Total Rewards - Recognition PDF

Recognition can foster a culture in which employees feel valued, are engaged in their work and are motivated to perform. Culture is strongly influenced by the values of an organization's management, and it is reflected through behavioral practices rather than declarations of senior management. Effec...

Recognition can foster a culture in which employees feel valued, are engaged in their work and are motivated to perform. Culture is strongly influenced by the values of an organization's management, and it is reflected through behavioral practices rather than declarations of senior management. Effective recognition can increase retention and have a significant impact on an employee's decision to remain or leave an organization. Definition -- Formal or informal programs that thank, validate, recognize and celebrate workforce contributions while aligning and strengthening organizational culture. The Value of Recognition Programs - Meet an intrinsic need for appreciation and enhance engagement -- Everyone likes to feel that they are valued and that their contributions make a difference to the organization. - Provide positive and immediate reinforcement of desired behaviors and results -- When positive behaviors are immediately recognized, they provide motivation for employees. This acknowledgement is usually without predetermined goals or performance levels that the employee is expected to achieve. - Accelerate organizational performance-- Recognition supports the business strategy and accelerates organizational performance through recognizing accomplishments that contribute to organizational success. - Organizations with the highest recognition of employee excellence report higher operating margin (6.6% compared to 1%) according to an O. C. Tanner white paper. - Additionally, organizations that effectively recognize excellence show a return on equity more than three times higher than the return of organizations that don't. - Increase retention through improved employee appreciation and loyalty - Although it isn't guaranteed, generally employees respond to special acknowledgements and continue to improve so that other recognitions will be given. Demonstrating appreciation for the individual's work taps into an employee's discretionary effort and may encourage the employee to improve performance levels even further. Using Recognition to Drive Results Employees basic salary needs must be met before they will begin to appreciate recognition awards. Implementing a recognition plan in lieu of a competitive pay plan may be poorly received and may actually do more harm than good. Today, more organizations are focusing their recognition programs strategically to align them with business goals in mind. These types of recognition programs are designed to promote employee actions that support and enhance individual, team, division, department or company goals. - Recognition philosophy-- It is important to capture types of behaviors the organization is looking for and will reward. Including these in a recognition policy will assist managers in observing, and ultimately, recognizing those employees who meet set goals. - Examples -- Of course, the behaviors organizations are looking for depend on the goals established. They may include any of the following: - Improving/sustaining employee productivity - Improving the quality of work/decreasing error rates - Acquiring new skills, experience, competencies or knowledge - Meeting or exceeding company financial goals, including sales, revenue, profit and market share - Providing superior customer service - Volunteering for additional work Recognition Plan Types Recognition plans may be both formal and informal depending on the plan design. - Manager driven-- Managers may recognize both their employees and employees of other units. The objective is to reinforce desired behaviors. - In addition to outstanding performance recognition, managers can recognize professional certification and personal development. - Spot awards -- A spot award is designed to be delivered spontaneously or "on the spot." - The idea is to reward the individual as soon after the effort, behavior or accomplishment as possible to maximize the reinforcement opportunity of the reward. - Cash is the most common form of a spot award. - Promotes a positive culture and work environment - Peer-based - Organizationwide recognition -- This award recognizes all employees and may increase retention. - Example: Unplanned year-end recognition "bonus" Recognition Programs Some recognition programs work better than others to drive business results. A recent WorldatWork survey showed that organizations using all three of the programs below are meeting their goals 80% more often than those organizations that use only one results-driven program and those that have none. - Results-Driven Programs -- Using all three of these programs appears to create a more positive impact on engagement and motivation. - Above-and-beyond performance -- focuses on the individual employee who goes the extra mile to perform well within some aspect of his/her job or for the organization - Peer-to-peer -- focuses on co-workers or others within an organization that observe an employee doing something well then nominating that employee for recognition - Specific results and behaviors -- based on motivating specific results and behaviors. By recognizing people doing something right, it is the goal that the desired behavior becomes a habit An additional and important survey observation is in the program budget. Organizations that include all three of these types of recognition programs do not have higher budgets than those that have only one or no results-driven programs. It would appear that those with a different distribution of budget for all three programs can potentially obtain better results. Forms of Recognition - Cash -- most common, although equity can be used - Points/Tangible award -- awards that have some level of cash value - Lower to minimal cost: reserved parking, movie tickets, dinners, flowers, candy - Significant cost: merchandise chosen from an award catalog, travel awards (weekend getaway, top performers incentive trip) - Symbolic award -- awards such as trophies, mementos, plaques, certificates, special team identity items, etc. - Social recognition -- one of the most effective and least costly forms of recognition Cash vs. Noncash Recognition Is cash the best way to recognize employees? There is no correct answer to this question. Research indicates that each one may be most effective, depending on what an organization wishes to recognize. To decide between cash or noncash, look at the behavior being rewarded. Do you want to recognize employees for the effect of their performance on the bottom line or on how they exemplify company values? - Performance-based recognition - Rewards performance that translates into economic benefits for the organization. Exceeding sales expectations is an example. - Cash awards may be most effective here. - Value-based recognition - More subjective -- There are no immediate financial results or outcomes. - Recognizes behaviors that exemplify an organization's core values such as teamwork or traits such as the ability to build morale - Don't need to be cash to work effectively Formal Recognition Programs - Essential elements: Formal recognition programs are predetermined and are an integral part of the total rewards program. To be successful, they should: - Contingent on performance-- The program should recognize and reward individual- and group-specific achievements such as improvements in work processes. - Clear, with specific success criteria -- The program should have specific criteria for granting recognition and identify the specific behavior or performance that is being recognized. The program must be communicated to all key stakeholders on an ongoing basis. - Consistent in both process and application - Well-defined monitors have the ability to track activity and results. They can determine areas of ongoing success and can be used to communicate program progress to key stakeholders. - Rewards that people desire - Rewards should be established that have significant monetary or personal value. Design the rewards to mirror what employees have identified as important. Informal Recognition Programs Informal or spot recognition rewards employees immediately for making positive contributions. It is a program that is relatively easy to implement and training time is minimal for participants. - Essential elements: - Set financial limits -- Financial limits should be established before the program is implemented. Dollar limits are generally low and in some cases non-cash awards are used exclusively. - Establish administrative responsibility -- Establish who has the ultimate responsibility for administering the program (i.e., human resources department, recognition committee, program coordinator, etc.) - Develop program definition -- Develop a clear definition of the program that can be widely communicated and easily understood. - Establish eligibility -- Establish who is eligible to participate in the program. - Identify qualifying actions -- Decide what actions, behaviors and performance areas will qualify for spot recognition. - Identify exclusions -- If appropriate, identify any exclusions. - Establish procedures -- Establish the guidelines and procedures that will be used to recognize individuals and groups. - Ability to track and monitor -- It is important to understand how informal recognition is being used in the organization to change behavior. Examples of Informal Recognition Most programs use small cash awards, recognition certificates, merchandise or some other token(s) that employees value. It might be a good idea to have employees complete a survey that identifies what types of things they would like to see in the program. The recognition should reflect what is important to the organization's culture. The following award items are representative of what is often found in an informal program: - Thank you card from the supervisor - Gift cards/certificates - Small cash awards (generally less than 50.00) - Movie tickets - Media rental certificates - Lunch with the supervisor - Flowers or balloon bouquets - Team dinner - Free parking spot - Full or partial day off with pay - Articles in the employee newsletter - Personal recognition from the CEO - Manager publicly recognizes the employee in a department meeting - Celebration lunches or dinners at the work site Individualizing Recognition Programs In order to keep enthusiasm high about the program, it must adapt to the changing needs of the participants. Many of the companies listed in Fortune's "100 Best Companies to Work For" incorporate fun and uniqueness into their recognition programs. They are effective because they focus on the individual and his/her unique needs and desires.