Recognition in an Ailing Economy

In their current newsletter, “Fresh Milk from Contented Cows,”, employee engagement guru Bill Catlette (half of Contented Cow Partners along with Richard Hadden) reports on his experience at the recent Recognition Professionals International conference in California. He calls out a couple of reasons recognition program providers such as Globoforce continue to experience success, even in a down economy.

“It seems likely that an ailing economy will cause many organizations to ‘lean down’ their spending in the traditional comp and benefits areas for awhile. We will be more reticent than usual to add to the fixed cost structure. With growing acceptance of the notion that a focused, fired-up workforce really does lead to improved outcomes, we will, however, likely see enhanced focus on performance-based recognition and reward programs.”

Bill is right. We’ve seen this proven out in our own customer base and it makes sound strategic investment sense for companies during tough economic times. When employees feel overworked and underappreciated, they will no longer give their best – consciously or unconsciously. Saying thank you, showing appreciation and rewarding employees in a personally meaningful (if not expensive) way is a simple and highly effective way to improve employee engagement in their roles and in the company during stressful times.

“As potent a tool as recognition and rewards can be, their effect is vastly diluted unless administered on a customized, highly personalized level. In other words, we’re beginning to realize that one size really does just fit one, and thus, people are best recognized in the manner, frequency, and currency of their choosing.”

Again, Bill is right on the money. Check out eBay and search for service awards or company awards. I just did and saw nearly 200 pins, watches, glasses, plates and other tchotchkes obviously of no lasting value to their owners. Giving people the reward of choice and letting them shop, dine or play in their own backyard or anywhere in the world for a meaningful item that they will remember is a far more valuable investment for a company.

For more insights from Bill and Richard, check out a webinar they presented with Globoforce not long ago on “Work Is Contractual – Effort Is Personal: Discretionary Effort, Employee Engagement and Your Bottom Line.”

RPI, Microsoft and Basics for Successful Global Recognition

I recently had the pleasure of attending the Recognition Professionals International (RPI) 11th Annual Conference in California. Mary Kennett, Amgen’s senior manager of human resources, presented with me on how the Fortune 500 biotech company orchestrated the successful conception, development, implementation and global launch of its strategic employee recognition program. Mary will co-host a webinar with us on June 11 (join us by pre-registering here).
I also had the opportunity to attend several sessions at the RPI conference as well. I particularly enjoyed the presentation “Big Company Love: Basics for Planning Global Recognition in the Enterprise” given by Michael Norried, an agent engagement manager at Microsoft.

I couldn’t agree more with the basics Michael presented:

1) Culture is always first – Michael very emphatically discussed the importance of the company being dedicated to a recognition culture, “beginning at the executive level, through the management level, down to the last person hired,” and then ensuring executives and senior management become evangelists of the program with a clear understanding of the impact on the bottom line.

2) Build something innovative – Tips Michael offered included defining recognition goals, keeping the platform flexible, including options for team and group recognition as well as individual recognition, being sensitive to diverse groups and cultures, considering offline workers, setting a budget for recognition, and making sure to have visibility into total spend and spend patterns.

3) Leave no one out. Period. – Again, Michael is spot on with recommendations to include even low performers in the recognition program to encourage them to become top performers, and that any company with international locations cannot be focused solely on the country where headquarters are based.

4) Listen to others (tips I have learned) – Michael offers several additional tips such as “don’t have a million dollar platform and give out stress balls.” It’s critical to give people the reward of choice with meaningful, memorable, and culturally appropriate rewards. And “don’t embarrassed when asking for large, non-traditional budgets.” Best practice shows 1-2% of payroll is the minimum for fully effective programs. WorldatWork’s recent Trends in Employee Recognition survey reported a budget of 2.7% of payroll for recognition as the average.

What tips have you learned that we could all benefit from knowing?

Are We in a “Psychological Recession?”

Judith Bardwick recently published a very interesting article on “The Psychological Recession” in the May/June 2008 issue of the Conference Board Review. Ms. Bardwick defines a psychological recession as “an emotional state in which people feel extremely vulnerable and afraid for their futures [such that they] are too exhausted to be creative and innovative. They expect the worst to happen, so they see no reason to give their all.”

With today’s fears in a slowing economy, mergers and acquisitions seemingly more and more common, and outsourcing only growing, it’s easy to understand why employees may be fearful for their jobs. It is up to management to clearly communicate the value those employees have for the organization and what the company is going to continue to do to maximize their value, input and performance. To do so is even more critical after, for example, a reduction in force. To keep the remaining employees from entering into a “psychological recession,” they need to understand without a doubt that they are an asset to the firm.

One way to do so is through strategic recognition. To increase employee engagement in their jobs and with the company during tough times, employees need to be frequently and appropriately appreciated for their efforts. As Rich Wellins, a VP with Development Dimensions International, pointed out in a side-bar in the article, it’s also important for leaders to reinforce and model the company’s vision and values so the employees have clear expectations.

A strategic recognition program that incorporates the company’s values and is built around the company’s vision can help to accomplish these communication goals with frequent and timely recognitions.

What is your experience with “psychological recession?” If you’ve found yourself in that state, what did it take to renew your commitment and restore your performance?

Big Money Bonuses Make Performance Suffer

I recently stumbled across PsyBlog, a very interesting blog on a wide range of psychology studies. A particularly intriguing entry for me was “Do Big Money Bonuses Really Increase Job Performance?”, based on a 2004 study titled “Large Stakes and Big Mistakes”*

The study leaders hypothesized that the anticipation of big bonuses for job performance may actually be counter intuitive by placing too much emphasis on money and not on the task at hand. To test their theory, the behavioral economists tested people in a low standard-of-living market (rural India) and in a high market (students at MIT). Both groups were given tasks to test problem-solving, concentration and creativity skills, with various levels of monetary reward offered for success.

The results were surprising to the researchers – according to the blog entry “in eight of the nine tasks, the promise of a bigger bonus actually significantly decreased people’s performance.”

Globoforce has long advocated the value of non-cash over cash rewards for performance. This research further supports our position in this area as well as our best practice recommendation that employee recognition take precedence over reward. Far greater benefit to the company and to the employee is derived when the employee is frequently recognized for desired efforts – even with a simple “thank you” – than with a single large monetary reward.

Have you evaluated or measured the impact of large infrequent or annual bonuses vs. frequent and timely recognition? You may be surprised with the results.

* Reference: Ariely, Dl, Gneezy, U., Lowenstein, G., & Mazar, N. (2004), CMU Working Paper.