Primer: Battling the High Cost of Employee Disengagement

I’m proud to say the June issue of Incentive magazine included an article I authored on overcoming employee disengagement with strategic recognition.

I discuss in the article how recognition has evolved during the last decade from tactical incentives programs that are poorly tracked and measured to modern strategic initiatives with defined objectives and clear metrics for success for solid ROI.

I also offer tips on how to launch a strategic recognition program and then how to evaluate the program’s effectiveness over time. I encourage you to read the article. Please give me your feedback as well.

High “Touch” Beats High Tech in Performance Management

Benefits & Compensation Solutions Magazine recently published stats and data on performance management, finding the tools and programs are typically not meeting their goals.

The article cites Towers Perrin: “This focus on high tech over what we call high touch could explain why just 43% of the respondents said their performance management program was only somewhat or not at all effective.” Indeed, technology can be an effective enabler of performance management – as it is with recognition – but any time a manager abdicates the importance of human interpersonal contact to technology, then the relationship with the employee will suffer.

Another study cited in the article found fault with pay for performance programs that were not applied equitably at all levels or simply did not communicate the factors impacting their pay package. We have also found this to be true with recognition. Most employees only see cash compensation (salary), benefits and perhaps equity reflected in their pay statements. The important investment companies make in employee recognition is left out. A key feature of an effective strategic recognition program is giving HR a way to easily communicate total rewards to all employees, individually – usually as line items in a pay statement but perhaps more visually as a pie chart with recognition as one of the wedges.

The article concludes, “To get more from their performance management programs, employers need to implement more human interaction so that employees understand how their contributions affect the company’s overall performance.” A strategic recognition program can also enhance these efforts by ensuring all recognized behaviors or actions are linked to the company values or goals to ensure reward recipients understand not only understand their efforts are appreciated, but also how those efforts directly impact the success of the company.

Using Strategic Recognition to Reengage Employees during Stressful Times

As employees worry more about keeping their jobs, their ability to focus on the job at hand tends to slip. These five critical steps can help you reengage your employees in their daily activities and boost company performance during distressing economic times.

1) See your employees as people and assets, not costs.
Your employees are people first -- and also assets and stakeholders in the success of the company. By engaging them fully in their work, leadership can help them be more fulfilled in their daily efforts, which drives additional value to the company. Clearly define employee-specific roles and expectations that are tied to overall department, division or company goals and you will see additional bottom-line results from their efforts.

2) Let your employees know they and their work make a difference.
Communicate the value employees bring through a strategic recognition program explicitly linking company values and goals to the employee behaviors and actions being recognized. Frequent and appropriate recognition helps employees see how their effort is delivering on company goals and mirroring company values.

3) Counter employee confusion and discontent over actions such as layoffs or reorganizations with constant communication.
Keep all employees engaged in daily efforts by communicating the reality of the situation, but with a tone of hope. Communicating the objectives and vision of a company during a downturn can provide a sense of security. Make your commitment to your employees clear by keeping a strategic recognition program in place and running smoothly, rewarding them for actions aligned with the objectives and vision.

4) Boost performance through recognition when merit increases become cost prohibitive.
Consistent, appropriate and frequent recognition encourages employees to perform at a higher level. After reducing annual increases to the minimum, companies can reinforce the psychological contract with employees with a well considered recognition program. Such a program feeds an employee’s need for Psychic Income™, which is the additional value they derive from increased social acceptance, self-esteem and self realization.

5) Optimize strategy execution through reinforcement of effective implementation steps.
A tough economy removes the cushion companies have become accustomed to in times of growth. There is no longer any margin for error or delay in executing on a company’s strategic objectives. A recognition program based on the company’s strategy helps employees clearly understand the goals and encourages and rewards them for effective implementation.

What steps are you taking to counteract the fears your employees may be experiencing in today’s slowing market?

Power of Recognition to Overcome Recession Fears

As the news about the state of the economy continues in a negative tone, employees around the world are becoming more concerned about job security as employers look to cut expenses while maintaining performance. But these fears and cuts begin a cycle of fear and discontent that will be challenging to overcome once the economy begins to improve. In the recent article “Psychological Recession,” author Judith M. Bardwick defines the term as “an emotional state in which people feel extremely vulnerable and afraid for their futures.” She goes on to explain the effect, “Chronically fearful people are too exhausted to be creative and innovative. They expect the worst to happen, so they see no reason to give their all.”

An ailing economy exacerbates these feelings, resulting in a greater percentage of disengaged employees than during times of plenty. Towers Perrin reported in their 2007-2008 global workforce study that almost four out of five workers are not performing at their optimal level, with two out of five “checked out.” The impact on company performance is substantial. Companies with high employee engagement show a 19.2% increase in operating income while low-engagement companies show of drop of 32.7%. With a potential 50% differential on operating income on the line, engaging employees becomes critical for company success – especially when a company is struggling for margins during an economic downturn.

Today’s savvy employee knows no job is guaranteed, especially when the economy turns sour. However, many companies are reporting that simply making reductions in force is not a viable option. After cutting resources deeply during the last downturn, human resources leaders are now positioning themselves more strategically to ensure the company has the right people in the right jobs when the market turns.

This strategy will help the company rebound more quickly than those that did a less considered layoff. Employees have long memories. Those who make it through layoffs are often the most talented high performers companies want to keep. However, once the market recovers, those employees will remember how the company treated them and their less fortunate colleagues and may be the first to consider leaving for a more appreciative work culture.