Rewards & Recognition Program Comparisons

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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.

Unintended Consequences
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.”

Rewards & Recognition Fundamentals

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Rewarding or recognizing members of the workforce is a standard component of most employee engagement efforts, but the way in which organizations approach the practice can vary.

In fact, during a discussion with our Partners in Improvement, we uncovered a variety of approaches to rewards and recognition programs. Some, like a service award, are very predictable; if you reach an anniversary, you are likely to receive one. 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 a $20,000 ‘President’s Award.’

Similarly, some programs 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.

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:

  • To increase the recipient’s satisfaction and happiness (and hopefully engagement) with the organization and his or her role within it
  • To motivate continuation of certain types of behaviors and accomplishments
  • To motivate people to work to achieve certain measurable results.

However, regardless of purpose, the amazing variety of program types allowed us to explore the benefits and unexpected drawbacks of each, which will be the subject of our next post.

Ten Steps for Developing a High Performance Culture

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Among the highest achieving organizations are those that have successfully planned and developed high performance cultures.

When helping clients build such cultures we focus on the following ten things:

  •  identifying the underlying assumptions, beliefs and values that cause people to behave the way they do
  • Identifying a clear link between individual performance and organizational goals
  • Identifying a clear link between team/department performance and organizational goals
  • Helping people develop a clear sense of purpose
  • Identifying the necessary time and attention management will need to devote to the performance management culture
  • Creating a work environment that supports high quality and productivity
  • Helping people at all levels understand the core values and beliefs which drive behavior
  • Promoting practices that are in sync with organizational values and beliefs
  • Clearly defining roles and responsibilities, performance gaps and accountabilities
  • Help managers develop and refine their skills and ability to coach for improved performance

Ten Key Questions for Optimizing Our Continuous Improvement Effort

One of Bill Conway’s favorite sayings is, “The most important business decision people make every day, is deciding what to work on….”

While at first glance this might seem a simple questions, upon reflection most of us will realize it is not necessarily an easy one to answer.

Possibly the following ten questions can help us move forward in a fashion that enables us to get the most out of our improvement efforts:

  1. What should we work on?
  2. What process should we use to decide what to work on?
  3. How should we prioritize?
  4. What is our “readiness to change?”
  5. What do we do now?
  6. What do we do next?
  7. How do we go about it?
  8. Which tools will best enable us to achieve goals?
  9. Which methods will best enable us to achieve goals?
  10. How can we increase alignment?

The Pros and Cons of Conventional Wisdom

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Our previous post shared an example of how what “seemed” to be a sure way of increasing the bottom line turned out to do quite the opposite! It was also a classic example of the perils that are often attached to “conventional wisdom.”

Conventional wisdom is typically considered to be an asset, and in many situations it can be. It speeds up consensus and increases our confidence in our decision making, leaving us to focus our attention on challenges for which there is no conventional wisdom to guide us. And conventional wisdom has much truth within it — having been developed over decades of observations.

But in a dynamic world when the underlying assumptions shift, we follow conventional wisdom at our peril as it can easily lead your organization to make some big mistakes.

For example, conventional wisdom holds that specialization is good. A person can get very fast and reliable doing the same thing the same way again and again, as was done in Henry Ford’s assembly line which broke the complex craft of auto assembly into a sequence of very specialized jobs that could be easily taught to the relatively unskilled workforce. Assembly line efficiencies put automobile ownership in reach of a much larger portion of the country and made the benefits of specialization a part of our national business psyche.

But to achieve the benefits of specialization, you need something increasingly uncommon in today’s world: high volume/low variation work.

A service organization learned this lesson the hard way when they implemented a plan they “thought” would speed up throughput and reduce overtime costs for processing new account applications . They organized their processers into different groups to handle different clients. This enabled each processer to complete an account set-up faster because they could easily memorize the steps and forms for their small group of clients. Nonetheless, the efficiency of the operation as a whole declined substantially. Variation in the incoming volume resulted in one group being swamped one day and working overtime, while another group was very slow.

For work that is low volume/high variation, as in the service organization example, specialization tends to reduce throughput. In such an environment, multi-skilled generalists are far more valuable. Specialization may maximize the speed of the individual, but sub-optimize the process as a whole.

Possibly Mark Twain summed it up best when he said, “”It ain’t what you don’t know that gets you into trouble; it’s what you know for sure that just ain’t so.”

The Bottom Line Impact of Saving People’s Time: It May Not Be What You Think!

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In a few instances, the impact of increasing process productivity or saving people’s time on the bottom line is clear and simple. For example, it may reduce the expenditures on overtime or contract workers.

However, beyond those few cases, productivity improvements for employees do not directly reduce expenditures, but instead increase capacity.

How much these improvements benefit the bottom line depends on how that capacity is put to use. The impacts can be extremely profitable or can amount to nothing — or worse!

For example, an organization has 30 people at an average cost per person per year of $50k. This organization is able to make major process improvements that achieve a 50% reduction in the amount of time required to handle the current workload. In theory, the impact of the productivity improvement would be the same — 30 people, 50% productivity improvement, $50k/year — should be simple math, right?

But in the real world, the impact would vary dramatically. Other factors, such as potential for sales growth, amount of attrition, transferability and scarcity of skills, etc. have a very significant impact on the value of any productivity improvements the organization may achieve.

In this example, it turned out that demand for the work is stable, neither increasing nor decreasing. Consequently, no new value-adding work is brought into the organization and there is neither attrition nor layoffs. People quickly add non-value-adding activity to fill the gap and make themselves look and feel busy.

Therefore, the productivity improvements produced neither revenue growth nor cost reductions; the impact of the improvement in is slightly negative — equivalent to the value of any time and investment expended to achieve the productivity improvement.

A good example of how, in many cases, conventional wisdom isn’t so wise!

How Much Time Do We Waste & How Can We Find Out?

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Recent posts have focused on time management. So today we ask, “how much time is wasted each day within your organization?”

Most of us can estimate the amount of time that might be wasted within our department or business, but few are able to be precise. Similarly, few are able to quantify most of the waste that exists within their work processes.

Quantifying the waste helps organization focus on the right things. More specifically, quantification does three things for you. 

  1. First, it helps you distinguish between the big hitters and the nice to have improvements so you focus on the most important opportunities first.
  2. Second, it makes the organization aware of the cost of a delay in tackling a ‘big hitter. If a problem is wasting $5 million dollars per year, then every week of delay is wasting nearly $10,000! Clearly the organization wants to make sure nothing slows down the improvement effort.
  3. Third, quantifying the waste enables you to have more meaningful discussions with other parts of the organization whose support you need to change the processes that cause the waste.  

So now that we’ve established “why” quantifying waste is important, here are three straightforward steps for doing so:

  1. Identify if and how the problem affects the four forms of waste: lost sales, material costs, time, and capital costs. If the problem causes delays, think through and estimate the form of waste that the delay results in. Does it increase capital such as inventory or receivables? Does it delay sales and revenue? Does it cost you customers and future business? Does it require additional people time? Many problems will affect more than one of the four forms — lost sales, material, time, and/or capital. For example, excess inventory not only ties up capital, but may increase the number of people who need to manage it, the warehouse costs to store it, and the probability of scrapping it. All these factors can be reasonably estimated with some historical data and getting close enough to the work.
  2. Quantify the impact, recognizing that assumptions and estimates will probably have to be made. If you have or can gather data, use the data and document where you got it. If you must use assumptions or estimates, document how you came up with that — who did you talk to? Perhaps document a range that you are pretty confident about. The Conway Waste Calculator can help with the documentation.
  3. Do the math to roll it up into annual dollars.

5 Best Practices for Maintaining Productivity When Working from Home

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Continuing with the theme of time management, and spring-boarding off of our previous post’s tips for avoiding the most common productivity pitfalls, today’s focus shifts to the pandemic-related reality of working more productively from home.

Many have struggled with the shift to remote work, so here are five best practices for maintaining productivity when doing so:

  1. Maintain a designated workspace – this may seem like a minor issue, but by dedicating a “work space” we can more easily shift our thinking from ‘home’ things to ‘work’ things when engaged in work. A designated space often “triggers” productivity as well.
  2. Set regular working hours – maintaining some type of regimen, though it may differ from the established workplace schedule, helps us to shift and maintain focus; it also helps us to avoid the pitfall of over-working and makes it easier for others to reach us because they know when we are in work mode.
  3. Set start-up/shut-down rituals – this helps us develop consistency and makes it easier for our mind to distinguish between “work” and “home” focus; we should also include rituals for periodically stepping back for exercise and/or stretching.
  4. Start each day with a written plan – this is a best practice that should be followed regardless of location, but maintaining it when working remotely is important. Lists should be actionable and time-bound.
  5. Keep workspace organized – simply stated, “mess equals stress!”

5 Best Practices for Avoiding Time Management Pitfalls

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Our previous post shared six of the most common barriers to productivity and to managing time.

Here are five best practices that can help us avoid some of these pitfalls:

  1. Plan our work – we should spend the 1st 15-30 minutes of each day planning, and then we must “work the plan!” In addition, while many of us use a daily to-do list, we might consider creating a weekly list as well; then we can prioritize on a daily basis and even incorporate “times of day” to ensure deadlines and priorities are met.
  2. Overcome procrastination – some proven ways of doing this include starting the day with the hardest tasks and/or breaking tasks down into small chunks. Forming an “accountability partnership” with a colleague can help as well, or simply making deadlines public, which tends to promote greater levels of self accountability.
  3. Prioritize! “if everything is important, then nothing is!” Consider using prioritizing tools such as the Eisenhower matrix.
  4. Keep a “crises log” and seek root-causes of repetitive crises so they can be anticipated or eliminated. Otherwise we will find ourselves spending too much time in “reactive” mode, which is impossible to manage.
  5. Take a long-term view of our work and keep learning to stay fresh! With this perspective in mind, it often becomes easier to seek the root causes of repetitive time-drains, and to keep an open mind with respect to learning or when faced with adopting change. Set specific goals for fixing root causes or adapting to change, and quantify what we can gain in terms of what’s important – i.e., “I’ll save 2 hours per week, which I can spend with family…”

Time Management Barriers

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Continuing with our previous post’s theme of time management, the Productivity Institute shares some helpful insights into the concept of managing time.

For example, it is important to recognize that while we all have the “same amount of time,” the way we manage it will vary from person to person. In other words, time management is a relative thing.

It is also true that people frequently make decisions about how they manage their time based on feelings or assumptions rather than facts because few of us take the time to actually measure how we use time or where we spend our time.

But, as Productivity Institute founder Dr. Donald Wetmore has said, “If you want to manage it you have to measure it!”

As a starting point to measuring the things that might be preventing us from using time wisely, here are six of the most common barriers to productivity and good time management:

  1. Attitude
  2. Other people
  3. Weather
  4. Fatigue
  5. Belief there is not enough time
  6. Unproductive habits

In our next post we will take a closer look at some of these barriers, and share ideas for how to avoid them.

Challenges and best practices associated with continuous improvement