Are You Rewarding Bad Behavior?

Paul Hebert recently wrote an excellent post on the Incentive Intelligence Blog about a very poorly designed incentive program. That got me thinking about the many poorly designed recognition initiatives I’ve seen over the years as well.

Scott Adams summarized my thinking well in this Dilbert strip from 2006.

Just to give one example of poor program structure, call centers will often set up reward structures based on call time or number of calls handled within a set amount of time. Yet such practices merely encourage representatives to get callers off the phone as quickly as possible, and not necessarily give the customer the level of service or help they truly require. So the representative is rewarded on essentially poor customer service and potentially a destroyed customer relationship.

Steve Kerr, the Chief Learning Officer at Goldman Sachs and former CLO at General Electric under Jack Welch, highlight similar poor program design in his excellent book Reward Systems: Does Yours Measure Up and in his oft-reference article “The Folly of Rewarding A while Hoping for B.”

Take a moment and think about your reward or incentive programs. Are you rewarding poor actions and outcomes and patting yourself on the back for high employee satisfaction scores? Or are you digging deeper to uncover true employee engagement and recognizing behaviors that reflect your company values while contributing your strategic objectives?

Recognizing What Millennials Value in the Workplace

Millennials (also known as Gen Y) are a frequent topic as organizations are learning how to manage them most effectively given largely different values and approach to work. But what are these differences? Consolidating what I’ve read and experienced in numerous places, there are three key take-aways for managing Millennials effectively:

1) Forget work/life balance – Millennials are not concerned about balancing their work life and their personal life as they often do not clearly differentiate between the two. Work and personal time are so blended for them that relationships at work and the ability to work anytime, anywhere are important aspects of their day. This leads directly into the next main point to understand about Millennials.

2) Show the meaning in the work – Millennials especially are seeking purpose in their work. A powerfully positive way to accomplish this is to incorporate your company values into a strategic recognition program in which employees are told clearly and specifically how a behavior or action reflected a company value and contributed to achieving a greater end such as a strategic priority. This gives Millennials a sense of purpose and accomplishment within the bigger picture while also emphasizing the importance of living the company values in your daily work.

3) Coach as well as manage – Millennials are use to constant feedback and encouragement. Such an approach has been proven to be more effective for employees of all generations, but it seems to have taken the mass influx of the Millennials for companies to begin to adopt practices that give this feedback everyone needs to know what to do more of and also perhaps what do de-emphasize or improve.

Are you a Millennial? What else would you add? What motivates you at work? What do you need your colleagues and superiors to recognize in your efforts? Do you manage Millennials? What other advice would you offer?

The Puppy Approach to Performance Reviews

It’s that time of year as HR professionals are gearing up for the annual performance review, a process I’ve written about before. I’ve read numerous perspectives on performance management in the last few weeks – for and against 360° reviews and how to do them right, what process to follow, how to get to real feedback, do you criticize or not – it’s endless.

Cutting through all that clutter in recent weeks, however, are two leaders I respect, Ann Bares of the Compensation Force and Compensation Café blog and Yahoo CEO Carol Bartz.

In a recent post on the importance of getting performance feedback right, Ann had this to say about a recent study:

“Only 11% of the organizations surveyed subscribe to the practice of providing ongoing performance feedback. 68% of them report that performance management in their organizations equates to a function that occurs only once or twice a year. … But evidence suggests that employees want -- even crave -- more feedback from their bosses, even if it is negative. … 67% say that they get too little positive feedback and 51% say that they get too little constructive criticism from their bosses.”

Carol Bartz, when asked in a New York Times interview about she gives feedback, responded:
“I have the puppy theory. When the puppy pees on the carpet, you say something right then because you don’t say six months later, ‘Remember that day, January 12th, when you peed on the carpet?’ That doesn’t make any sense. ‘This is what’s on my mind. This is quick feedback.’ And then I’m on to the next thing. If I had my way I wouldn’t do annual reviews, if I felt that everybody would be more honest about positive and negative feedback along the way. I think the annual review process is so antiquated. I almost would rather ask each employee to tell us if they’ve had a meaningful conversation with their manager this quarter. Yes or no. And if they say no, they ought to have one. I don’t even need to know what it is. But if you viewed it as meaningful, then that’s all that counts.”

Both highlight powerfully employee desire for more frequent and more timely feedback on how they are doing. Employees crave success in the workplace, but so often we fail them by not telling them when they are successful, what they did to achieve that success or how much that effort is appreciated. Equally important, we also often fail to tell them when they have not achieved success and what they could or should do differently in the future. As with Carol’s “puppy theory”, such feedback – positive and negative – is far more effective in the moment. What’s the most effective feedback you’ve ever received or given? How did it occur? In a formal review process or in the moment? What’s your preferred method of receiving this feedback?

Cultural Wisdom and Recognition

A key point when planning or structuring an employee recognition program is keeping in mind what employees want – both through their work and in their rewards for a job well done. For a bit of a fun post this Friday, I’m sharing this funny video that highlights the employee need for meaningful, interesting work.

(Email subscribers, click through for video.)

Of course, doing something that interests you automatically engages you in that work. People who find their work interesting are far more likely to want to spend discretionary effort on the tasks and ensure the work is done well – the very definition of engagement.

Similar principles apply when considering what rewards to offer employees. Seth Godin recently tackled this topic when discussing the importance of sophistication and cultural wisdom in building your company brand through interactions:
“We place a high value on sophistication, because we've been trained to seek it out as a cue for what lies ahead. We figure that if someone is too clueless to understand our norms, they probably don't understand how to make us a product or service that we'll like. This is even more interesting because different cultures have different norms, so there isn't one right answer. It's an ever changing, complex task. Cultural wisdom is important precisely because it's difficult.”

The same is true when planning reward offerings for employees across various countries and cultures. “Cultural wisdom is important precisely because it’s difficult.” Giving an employee in China a clock (signifying death) is beyond insulting to the recipient, whereas the giver was merely trying to be nice. Or sending a company logo fleece jacket to employees in Nairobi would just show lack of consideration for that employee’s situation or desires.

Rather, offering a broad range of choice for all employees to choose the item, adventure or experience that would be most meaningful to them – in their own backyard or anywhere in the world – far more powerfully conveys your desire to show true appreciation for well executed effort as well as your cultural wisdom.

The Negative Power of Recognition Done Wrong

On Monday I shared a Bnet video that gave excellent tips and insight for recognition done right. In a recent article, Bnet’s Kevin Gray highlighted HP’s failure with incentive pay, an equally excellent example of recognition done wrong.

In the early 1990s, HP added a bonus system, with was “highly experimental” for the HP culture of the time. The plan tied 10-20% of worker pay to team performance. The results?
“The experience of Hewlett’s San Diego production unit was typical. Management set a series of production goals for several teams, and based their workers’ pay on three levels of rewards. … Achieving Level 3 status meant each worker on the team would receive a bonus from $150 to $200 for that month. For the first six months, nearly every team hit the two highest levels. Good for employees, who were suddenly — if briefly — flush, but bad for the bottom line. Management found itself paying out more than it had expected, so it adjusted the target numbers upwards, essentially moving the goal posts during the game. A bad mood began to set in.

“High-performing teams refused to allow workers they saw as less experienced join them. Less movement between teams meant that less knowledge was shared or transferred among employees. Workers who bought cars and new homes had trouble paying loans when they could not achieve their numbers. The whole experiment grew increasingly messy, and workers became irritated. It became a sort of vicious cycle: Employees focused on doing what they need to do to gain rewards — and that just feeds their self-interest even more. In short, people chase the money — often, Beer says, “at the expense of doing other things that would help the organization.”

As I’ve said before, that’s a key problem of incentives -- you are pre-directing effort in a way that eliminates the need for creativity and can actually discourage innovation and the desire to give additional discretionary effort - often with unintended consequences. Incentives are all about the prize – the reward.

Recognition is all about the praise – the after-the-fact acknowledgment and appreciation of exceptional effort. Strategic recognition goes a step further to tie this appreciation to a company value or strategic objective, ensuring employees are demonstrating those values in line with your company mission and goals.

Globoforce & Quintiles Webinar: “Work Worth Doing—Global Strategic Recognition”

Join me at 11:30 (EST) on Thursday, October 22, as I host a webinar with Quintiles’ compensation experts Lisa Marie Taylor and Nosaira Gelabert as they discuss how they have used strategic recognition to encourage, recognize and reward outstanding Quintiles employees who deliver on the company’s core values. With 23,000 employees in 59 countries, Quintiles is using their "Work Worth Doing" strategic recognition to recognize individuals and teams across all geographies and locations in timely and effective way. Doing so fosters an environment of shared success and engagement.

Specifically, Lisa Marie and Nosaira will speak to:

• Securing executive level support
• Designing a program highlighting company values
• Improving new hire retention rates
• Improving overall employee engagement

Register here and join us at 4:30 GMT/11:30 EDT/8:30 PDT this Thursday, October 22, and gain the tools necessary to stress the importance of employee engagement with leadership in these challenging times!

Getting Recognition Right

Bnet’s Leila Bulling-Towne regularly offers instructive videos on a range of human resources, sales and marketing topics. A recent “House of Corrections” video on The Power of Recognition offered excellent insights into why recognition is important. Leila’s five main points were:

1) Recognize not only what the employee did that was deserving of recognition, but how it helped the company.
2) Recognition is good for the bottom line. Leila cited a Gallup statistic that companies with managers who give employees balanced, regular feedback are 10-20% more productive than companies that don’t.
3) Employees want recognition – positive words trigger a chemical reaction in brain, generating a “high”
4) Recognition reinforces what’s working and what you want more of, thereby reinforcing a continuation of effective behaviors and tasks
5) Payoff: engaged employees are 50% more likely to retain customers and 44% more likely to achieve above average profitability.

My only addition to this advice is to be sure to tie every recognition to a company value demonstrated or strategic objective contributed to. This makes your values and objectives come to life in the everyday actions of all employees while also telling them how their efforts are helping the company to achieve your objectives. Employees desperately want meaning – to know that what they do really matters. Give them that meaning wrapped in positive recognition and reinforcement of their actions.

A Global Look at 2010 Planning and Engagement

Continuing on the theme of preparing for the recovery, Mercer’s global look at Human Capital Planning 2010: Resetting the Talent and Awards Agenda covers much the same ground as Watson Wyatt/WorldatWork for alignment concerns and recommendations:
“A significantly changed employment deal. It’s been a tough year for employees. Trust in and connection to the organization have diminished. Attitudes toward success, rewards and work have shifted. Employers must find ways – within the current cost-constrained environment – to reconnect and reengage their workforces for the challenges ahead. … Employers today have a daunting task: focusing their limited resources toward reengaging key talent in ways that will drive performance and profits.”

But Mercer then goes on to look at a global compounding factor:
“In certain countries, pay equity practices, executive remuneration and unionization are among the areas undergoing significant change. Looking ahead, many economic and political observers foresee more direct government involvement in shaping the business decisions that affect a company’s workforce.”

This potential leaves many companies at risk in their recognition and rewards practices. Too many have no true concept of the myriad of recognition efforts that happen all over the company. Whether it’s a local manager trying to do the right thing by giving a hard-working employee a gift card to a local restaurant and then paying for it via the company expense form, or more formal but distributed recognition practices that vary by department, country or business yet, companies are at a tremendous governance disadvantage.

A key tenant of strategic recognition is a clear, global strategy to encourage consolidation of these many recognition initiatives into a single platform that can be tracked, measured and governed to ensure compliance with new and changing global requirements around compensation and rewards.

What level of insight do you have into your distributed recognition efforts today? How confident are you that you are in compliance with all local laws regarding recognition and rewards?

Building Alignment and Engagement into 2010 Planning

Watson Wyatt Worldwide and WorldatWork recently issued their 2009/2010 US Strategic Rewards Report: Looking toward Recovery – Realigning Rewards and Re-Engaging Employees. The report evaluates the impact of the workforce-based actions of the recession on companies’ ability to emerge in a competitive position and able to retain top-performers in the recovery. Three key findings were:

1) Organizational restructuring has been pervasive and deep
2) There has been significant negative impact on employee engagement (an alarming 25% for top-performing employees as compared to 9% across the board)
3) Employees believe the changes made by their companies are affecting work quality and delivery to customers

The extreme disconnect between management and line employees the report highlights in these last two points are particularly unsettling:
“Top-performing employees are 20% less likely to agree that they understand the link between their own goals and the company’s goals in 2008.”

“Forty-one percent of employees indicate that changes have had an adverse impact on quality and customer service, while only 17 percent of employers believe this is the case.”

Looking at those two findings together, I can only conclude that employees don’t know what they should be working on and how it contributes to company success (alignment problem again) and that quality and customer service is suffering as a result.

It is heartening to see that companies are finally beginning to understand the ineffectiveness of cash-based bonuses (anticipated to drop 24% from 2007 levels) while 23% of companies are increasing their use of recognition programs, defined by the report authors as “offering a cost-efficient opportunity to recognize the contributions of top-performing employees at a time when the average company has reduced core forms of compensation and benefits.” Why is this good news? Bonuses target a small cadre of elites and rules for achieving the bonus often seems to be a moving target. Recognition, on the other hand, is available to all as an after-the-fact show of acknowledgment and appreciation for a job well done.

How are you building alignment and engagement into your 2010 process? Share your approach in comments.

Realign, Reengage for Success in the Recovery

An interesting factoid from Challenger, Gray and Christmas that appeared on the back of a recent issue HR Executive: “54% of HR executives consider employee engagement the biggest challenge that companies face after job-cut announcements.”

Makes sense to me that HR professionals would be most concerned with layoff announcements, followed immediately by the impact those announcements will have on engagement. Now that 2010 planning has begun in earnest, leadership beyond the HR suite should have engagement top of mind as they prepare for economic recovery.

I’m a fan of John Hollon’s columns in Workforce Management. He spoke with wisdom on this topic recently:
“So what will it take for us to get out of this economic morass we’re in? Here’s a simple answer that is frighteningly obvious: Invest in your workforce and make it a point to help them to feel more hopeful and confident that things are going to get better next year. … What I’m talking about is a concerted effort by managers to boost the sagging spirits of workers and help pull them out of the funk they’re in.

“Yes, all those who have managed to avoid becoming another unemployment statistic should be happy that they’re still working. But that’s not exactly a rallying cry for improving engagement in 2010. … Businesses everywhere need to truly engage workers and help them get past the bad feelings that so many have about their organizations and their jobs.”

A focus of 2010 planning for many will be getting employees back in alignment with new strategic priorities, new organizational structures, and new personal goals – all designed to position the company for success when the economy turns. But alignment is only one piece of the puzzle. You also need your employees willingly working hard and giving discretionary effort to help achieve those strategic priorities – that’s engagement. And that’s where the bottom-line value lies. No company can afford to leave on the table the millions in profits possible through a more highly engaged workforce.

My posts this week will look more deeply at new research on these topics of 2010 planning for the recovery.

What Motivates? Survey Says: Meaning and Recognition

What motivates you at work? Bnet recently ran a poll asking just that. While some are still surprised, “cash” ranked third – behind “doing something meaningful” and “recognition.”

Not surprisingly, praise won out over cash in a similar survey done nearly a year ago, also on Bnet.

So why are people still surprised by this (as evidenced in the comments)? A common comment theme was that you can’t do something meaningful at work. You must look for meaning outside of the workplace and work is only a means to enable you to find that fulfillment elsewhere.

Nothing could be farther from the truth. In many ways GenY is leading the charge on changing this narrow attitude and more power to them. As I said in my comment to the first survey referenced, to many, “doing something meaningful” at work means knowing what your daily tasks are contributing to in the grand scheme of things – how they fit in the big picture and what value they bring to the table.

That’s the goal and primary benefit of strategic recognition, which ties every employee recognition to a company value demonstrated in achievement of a strategic objective. This process automatically shows meaning by telling employees clearly (and in the most positive way) how their valued efforts also deliver value.

Be sure to take our own weekly survey and see if readers of this blog align with those of Bnet.

Putting a Value on Engagement

Not as comprehensive or definitive as The Value and ROI in Employee Recognition research, The Economics of Engagement out of the Human Capital Institute and the Enterprise Engagement Alliance offers several interesting points on engagement, if not the practical steps for successful employee engagement so many are seeking.

Three points of interest in particular leapt out at me.

1) The observation that the Gallup Q12 survey asks about recognition received in the last seven days, indicating the importance of frequency of recognition. Up to 65% of Americans say they do not receive enough recognition on the job. A negative answer to this question will quickly tell you if your recognition program is being used to its full capability.

2) A statistic from Towers Perrin showing workers in organizations with higher business value were significantly more likely (68% versus 49% for underachieving organizations) to agree that their “immediate manager recognizes and appreciates good work. Line managers are a critical factor in creating an environment in which employees want to engage and therefore must be held accountable for recognition practices.

3) Charts that clearly illustrate the bottom-line value of improving employee engagement by eliminating the disengaged and increasing the number of fully engaged and engaged employees. The charts are available in the research.

What’s the attitude towards employee engagement in your organization?

ROI of Employee Recognition

Have you ever been asked, “Yes, I see why recognition may be helpful in boosting employee morale, but what’s the value of the program? Where’s the ROI?”

An interesting report on The Value and ROI in Employee Recognition, recently issued by The Forum for People Performance Management and Measurement, the Incentive Research Foundation, and the Human Capital Institute, offers interesting insight.

In a concise format, the report offers clear definitions for recognition, incentive, engagement, total rewards and other often misused terms. These definitions are derived from summaries of the research in this space in the last two decades from Watson Wyatt, WorldatWork, Towers Perrin, Gallup and others, offering a nice overview of the relevant research and findings in this space.

The report also positions the role of recognition in a total rewards program, how to measure the ROI of recognition and suggests the need for a VALUE on Investment (VOI) metric for recognition programs. VOI considers both the financial and the intangible benefits of recognition. Employee Lifetime Value would be one example of a VOI metric.

I was particularly pleased to see how completely the researcher’s “best principles” for implementing recognition align with our own best practices:

• Build a culture of recognition
• Provide a wide variety of recognition rewards to appeal to individual preferences
Recognize workers regularly – sporadic recognition may be worse than no recognition
• Link reward activities to business objectives and/or cultural values
Measure the cost of the recognition reward system and the benefits gained

Take a read through the research and let me know what you think.

Engagement Is…

In response to a post I wrote about engagement on the Employee Engagement Network, Jennifer Schulte, global engagement director for Mars, Inc., gave details about a communication campaign they have called “Engagement Is…” In Jennifer’s words from her comment to my post:
“This is an invitation for our associates to complete the statement with what engagement means to them, instead of pre-describing a definition for them. Of course it's about commitment, connection, line of sight, passion, emotional & rational connectivity. For us it's all about "how" we deliver results.

“The Engagement Is campaign has produced really interesting responses from around the world. Some of the best statements include:
• "when associates try to make a change every day" (Germany)
• "having the opportunity to succeed and develop in a positive, fulfilling work environment" (UK)
• "being fully involved within your team and taking responsibility for your actions" (US)
• "being part of something and doing your part to make it live and breathe with energy and a passion to achieve" (Australia)
• "give yourself generously, from the heart, to the common vision and you will engage others along the way" (Dominican Republic)
• and many more!”

All excellent definitions of engagement and an important reminder that while engagement may be hard to get a handle on (see my recent series of posts from August on the MacLeod report definition, Aberdeen’s definition and Blessing White’s definition, it’s not so confusing to employees who are engaged.

Here’s another excellent definition of engagement. I watch this video and I see talented people engaging their whole mind and body – all of their talents – in tasks they so clearly enjoy. And some are doing it in a perfectly choreographed dance with equally talented colleagues they trust. Would that it were so in every workplace.

What are your personal definitions of engagement? Forget the analysts and pundits for a moment and tell me how you feel/how you are behaving when you are engaged at work.