The Role of Tangible vs. Intangible Rewards in Strategic Recognition

The value and role of tangible vs. intangible rewards is an ongoing argument. I’ve caused some of the disagreement myself with my post on Why Incentives Fail (but recognition works). Kevin Sensenig of Dale Carnegie & Associates recently summarized this issue well in the article “Human Potential Untangled”:

“The traditional forms of motivation are compensation and benefits. The problem with these tangible rewards is that they are short-term motivators. The more people get, the more they develop an entitlement mindset. Adding more and more tangible rewards does not necessarily increase motivation or engagement. However, taking away tangible benefits or entitlements really de-motivates or disengages people.

“On the other hand, intangible rewards, such as a “thank you,” “good job,” or effective coaching let people know their managers care about them and value their contributions. The more intangible forms of motivation the better—they raise engagement levels by helping people feel connected.

“The additional advantage of using intangible rewards is that while offering them greatly increases levels of engagement and motivation, withholding them tends not to have a significant long-term de-motivating impact. Additionally, intangible forms of motivation are not costly to provide. So for a small investment of time in showing appreciation, the resulting improvement in engagement and connectivity can be huge. The key is in giving credible, sincere, and respectful appreciation.” (emphasis mine)

Are you still fighting the tangible vs. intangible battle in your organization? Both have their roles, but don’t confuse one with the other. Join the conversation in comments.

The Highs and Lows of Employee Engagement

The BRIC block – Brazil, Russia, India, and China – have been all over the media for a few years now for the strength and rapid growth of their economies and the perceived threat that holds for “old” economic strongholds in the U.S. and Europe. Now Brazil and India add another strength – their ability to engage and motivate their teams.

Kenexa recently announced these two nations to have highest levels of employee engagement anywhere in the world with India leading the charge at 73% of engagement and Brazil close behind with 65%.

On the other end of the spectrum is Germany, which has consistently low levels of engagement. Not only did Germany score poorly in engagement for 2008 (13% engaged, 67% not engaged, 20% actively disengaged), but also showing similar scores since 2001. What does this mean in real euros?

“Gallup estimates that actively disengaged employees cost the German economy between 81.2 billion and 109 billion euros per year in lost productivity alone. This does not include additional costs to the economy due to absenteeism, lack of innovation and customer orientation, high turnover, and negative word-of-mouth. … Germany is positioned well for future growth -- but its high percentage of actively disengaged workers is putting its current and future economic stability at risk.”

In both the high and low engagement countries, a critical area reported by employees is need for motivation and recognition of contributions. Do you need to increase productivity and customer focus while reducing absenteeism and employee turnover? Research points to simple appreciation as the answer. Be sure to take our weekly poll.

Why Employee Engagement Initiatives Are on the Rise

While interest in employee engagement has grown steadily during the last few years, adoption of employee engagement principles and practices seems to have skyrocketed as the recession drags on. This makes sense as true employee engagement can help overcome the negative impacts of the recession as seen in lower employee morale, productivity, and focus.

Gallup recently issued a report on how to keep teams engaged if the recession endures.

“To quell short-term anxiety, managers should emphasize recognition, promote well-being, and keep their teams as stable and secure as possible. But for the long run, managers must reduce anxiety, focus attention, increase productivity, and keep workgroups functioning. It's far easier to achieve those goals when employees are engaged.”

Drawn from the results of a survey billed as the largest employee survey of blue chip companies, ETS consultancy offers these tips to help engage employees:

* Address 'redundancy' morale. One third (34%) of employees say their employer isn't motivating them to do their best work, which is not surprising given the prospect of redundancy.

* Be clear about what will make the company thrive. Currently, a quarter of employees don't know their company's objectives,

* Recruit front-line managers to rally morale. This is essential if the whole workforce is to unite around a common purpose.

During a down economy when companies need employees to give more discretionary effort to achieve critical objectives, strategic employee recognition specifically acknowledges actions and behaviors that align with company values and help to achieve those objectives, encouraging employees to repeat precisely those behaviors needed for the organization to succeed.

What’s the attitude in your organization towards employee engagement? Are you seeing new initiatives to rally your teams? Tell me in comments.

Avoiding Layoffs * The Benefits

In a time of ongoing layoffs and insulting and insensitive reality-TV proposals for programs where employees get to decide which colleagues are made redundant, it was heartening for me to see in two prominent American publications that many companies see the hidden expenses in layoffs.

MSNBC.com reported:

“Many companies concluded that layoffs could be costlier down the road. Employers who have laid people off have to find, hire and train new ones when the economy recovers. Workers with specialized skills or strong customer contacts aren’t easily replaced. … There are also other costs that are harder to put a price tag on, including the loss of talent and leadership. Layoffs can drag down the morale of those who managed to survive the job cuts but fear they could be next.”

Fortune magazine summarized the costs of layoffs in this way:

• Brand Equity costs: How badly will the layoff damage your company’s brand as an employer – and its ability to attract the best talent?
• Leadership costs: Layoffs greatly increase the chance that you’re firing a future company leader
• Morale costs: Even the survivors pay a price. Workers who remain file dramatically more medical claims.
• Wall Street costs: Layoffs for cost cutting sends Wall street a signal of a sign of trouble.
• Rehiring costs: When the economy goes up, you’ll face the costs and delays of training new employees

The latest news reports have a more hopeful tone for market recovery, but jobs reports are a lagging indicator. Instead of continuing down a path of redundancies, uncover cost savings, boost morale and productivity and gain competitive advantage by implementing strategic recognition.

What are your strategies for avoiding layoffs to retain your competitive advantage in the marketplace? Tell me in comments.

Do What Your Employees Want * Say Thank You

Continuing on the theme of my last post, in multiple studies employees consistently say what they want in the workplace is recognition for a job well done. Just as consistently, managers and company leaders aren’t getting the message.

In a survey of employees from across industries and organizations, Dr. Gerald Graham, Professor of Management at Wichita State University, found:

• 58% seldom if ever received praise from their manager
• 76% seldom if ever received written thanks from their manager
• 78% seldom if ever got a promotion based on performance
• 81% seldom if ever received public praise
• 92% seldom if ever participated in a meeting designed to build morale

This same study invited participants to rank, in order, 65 potential motivators - the top five are those listed above!

Why the disconnect? The answer usually lies in the culture of the organization. In the companies we work with, we strongly emphasize the roll of culture and change management in successful employee recognition program efforts. Managers who never recognized their team members before won’t suddenly become the most appreciative of leaders just because a new program for recognition has been implemented.

So how can you manage change within your organization?

• Secure executive buy-in for recognition, both to promote the program and, critically, to demonstrate recognition with their direct reports and on down the chain.

• Hold managers accountable by making recognition targets part of their MBOs or KPIs

• Report on the results of recognition within the manager’s area to show the value. These reports can show increases in productivity, teamwork, performance against strategic objectives or similar. Once the value of recognition is understood, reluctant managers are more quick to jump on the bandwagon.

By enforcing change management principles for recognition up front, you can begin to change the very culture of your organization into one of appreciation through frequent, timely, memorable and personal recognition of effort.

The Appreciation Disconnect * What Employees Want

What would boost your engagement at work? The answer is surprisingly different if you’re sitting in the employee’s seat or the manager’s.

In a study developed by OfficeTeam and the International Association of Administrative Professionals (IAAP), the disconnect couldn’t be more pronounced. Administrative professionals cited an “in-person thank you” as their most desired and valued form of recognition, tied with “boss shares achievement with senior management.”

Where’d the managers rank these options? You got it – dead last after promotion, cash and paid time off.

As I’ve said all along, a simple thank you, sincerely and meaningfully given, carries much more weight with staff than cash-based awards.

Managers must not fool themselves however. In another recent study, 56% of managers said they appreciate their employees, but only 23% of staff agreed.

Is there an appreciation disconnect in your workplace? Be sure to take our weekly survey.

Towers Perrin on Rewards Governance

Do you have a handle on your investment in recognition across all your locations? Are you confident all expenditures on employee recognition are being properly accounted for and taxed – especially in your international locations? Do those recognition efforts align with company goals, or even the goals you have set for the recognition initiative?

If not, you’re not alone. Towers Perrin’s latest report, Effective Global Governance and Oversight of Total Remuneration Programs: an Elusive Business Imperative, found:

* Only 44% (of multinational organizations surveyed) report their global remuneration policies are closely integrated with company business goals
* Lines of authority for global governance and oversight remain fragmented in many organizations
* Fewer than half use benchmarks or metrics to monitor performance of their investments around the world.

But the most important finding in the paper was:

“Only 14% view their measures as very useful in determining whether total remuneration investments actually support the execution of key business goals. These findings suggest that many companies have yet to build truly robust global governance frameworks that both inform key reward investments and enable leaders at all levels to measure the return on their investments in talent on an ongoing basis.”

Whether you define these remuneration efforts under the broad umbrella of pay-for-performance or more narrowly in an employee rewards and recognition initiative, the fact remains if you don’t know where the investment is going or measure the impact, then you’re just throwing money away. Our own survey revealed similar findings – a tremendous waste of resources as recognition programs fail to meet CEO needs and do not contribute to company strategy.

What do you need to gain the governance you need over your employee investments? The tools to measure and track? Buy in from line mangers? Buy in from executives? Tell me in comments.

From the Trenches * HR Leaders Discuss Strategic Recognition

I’m very excited to be hosting a roundtable discussion at the upcoming Total Rewards 2009 Conference (31 May to 3 June) in Seattle, Washington. This year’s conference is “Dealing with Today’s Challenges/Preparing for Tomorrow’s Opportunities.”

If any blog readers are attending the conference, be sure to say hello. I'd be pleased to meet you. The easiest way to find me will be at the roundtable I’m hosting on Tuesday (workshop code: C26T4), called “21st Century Employee Recognition Knows No Boundaries.”

For those unable to join us in Seattle, this is your chance to participate virtually. If you were in the roundtable session (more details below), what would you ask the panelists? Send your questions via email, in comments, or via the Ask Derek section at the bottom of this blog page. We may answer them in the session. Any questions I receive, I will pose to the panel and will answer in a blog post after the event.

For those attending, the roundtable will be held Tuesday, 2 June, from 3:30 – 4:45. Joining me will be experts from telecommunications, software, media, and pharmaceutical services, specifically:

* Jennifer R Lepird, CBP, Sr Compensation Business Partner, Intuit
* Scott Himelstein, CCP, Director Compensation, Discovery Communications Inc
* Rob Schmitter, Global R&R Program Leader, Nortel
* Jennifer M Reimert, CCP, Sr Director Global HR Compensation, Symantec Corp
* Lisa Marie Taylor, Sr. Director of Global Compensation, Quintiles

We will be discussing how strategic employee recognition programs help reinforce a culture of appreciation that knows no boundaries. The results are increased levels of employee engagement and customer loyalty, high productivity, higher sales and profits, and increased operating income and earnings per share. We will offer insight into how to budget for a global recognition program, using metrics to determine the program's effectiveness in specific geographic areas, achieving global culture change through recognition, and communicating the rollout to a dispersed workforce.

What would you ask this panel? Let me know!

Governing Recognition * How to Remove the Risk

Many of our clients gave up their tactical incentives initiatives and turned to global strategic recognition when they realized the level of risk associated with ad-hoc, untracked and ungovernable motivation efforts they had in place.

As Jennifer Reimert, Symantec’s Senior Director of Global Compensation, answered to a viewer question on risk in a recent webinar:

“We didn’t always know where programs were happening. We had a lot of people handing out actual merchandise. For example, they would go out and buy an iPod and present it to an employee. We needed to get the entire company to be aware of those risks and get a better control over that.”

The Edmonton Journal recently reported:

“City staff expense claims jumped 41 per cent in 2006-08, and auditor David Wiun says many of those purchases were inappropriate, cost too much or didn't have proper receipts. Spending in 10 common areas, such as travel, training, food, employee recognition and car allowances, rose to an estimated $13.5 million last year from $9.7 million in 2006.”

For precisely this reason, employee recognition does not belong in expense reports. It is eminently not trackable, not reportable in any meaningful way, and therefore not measurable across the entire organization.

Strategic recognition pulls all those ad-hoc initiatives into one single, tracked and governed program that complies with international tax and payroll compensation laws – without adding additional administrative burden to your staff.

How do your recognition initiatives stack up? Be sure to take our weekly poll.

Measuring Recognition: Building the Business Case

Do you need concrete, real world suggestions for how to structure, deliver and report on a measurement program for your employee recognition initiative?

Available today is our latest white paper: Measuring Recognition: How to Build the Business Case for Strategic Recognition in a Recession.

In the paper, I discuss why measurement is important, how to structure a measurement program for recognition, and how to report results meaningfully to employees, managers and executives. I take you through the five main steps to building a successful recognition measurement program that reports ROI and other critical-to-success results.

1) Determine Metrics of Success
2) Establish a Performance Baseline for Recognition
3) Measure Regularly and Consistently
4) Analyze Results and Look for Trends
5) Report to Target Audiences in a Way that Matters

But you cannot forget the people in the process. Remember you are measuring a program meant to encourage employees, build morale and increase productivity against your strategic objectives. Your people must be involved in the process of creating that recognition program in the first place. As Jason said on the Engauge blog:

“You don’t get to decide what engages employees, what they think works best, what they don’t like. They do. To find out, you need to talk to them. Get them involved in the process and find out what works and what doesn’t. What they like may not be what you would choose, but if there’s no good business reason not to, go with their choice. It will be worth it.”

Are you measuring for success in your employee recognition program? Tell me in comments how you are doing so.

Why Measurement Matters in Employee Recognition

Especially in these turbulent economic times, I am asked frequently to help companies build the business case for strategic employee recognition. Foundational to such an effort is setting up measurement guidelines for the program so you can clearly understand where you are now, where you want to go, and how to measure success against those goals.

But first it’s critical to understand why measurement is important in employee recognition.

Some assume with something as nice and positive as a program encouraging “thank yous,” measurement is not important. However, as with any investment in employees that ultimately drives productivity and performance against strategic objectives, you must measure as a means to encourage the level of program adoption necessary to achieve the culture change you need.

John Pescatore of Gartner recently made this point well:

“AWARENESS - 30 mile per hour speed limit signs every 1/4 mile on a stretch of road that goes past the elementary school where my wife works. Result: everyone knows the speed limit and drives 40-50 mph.

“ENFORCEMENT - Traffic cameras that automatically issue $40 tickets if you exceed 39 mph were installed. Result: everyone obeys the speed limit and drives 25 - 35 mph. So, about 40 years of awareness and education training plus periodic enforcement failed to change driving behavior. Installing a technical control with continual monitoring and enforcement changed the behavior in a day.”

Are you trying to change the culture of your organization to one of appreciation and high performance? How successful have you been at changing the behaviors that lead to culture change? Strategic recognition – with its inherent mechanisms for measurement – lend to behavior and culture change by measuring and reporting on actions and results. This helps hold people accountable to the standards you need to drive program success.

Tomorrow I will discuss in more detail additional, concrete steps for measuring recognition.

What’s Your Engagement Level at Work?

How’s your level of engagement at work? Is the economy getting you down? Are you just trying to hang on? Or are you actually more focused on your work and enjoying it? If the latter, you’re not alone. Several studies are reporting increased levels of engagement.

The Sunday Times reported the employees at the companies that appear on the Best Companies to Work For list:

“Employee engagement remained steady at 71%. Workers are still as committed and motivated as they were and some even more so. Although people are worried about job security they are not blaming their company for it. There will be winners and losers and, five years from now, the top 100 lists will be dominated by companies that have not just maintained but improved their employee engagement in difficult times.”

This tells me these companies have mastered the art of communicating necessary messages to employees while also inspiring and motivating employees.

Modern Survey is reporting the same results – employee engagement remaining relatively high because employees now feel fortunate to have their jobs instead of feeling entitled to their jobs.

“At least for the time being, these results suggest that the majority of employees are motivated to do their part to help the organizations they work for survive the current economic crisis. Those organizations that neglect their employees by failing to provide recognition or developmental opportunities risk losing people as the economy improves and other opportunities present themselves.”

It's this final point that is most critical to understand. Even if you are showing increased or stable employee engagement levels during this recession, you must not become complacent in your employee appreciation tactics. Your people are your greatest competitive advantage. To position yourself strongly for success today and in the upturn, ensure your employees clearly understand how much you value their efforts and appreciate their contributions.

What’s the average engagement level in your organization? Be sure to take our weekly poll.

Culture & Employee Value * Join the Conversation

The announcement of our upcoming 14 May webinar, “Ask the Experts: Using Recognition, Compensation and Human Capital Management as a Catalyst for Positive Change in a Recession” (register here, more info here), sparked a lively discussion on LinkedIn on valuing employees in good times and bad, including this comment from Lisa Pehler, a Human Resources Business Partner:

“Management looks for quick fixes and then drops them like an old hat when the need has been fulfilled. Due to the current economic situation and the need for creativity to keep what workforce we have engaged, we just happen to have the ears of senior management. As HR business partners, we need to take advantage of this opportunity for the sake of employees and for the sake of building our economy. The true test (and goal) of HR practitioners is to keep this topic on the forefront into the future so these types of employee engagement activities don't become a quick fix, but remain BAU practices that continue to engage the workforce & grow the business.”

Similarly, a conversation I started on “How Are You Influencing Your Company Culture" drove interesting comments such as a this one from Hector Francisco Torres, a senior HR executive at Proquinal, S.A.

“Communication is not enough. Cultural changes are a matter of credibility and managerial buy-in. If you are able to convince senior executives to 'walk the talk', it's highly likely that you succeed in your cultural change iniciatives.”

I’m really enjoying the interaction with colleagues available in social networks such as LinkedIn. I encourage you to join in.

Cleaning Up Toxic Employees with Gratitude

Several consultancies have recently reported on the concern executives around the world have for retaining their top talent.

Deloitte reported:

“Nearly half of senior global company executives are worried about losing top talent during the recession while 30% saying they are looking to bring in more leaders. 44% of business leaders cited a decline in employee morale, rising to 60% in financial service.”

The Financial Times reported European boss’ concerns about repeating the same mistakes of past recessions by cutting too many skilled jobs, leaving them exposed when the market turned. John Griffith-Jones, head of KPMG in the UK and joint-chairman in Europe, said, ”What we did suffer from is, when the upturn came, we were desperately short of people in some areas.”

At the same time, however, leaders are faced with an increase in both the number of toxic employees and in their impact on an organization. Harvard Business Review reported:

“Among those on the receiving end of incivility in the workplace:
• 48% decreased their work effort,
• 66% said their performance declined,
• 80% lost work time worrying about the incident, and
• 78% said their commitment to the organization declined.”

No company can tolerate those kind of engagement and productivity losses at this time. So how do you clean up those toxic workers? Lead with gratitude.

“Complaining is a dead-end road; it feeds depression and hopelessness. The next time you complain, ask yourself, ‘Is this conversation adding any value?’ The fastest way out of being a complainer is gratitude that stems from acknowledging the roles that others have played in your life and career.”

What are you doing to make your corner of the workplace better – to make it a place where your top talent wants to stay? Tell me in comments.

Defining Employee Engagement * What’s Your Line of Sight?

I’ve seen countless definitions of employee engagement during the recent years, generally centered on engaged employees willingly giving additional discretionary effort. I recently read another definition I like very much from two sources:

From AsiaOne:

“Employee engagement is a combination of both commitment (that is, willing to contribute to the organisation's success) and line of sight (that is, know what to do to make the organisation successful).”

From MotivationConnect:

“Creating a line of sight across the business for all stakeholders is stopped if managers can't interpret and translate the strategy at the team and individual level. Managers then become a "cork" in the execution of strategy. To engage people in the game plan, managers need to interpret and translate new strategic actions.”

In both of the above, line of sight is used to mean an individual’s understanding of their role in the organization. We all need to know that we matter. In the workplace, we need to know that what we do contributes to the company achieving its objectives -- succeeding.

Strategic recognition is a powerful tool to create line of sight in the most positive way possible – with simple recognition of effort and a sincere thank you linked to precisely what it is you need your employees to accomplish.

What’s your line of site in your organization? What are you doing to create that line of site for your employees? Tell me in comments.

Recognition Gone Wrong * Thanks, but No Thanks

And finally, our Grand Prize Winner in the Recognition Gone Wrong contest:

“Here’s a great example about recognition gone wrong. I was working for a large, international company and hit my five-year anniversary. On the day of my anniversary, my boss just hands me this envelope. I open it up and the first thing I find is the instruction letter addressed to HIM that provided instructions on how he should have presented this “gift” to me...whoops! Okay, so he missed the boat on the thank yous. The next thing I find in the envelope is a gift catalogue. I thought, “Well, at least I can pick out a nice gift.” That notion quickly changed when I looked through the catalogue. It was filled with page after page of stuff that no one would want -- all emblazoned with the company’s logo --– ugly watches, desk tchotchkes, cheap travel bags, even jewelry that had the company’s logo on it. I was so hard pressed to find something that I showed it to my wife to see if she wanted anything. She looked through it and gave it right back to me. There was literally nothing in there for either one of us. The whole experience was a let down. This milestone moment became an empty moment. I think I would have been happier if the company just didn’t acknowledge it at all.”

I’ve heard similar stories from countless people over the years about the insult of trinkets and trash. In their recent webinar, Intuit told how employees were upset on behalf of the company as they thought Intuit was getting a bad deal on over-priced, outdated merchandise. Others have agreed corporate logo-wear was not a gift of choice and destined for the local charity shop.

But to me, that’s not the real insult in this story of wrecked recognition. It’s that the boss couldn’t even be bothered to take five minutes to personally and sincerely thank the employee for his five years of effort and contribution.

How to make this right?
* First, the manager should have made a point of acknowledging the five year anniversary directly to the employee and possibly in a team meeting or similar public arena. In today’s workplace, many employees don’t last five years. If you want to keep your top performers (who will have many more options when the recovery comes), you had better show appreciation for their time investment with your organization.
* Second, give the gift of choice. Let the person choose what matters to them. Perhaps this employee works long hours to get projects done on deadline, causing him to miss plans with friends for weeks on end. Let him choose to treat them to a fancy dinner. Or maybe his kids mean the world to him – let him choose to buy them a backyard playset and watch them play while works from the home office.

It really is as easy as that. Make it personal; make it meaningful; make it relevant.