effect” to your employee recognition program and save a bundle on shipping costs alone?

Intuit Spotlight Recognition Featured in Talent Management

Eric Mosley, our CEO, recently published an article in Talent Management magazine. “Intuit Spotlights Strategic Importance of Recognition” highlights the very impressive strategic employee recognition program Intuit now has in place. In fact, Intuit and the Spotlight program are the subject of a business case that is now in the curriculum at the Stanford Graduate School of Business.

Jim Grenier, vice president of human resources at Intuit, explains the value of the Spotlight program:

"It's all about trying to create excitement in the culture. It's part of trying to build momentum and keep that momentum going. But how do you keep the momentum going day-to-day? You want to let people know they are doing a good job and, at the same time, reinforce the same messages about where the business is going and what's important."

Intuit achieved best practice goals of program adoption by seeing awards reach 20,000 employees in the first year of the program, and grow to 26,000 the following year. Within two years, between 90 and 95 percent of eligible employees had received at least one award.

With such a strong appreciation culture in place, it is no surprise Fortune listed Intuit as the most admired software company in the U.S. in 2005, 2006, 2007 and 2008. In a 2007 survey that included eight categories, Intuit ranked No. 1 in people management, use of corporate assets, social responsibility, quality of management and quality of products and services. Fortune also regularly includes Intuit in its list of the best places to work, and its employee recognition program is one reason for this acknowledgement.

Kudos to Intuit for demonstrating so well their commitment to their employees.

You Call THAT a Reward?

I read an article last month extolling the virtues of pens, watches, and other desk trinkets as the ideal “reward” to incent employees. I was particularly flabbergasted by the comment that “today’s young workers demand constant affirmation that they are valued” (true) and then suggesting trinkets such as pens, paperweights, paperclips, business card holders or perpetual motion machines are what the “younger generation” want for rewards (false).

Desk tchotckes such as these may have played well in the past when people were committed to their “work families,” but Generations X and Y especially value time with their family and friends outside of work far more. When given the choice of reward, Generation X members, who are sandwiched between caring for their aging parents and their young families, tend to choose reward items they can share with family members – playsets, BBQ grills, televisions, and the like. Generation Y often chooses more lifestyle-based reward items such as travel and adventure, dinners with friends, or entertainment packages. High-end writing instruments, such as those touted by the article, are of little interest to these younger generations who rely more on their texting thumbs or a PDA stylus than on an old-fashioned pen.

Regardless of what they ultimately choose, having a preselected “reward” forced on you is no more valued by the recipient than an ugly sweater/jumper from Great Aunt Myrtle. If you want to show your employees – of all generations – that you value them and their contributions to the team and the company, then give them the gift of choice. Give them the ability to choose from millions of reward options in their own backyard, online or anywhere in the world. Don’t saddle them with silly clacking-ball perpetual motion desk accessories.

Tell me about rewards you’ve received in the comments or take our weekly poll.

Bad Bosses v. Good Bosses * What's the Difference?

Continuing the theme of bad bosses, David Silverman recently posted on the Harvard Business blog a hilarious but frightening list of 11 habits of a bad boss he had the (dis)pleasure to work for. Three that stuck out for me include:

1) “Be sure your employees don’t know what’s important to you.”
As the old maxim goes, “if everything is important, then nothing is.” This is certainly how employees will react over time. If you want to demotivate your teams in record time, follow this advice. If you want to actually increase productivity, clearly define company, division, team and personal mission and goals for each employee to help them know when they have achieved personal goals as well as how they are helping to contribute to the company achieving its overall mission. Then recognize them at each stage for their efforts and their success.

2) “Be careful not to get too wrapped up in your employee’s own goals.”
Employees need to know their managers care about their success as much as, if not more, than their own. The best way to demonstrate this caring meaningfully to the employee is to acknowledge every achievement that brings them closer to that goal.

3) “Thank your employees – but only for efforts below their skill level.”
Too much of a good thing accomplishes nothing. While Globoforce strongly advocates eliminating elitist recognition programs in favor of recognition that targets 80-90% of employees, the behaviors and achievements deserving of recognition must always continue to be at a high standard. By recognizing more people for high levels of achievement, you begin to foster a culture of appreciation while also advancing the company’s values and mission.

What are some of the hallmarks of bad bosses you’ve worked under? What about the good ones? What sets the two apart in your mind?

Employee Recognition Lessons from the Olympics

As I’m sure is true for most people, the sheer athleticism of our Olympic athletes held me in awe these past two weeks. More even than the athletic performance, I found myself enjoying the post-win celebrations of the athletes, regardless of the nation they represented. Colleagues tell me they’ve actually cried watching the athletes hug each other and rejoice in victory, even before the medal ceremony.

Why do we react this way? I believe our emotional reaction to scenes of recognition for significant achievement are deeply ingrained in us, as is our pride in our own achievements. Recent research shows pride in achievement is an “innate human biological response that shapes human dynamics.”

The same need for recognition and pride in accomplishment is true in the business environment. How do you recognize your star performers? Do you give them an appropriate platform to demonstrate pride in their accomplishments? Are you “shaping the human dynamics” in your organization by fostering a culture of appreciation in which all employees – at any level – encourage each other to push just a little bit harder to win the gold? And then do you give them a forum to celebrate those achievements?

In these tougher economic times, consider modeling a strategic recognition program on the spirit of the Olympics. Give rewards on the spot for a job well done. Publicly acknowledge good work so that all can celebrate it. Measure the program to ensure success. Personalize it so recipients find meaning and value in the reward. Give the “medal” of thanks!

Tough Times = Mean Bosses: How to Change the Equation

The effect of the ailing economy on managers seems to be a continuing theme in the media. Eve Tahmincioglu recently reported on “Hard Times Drive Some Mean Bosses over the Edge” in MSNBC, relating various stories of bosses driven over the edge by the pressures of today’s economy.

As one worker related in the article, “He [the boss] has no problem reminding me or anyone else that the economy is bad, we are losing clients, the job market is awful, hint-hint, and if we don’t work our (butts) to the bone, not like we haven’t been already, then trouble will begin.”

Tahmincioglu also notes the result of all this “meanness” is a disgruntled and unproductive workforce. Of course, this isn’t surprising. When people feel overworked, overstressed and underappreciated, they will not give their best effort – let alone extra discretionary effort.

The advice in these situations is obvious: If managers want to encourage an employee to accomplish the tasks formally done by two people, then showing direct and tangible appreciation for those efforts will yield far greater results than demeaning accusations and threats.

Increasing meanness isn’t the only hallmark of a negatively changing company culture. C.C. Holland also reported on “The Ramifications of Workplace Rudeness” on BNet recently. A poll included in the article showed about 75% of respondents constantly or occasionally experience workplace rudeness.

What is your workplace attitude? Be sure to take our weekly poll and let us know. How are you counteracting meanness and rudeness as managers and employees become more and more stressed?

“A” in Engagement with Amgen and Avnet!

Globoforce customers Amgen, a global biotechnology firm, and Avnet, a global distributor of computer and electronic components, were recently featured in Incentive Magazine in “Amgen & Avnet, Two Views of Global Recognition.” Below are a few excerpts from the article. I encourage you to read the whole thing to see how these very different companies approached the highly important task of strategic employee recognition.

When asked what the objectives are of engagement programs, Steve Church, the senior vice president and chief human resources development officer of Avnet, said:

"An engaged employee performs better. They stay longer and they're your best recruiters. They go above and beyond. They perform better so the company performs better. And as the company performs better, there are more opportunities for advancement, [employees'] compensation is better, and there is a sense of winning, of succeeding in the marketplace. What does that do? It builds more engagement. If you think about it, it's sort of a symbiotic relationship, and that's what we're trying to accomplish."

Amgen also proved this by simultaneously launching its Bravo! global recognition program to all 17,000 of its employees scattered throughout North America, Europe, Asia, Australia and the Middle East. As Mary Kennett, Amgen's senior manager of human resources and the Bravo! program leader said:

“Amgen had a culture of recognition, but did not have the tools to recognize people on a global basis. We needed a tool to keep the staff engaged [and provide recognition] in a timely manner, so that the recognition occurs close to the accomplishment and reinforces that accomplishment and behavior."

As the article states, “Fully 85 percent of Amgen's employees have either nominated a coworker for a Bravo! Award, sent an award or have received one themselves, resulting in 45,000 awards in the first full year of operation. Amgen reached its goal—to have between 5 and 8 percent of its employees nominated for an award on a weekly basis."

Congratulations Amgen and Avnet for achieving such success among your employees!

“Desk Rage” in America the Latest Trend?

Ellen Wulfhorst of Reuters recently published a story on the growing incidence of “desk rage” in America. The article discusses the increase in “grumpy, insulting, short-tempered or worse” behavior in the American workplace. Some of the statistics quoted:

* Nearly half of US workers report yelling and verbal abuse on the job.
* Roughly a quarter say the abuse has driven them to tears.
* One-sixth of workers reported anger at work that led to property damage.
* One-tenth reported physical violence and fear their workplace at work.
* 88% think incivility is rising at work.

Anna Maravelas, author of “How to Reduce Workplace Conflict and Stress,” says, “Rudeness, impatience, people being angry – we used to do that kind of stuff at home but at work, we were professional. Now it’s almost becoming trendy to do it at work.”

The article concludes with a comment from Paul Spector, a professor of industrial and organizational psychology at the University of South Florida:

"Companies pay dearly in terms of lost productivity, sagging morale and higher absenteeism. The worst cases end in violence. Somebody didn't just come to work one day and shoot somebody. There's probably been a pattern of less extreme behaviors leading up to it."

If it’s become “trendy” to engage in such anger-based behavior at work, and we are noticing “patterns of behavior” leading up to it, then I believe we can establish a new “trendy” behavior and far healthier patterns.

Why not make it trendy in your organization to say “thank you?” Why not establish patterns of appreciation? If you transform the very culture of your organization in this way, those who do not fit the mold – those exhibiting “desk rage” – will either choose to leave or be shown the exit. This is especially true if KPIs or MBOs are put in place to encourage achievement of recognition targets.

We do have power over our emotions and our workplaces. We just need to reclaim it. And in the process, we will make our people feel safer in their work and, according to Spector, increase our bottom-line while we’re at it.

Recognition Done Right Video Clip

Our animated video clip on YouTube has garnered more than 1,300 hits! This short two-minute clip explains – in the simplest of terms – the difference between a poorly executed global employee recognition program and a properly executed one. Check it out below!

The Lessons of Childhood Still Apply

This terrific post on likeability in the workplace offers a couple of tips specific to recognition that everyone can (and should) do for no cost at all.

Compliment People Who Deserve It – Go out of your way to personally acknowledge and complement the people who have gone out of their way to shine. Everybody likes to hear that their efforts are appreciated.

It really is as simple as telling people why and how the work they have done is good.

Say “Please” and “Thank You” – These 2 simple phrases make demands sound like requests and inject a friendly tone into serious conversations. It can mean the difference between sounding rude and sounding genuinely grateful.

Yes, those lessons we learned as young children still apply in the workplace. And the power of a simple “thank you” to motivate and improve performance has been proven in countless research studies – one of which I recently blogged about.

What other simple things make your day at the office more pleasant? What do you wish your colleagues would do more often?

Motivate Employees & Recognize Achievement – Especially in a Down Economy

Lindsay Blakely of BNet again offers an insightful article on managing your team during a downturn. In particular, she talks about getting your team involved in the solution and rewarding deserving employees.

Blakely sets a goal to “motivate employees and find out how and where the business needs to change.” Getting your team behind you to find solutions in a down economy or when the firm is struggling is not only smart, but may help you grab market share . Involving employees in decisions about where to cut costs also gets their buy-in for greater compliance. Also, if you have a strategic recognition program in place, you can add “business discipline” or “costs discipline” as a category for reward. This gives you insight into areas of the company working harder to save money and also encourages sharing of those ideas across groups or divisions.

Blakely sets another goal to “recognize achievement, even if resources are scarce.” Managers must continue to recognize above-and-beyond effort or actions demonstrative of company values – in fact, this becomes even more important during a down market. David Sirota, founder of Sirota Survey Intelligence, offered this telling anecdote:

“Lack of recognition — both financially and verbally — is one of the things that does the most damage. I worked with an investment bank some years back where bankers were earning bonuses from $100,000 to $1 million a year. You know what they complained about? They didn’t know if the chairman thought they were actually doing a good job, because he never spoke to them about it.”

As I’ve blogged repeatedly, cash is never the best motivator.

I do take issue with Blakely’s encouragement of Yahoo’s method of elitist recognition, in which the top 15-20% are singled out for recognition. When you limit formal recognition programs in this way, you miss out on countless opportunities to reward employees for their daily actions and behaviors that reinforce the company values and drive company performance based on your stated mission. Strategic recognition is very powerful tool in the management toolbox – it must not be limited to the relatively few.

What are your stories of lack of recognition?

Recognition & Reward * How to Get It Right

A conversation starter from Harvard Business Publishing on rewarding and retaining people when money is tight recently did inspire several excellent comments. It is encouraging to see so many people who “get it” when it comes to the importance of recognition.

A couple of key conclusions were:
1) “Recognition inspires not only the recipient but also others.” – This is certainly true. Recently, the Stanford Graduate School of Business asked us to participate in a study that has now become part of their curriculum on the importance of effective recognition. We confirmed through that study what we had believed to be best practice – when employees are recognized at a rate of 5-8% a week, a culture of recognition takes off in that employees throughout the organization begin to encourage each other and notice actions and behavior deserving of recognition. What a powerful motivator for positive change!

2) “Different people see value in different things, so one should strive to understand what is important to individuals working for you. This is especially critical when working in an unfamiliar cultural environment.” – Again, this is very true. Old-school catalog programs limited reward choice – making it difficult, for example, for a manager with globally scattered team to choose an appropriate and equivalent reward for all team members. We’ve heard horror stories of clocks being sent to Chinese team members, where such an item symbolizes death! Or fleece jackets sent to staff working in countries where the average temperature is 30 degrees Celsius (86 degrees Farenheit)! The importance of giving the reward of choice is another key tenet of strategic recognition.

Are you creating a culture of appreciation with valuable rewards? What is valuable to you?

Just Say “Thank You”

Smart Company ran an article recently on the power of a simple thank you to retain staff. The article references a 2008 survey by British consulting firm White Water Strategies that found, “Saying ‘thank you’ often had the same impact on job satisfaction as a salary hike. The research revealed that praising staff had the same motivational kick as a 1% pay rise.”

While I agree fully with this statement, I am not surprised at another finding of the same study: “One in three employees reported that they were not thanked at all when they did well, while a further third said they were not thanked enough.”

Fully two-thirds of employees report not receiving adequate acknowledgment of their valuable contributions at their companies. And yet a simple thank you would increase their job satisfaction and encourage them to perform at a higher level. It amazes me that very smart strategist-leading companies today are failing to see how closely tied these are – and how it is impacting their bottom line today.

This is why a strategic recognition program is so critical. A key tenet of strategic programs is the importance of measurement. For any strategic initiative to succeed, clear objectives must be set with the appropriate metrics to measure success. And those responsible must be held accountable.

As the oft-quoted truism goes: “What gets measured, gets done. What gets rewarded, gets done well.” Are you measuring the simple act of thanking your people for their contributions? Are you rewarding that which gets done well?

“Managing Talent” or “Encouraging People”?

Joanna Higgins discussed the divisive nature of talent management in a recent Bnet blog. Joanna poses a very important question on what, exactly, is the definition of talent management and identifies several large holes in talent management theory.

"Is talent management about identifying and nurturing high-flyers, or helping all of your people to develop their particular skills? Done badly, there’s potential for a massive rift to emerge between the ‘talented’ — the ‘hi-pos’ (high potentials) — and the ordinary, tellingly defined recently as ‘the po-pos –passed over and p***ed off’. It’s very dangerous to single out the stars in an organisation to the exclusion of all others. There are far more ‘utility players’ on most teams than standouts, for one thing."

This is why we at Globoforce advocate getting rid of the old-school elitist incentives programs that only recognize the top 10% of employees to allow up to 90% of employees to receive recognition for their efforts to advance the company mission. This aligns, too, with Jack Welch and GE's performance bell curve approach. Welch famously said it's the middle 80% that do the majority of the work -- and therefore where the majority of the recognition belongs.

For those in talent management, what type of programs do you have in place to manage your “talent?” How do you define that? Do you see “talent” in all of your employees – skills, behaviors, and actions that can be nurtured to the benefit of themselves, their teams, the company, and your customers?

Turn Around “Crummy Jobs”

Lindsay Blakely wrote a strong article on the “Five Signs You Have a Crummy Job.” Blakely ties her five signs to “recession putting your organization in a chokehold,” but really, we’ve all seen these situations happen in perfectly good companies for a variety of reasons. Three of the signs Blakely identifies can be dramatically impacted by strategic recognition programs used effectively.

Blakely’s Sign 1: “Budget Ax Severs Emotional Ties” and Sign 3: “A Climate of Fear Sets In” are very closely intertwined. It’s true that when costs – and, more importantly, people – are cut due to recession, an acquisition or other reason, the people remaining lose trust in their leaders and in the organization itself. What once may have been a collegial environment becomes suddenly politically charged as everyone looks out for themselves first. By making a smart move to reinvest in a strategic recognition program, company leadership sends a strong message that all employees are valued. Such a move will also help the company once market conditions improve as remaining employees may remain more loyal to the company and less likely to jump ship – a common occurrence when trust is lost in tough times.

Sign 5: “Innovation Comes to a Standstill” is particularly troubling. If the good ideas stop flowing, how will the company outperform competitors and succeed in the market? Companies thinking strategically will certainly reinvest in programs that encourage innovation to take advantage of the downturn to potentially seize market share. Strategic recognition is once again a strong motivator, especially if the program is structured to properly measure and track recognitions by divisions or regions as well as by employee and group. This gives senior management insight into where the good ideas are coming from so more of now scarce resources can be directed in that area.

Leaders, are you taking advantage of this down market to drive your business and advance your employees? Share your tactics for success.