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.