Category Archives: Rewards and Recognition

Rewards & Recognition Best Practices

Recent posts have focused on “rewards and recognition,” a crucial component of enterprise engagement.

We shared a range of perspectives based on discussions with our Partners in Improvement groups, who agreed that these programs are typically designed to achieve one of three objectives:

  • increased commitment
  • increased desired behavior or motivation
  • increased measurable results

Based on their collective experience the Partners identified the following eight criteria or best practices for an effective rewards and recognition program:

  1. Keep it simple: The most cost effective method of all seemed to be the simple thank you note. The notes, if done well, are widely appreciated and cost nothing more than the time and attention to set up a system of information when an individual or team deserved a thank you.
  2. Be very careful about extrinsic rewards: these can cause more trouble than benefits. Extrinsic rewards require very clear metrics, auditing, and careful, even elaborate design to ensure a focus on the rewarded metrics will not lead to deterioration of other facets of the organization. Obviously, this makes it hard to ‘keep it simple.’
  3. Be specific: it is much more effective to recognize a team or a person for a specific result or accomplishment than for generally doing a good job.
  4. Be timely: the closer in time the reward or recognition is to the accomplishment being recognized, the more impactful it will be.
  5. Be consistent: Be sure that you respond to comparable accomplishments in comparable ways.
  6. Be authentic: Sincerity in words of appreciation and praise are essential to an effective system of reward and recognition.
  7. Communicate widely: Publicity helps extend the celebration and communicates widely what is valued by the organization.
  8. Use team rewards to encourage better organization-wide results.

Rewards & Recognition Part 3: Comparisons

As discussed in our previous two posts, “Rewards & Recognition” programs can vary in a many ways.

For example some are very inexpensive to run, and others are costly; some are geared toward recognizing individuals, while others focus on rewarding teams.

Similarly, the reasons for implementing a program can differ a great deal, depending upon an organization’s situation and objectives; and as our Partners in Improvement groups discussed, the outcomes — both intended and otherwise — can also vary.

During our Partners’ discussions three distinct types of programs were compared:

  1. “After-the-Fact” rewards vs. “Defined Benefit” awards:
    Some organizations conduct recognition and reward programs that are designed to ‘catch people’ doing the right things, such as a “caught in the act” program that recognizes individuals by posting a card describing their accomplishments on a wall in the lunch room, or a “Bravo” program for peer-to-peer recognition, where recipients are awarded small gifts — in the $5-10 range.  These systems are designed to encourage certain behaviors and accomplishments — but an 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 overall.

    Alternatively, 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.  Along the same lines, one organization implemented a partially-defined reward: the reward was defined, the criteria were defined, but there would be only one winner and the identity of that winner would remain uncertain until the end. This prize, in this case, was a one year lease on a BMW for the manager with the best results. The success of this program depended on being well-hyped in advance so that every manager improves his or her results in order to try to win. However, the size of the prize being so significant caused some dissatisfaction among some of the managers who didn’t win.

    Conclusions: both the individual and team concepts are effective. If a “one winner” approach is taken it is best to keep the value of the single award on the lower-end as opposed to awarding one “big” prize such as the above-referenced car lease.

  2. Team Awards vs. Individual Rewards:
    The primary advantage of individual recognition is the precision of being able to reward and recognize a person who best exemplifies the behavior that the organization wants to encourage.  Consider that, on any team, there are bound to be 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 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.  Our research into employee engagement suggests that being viewed as an important member of a team is also very motivating. Indeed, in Daniel Pink’s book Drive, The Surprising Truth About What Motivates Us, he describes the pleasure people receive from being part of something bigger: a team, a movement, a purpose.

    Conclusions: While the benefits associated with individual rewards were recognized, the vast majority of our Partners expressed strong support for the benefits of team rewards and recognition.

  3. Intrinsic vs. Extrinsic Rewards:
    Intrinsic rewards are those that strive to produce a sense of appreciation, belonging, satisfaction or contributing to a higher purpose. Some 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.

    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. 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.

    Conclusions: While appreciating the clear nature of extrinsic rewards, nearly all of our Partners had a cautionary tale about unintended consequences; 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 BMW lease, 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 of the organization. Team morale took a serious hit as well.  As one of the Partners put it, “An extrinsic reward seems to create 1 winner and 99 losers.”

Ultimately, our Partners agreed upon a list of best practices, which we will share in our next post.

Rewards & Recognition Part 2: Strategy

Our previous post noted  that a Rewards & Recognition program is an important component of a comprehensive engagement plan, and that there are different approaches or “reasons” to implement the practice.

During discussions with our Partners in Improvement  groups details associated with each of three distinct strategies for implementing a rewards and recognition program  were summarized as follows:

Strategy #1: To Increase Commitment and ‘Team Spirit”
Service awards are an example of recognizing people in order to strengthen the commitment to and satisfaction with their jobs.

Many organizations announce service anniversaries and offer public congratulations and appreciation. In some cases a paper certificate is ceremoniously handed to the individual. Some organizations award gifts of increasing value for milestone anniversaries, such as 5 year, 10 year, 20 year anniversaries. Gifts bearing the company logo were also intended to increase association with and commitment to the organization.

Strategy #2: To Increase Certain Behaviors or Accomplishments
A good deal of our discussion of rewards and recognition focused on ways that were intended to reinforce behavior that the organization wants to see more of.

For example, the CEO of a global engineering corporation with 8,200 employees has made a practice of sending a personal thank you to people who have really contributed to process improvement, with a “cc” to the person’s supervisor. These notes are highly valued. Similarly, the CEO of a defense contractor also described how powerfully motivational a simple thank you can be. He was walking through one of his manufacturing plants and saw the operator of a machine that was under repair, cleaning the machine. He stopped to thank her, saying he really appreciated her effort because he would like the work place to be cleaner. The comment was so motivational that when he walked back
through several hours later, long after the repairman had left and the machine was functional again, she was still cleaning the machine.

Another organization has instituted a ‘Six Star’ program to recognize and reward people for giving excellent service.
Customers and employees can award ‘stars’ for service that they feel deserves recognition. Once employees receive six
such stars they are given a fifty dollar gift certificate. Another Partner described a high five on-line recognition, with a “cc”
to the Director. If the Director saw an accomplishment that was especially good, he or she could promote it into a “Round of
Applause” that would involve a gift.

Strategy #3: To Achieve Better (Measurable) Results
Some organizations used rewards to encourage extra effort to achieve specific goals.

Examples included a one year lease on a BMW that was awarded to the store manager with the best results, and a $20,000 President’s award that was given to the employee who generated the most profitable business.

At another organization, an additional one-week vacation was given to the employee who was deemed to have done the most for the organization in the previous year.

While each of these was awarded to an individual, the intent was to motivate many people to compete for the award. The assumption is that an unusual and substantial reward will inspire people to try and outdo one another in order to win — thereby increasing the results produced by all those who failed to win as well as the winner. These rewards rely on publicity and  extravagance to generate enough interest to get everyone trying to win.

But strategies, goals and objectives do not always translate into the desired results. In fact, some rewards and recognition programs produced unintended consequences, which we’ll discuss in our next post.

Rewards & Recognition – Part 1: Variation

We recently attended the “Engagement World” expo in Galveston, Texas, at which all aspects of enterprise engagement were discussed including ISO 10018 and  standardized engagement plans.

Simply stated, to be truly effective, an engagement plan must contain certain elements, including a method for rewarding and recognizing  desired behaviors and outcomes.

This fact was spelled-out in a prior post, noting that Rewards & Recognition is an important component of a comprehensive engagement plan. In addition, our Partners in Improvement discussed this fact, and shared some interesting insights regarding various ways of recognizing and rewarding people, and the variation in results.

For example,  some, like a service award, are very predictable; if you reach an anniversary, you are likely to receive one. But many other recognition programs include an element of surprise when exceptional service is spotted.

Some rewards cost the organization little or nothing — such as a thank you note or a special parking place. Others are quite costly, such as a one year lease on a car, or an upscale ‘President’s Award.’

Some are for teams, and others are for individuals. Many of the rewards and recognition are after the fact, while some are announced and hyped in advance in order to encourage people to try for them.

The amazing variety allowed us to explore the benefits and unexpected drawbacks of the different types of rewards and recognition. But despite the variety of implementations, the objectives were really quite simple. An organization implements a reward and recognition program for one of these three reasons:

  1. To increase the recipient’s satisfaction and happiness with the organization and his or her role within it
  2. To motivate continuation of certain types of behaviors and accomplishments
  3. To motivate people to work to achieve certain measurable results

We’ll take a closer look at these differing approaches in our next few posts, and share some surprising data points regarding outcomes and predictability.