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.