Our previous post shared some of the fundamentals associated with Rewards and Recognition (R&R) programs. Continuing on that theme, today’s post will contrast some of the most common “types” of R&R programs based on input from our Partners in Improvement.
After-the-Fact Rewards v. Defined Benefit Awards
Some organizations have recognition and reward programs that are designed to ‘catch people’ doing the right things. These systems are designed to encourage certain behaviors and accomplishments — but the individual may or may not be one of the lucky ones ‘caught.’
Not every worthy act is rewarded, but the belief is that the program reinforces the desired behavior.
One organization has a “caught in the act” program that recognizes individuals by posting a card describing their accomplishments on a wall in the lunch room. Another organization used to give out ten dollar bills to recognize behavior or accomplishments after the fact, but the administrative burden was too difficult. Now they have a “Bravo” program for peer-to-peer recognition, where recipients are awarded small gifts — in the $5-10 range. Yet another would hand out $25 gas cards for identifying safety issues or making process improvements:
“Everyone seemed to like them,” one of our Partners said. “But they prizes were not large enough to make anyone mad if they went to the wrong person.”
Some awards are planned in advance, such as an organization that gives one day off to everyone after every 250,000 hours without a lost time accident; or another program that promised a raise to all employees if first pass yield metrics were achieved.
These ‘defined benefit’ rewards rely on publicizing in advance so that everyone works toward that goal.
Another organization implemented a partially defined reward: the reward was defined, the criteria were defined, but there would be only one winner and who would win was uncertain until the end. This company offered a one year lease on a new car for the store manager with the best results. The success of this program depended on being well-hyped in advance so that every store manager improves his or her results in order to try to win. However, this program triggered some resentment, as some managers who did not win expressed dissatisfaction with the program.
Team v. Individual Rewards
We also discussed the effectiveness of rewarding and recognizing teams as compared to individual rewards. While the Partners recognized some benefits from individual rewards and recognition, they expressed strong support for the benefits of team rewards and recognition
The primary advantage to individual recognition is the precision of being able to reward and recognize individuals who best exemplify the behavior that the organization wants to encourage. On any team, there are stronger and weaker contributors. The weaker contributors on a strong team are, perhaps, unfairly recognized for contributions they may not have made. Furthermore, the stronger contributors to a weak team are unfairly under-recognized and may become less motivated.
Individual rewards and recognition may enable organizations to reward the people they believe most deserve it. However, often the success of an operational or project team as a whole is far more important to an organization’s success than the actions of individuals.
Recognizing operational teams as well as temporary teams for their contributions encourages effective teamwork, helping one another to get further faster. It takes a mix of talents and personalities to build an effective team and while a team may have one or two stars, the success may also be due to the down-to-earth individual who keeps the group focused or the individual with the easy personality that defuses tensions and egos in order to keep the group working effectively. Individual rewards easily overlook the interdependencies so critical to success.
One of the forum participants established a ‘before the fact’ team reward system for improving first pass yield. This was a high priority for the company — producing top quality first time — which had a big effect on both quality and profitability. Not everyone could work directly on this improvement team, but many people influenced it indirectly.
When the yield reached the desired level, everyone received a raise.
Another of our forum participants established a team health and safety award that demonstrated the power of team influence. At his organization for every 250,000 hours without a lost time accident, the whole plant gets one day off.
The plant is now at over a million hours without a lost time accident. One fellow almost cut his finger off, but, after a quick trip to the ER, was back asking for some light duty work. Nobody wants to let the team down!
Intrinsic v. Extrinsic Rewards
The broad range of methods of reward and recognition our forum discussed seemed to divide fairly evenly between intrinsic and extrinsic motivators. Intrinsic rewards are those that strive to produce a sense of appreciation, belonging, satisfaction or contributing to a higher purpose.
Some intrinsic rewards are free, such as a thank you note, a parking space, or putting a person or team’s picture in the newsletter. Some intrinsic rewards may cost the giver something, such as buying a team lunch, giving everyone a day off, and making a contribution to a charity of the person or team’s choice, but these rewards are non-monetary and are not designed to appeal to a person’s acquisitiveness. Rather they emphasize the organization’s appreciation for a person or team’s contribution.
But a drawback to intrinsic rewards is that the value will vary from individual to individual. One person might be delighted to have their picture in the newsletter with a congratulations or note of appreciation, while another might dread it. Many people would really appreciate a sincere thank you note or a contribution to a favorite charity, but others may be indifferent to one or both of those. One person may love a fruit basket, and another may detest fruit.
By contrast, monetary rewards have a simple and clear cash value for the recipient. For example, a grocery chain gives $50 to any individual accumulating six ‘stars’ which are awarded by coworkers or customers to recognize exceptional service. An engineering firm has an annual “Presidents Award” of $20,000 for a specific accomplishment, which the individual recipient may choose to keep or divide among deserving participants as he or she sees fit. Another organization explicitly calculates a portion of a person’s annual bonus based on their participation in a process improvement project. Yet another company gives cash bonuses when financial targets are met.
The main advantage of monetary rewards is that, whether the amount is large or small, public or private, before or after the fact, one can expect that all recipients will value the reward because the recipient can spend it however they choose.
In this way, it is economically ‘efficient.’ While non-monetary rewards are less certain, whoever you are, whatever your preferences may be, cash can always be converted into something you like.
While intrinsic rewards seem uncertain in their effects, extrinsic rewards seem simple and sure — the classic ‘carrots’ intended to motivate people to try harder to achieve a specific goal. How could they fail? Well, we had a few examples.
While appreciating the clear nature of extrinsic rewards, nearly everyone had a cautionary tale about unintended consequences of extrinsic rewards; and the bigger the reward, the bigger the problems.
Unlike rewards aimed at intrinsic motivation, the problem with extrinsic rewards was not that they might fail to influence the recipients, but rather that the outcomes were often entirely different than intended.
For example, the organizations that implemented large monetary rewards, such as the automobile lease and the President’s Award, found they attracted attention and inspired avarice as intended. Many people really wanted to win them. In fact, a good many people felt they deserved to win them. The unintended results included resentment, accusations of unfairness, and powerful disincentives for people to help one another to raise the overall performance. Organizational morale took a serious hit.
As one of the Partners put it, “This type of reward seems to create 1 winner and 99 losers.”