How often does a reward and recognition programme launch in a blaze of promotion and high take-up rates only for it to flounder months later, buried under an administration burden and general disinterest from managers and employees?
As recent research from employee reward and recognition specialists Accumulate reveals, programmes fail for a number of reasons – but there are key strategies that can prevent it from falling over, notes Adrian Finlayson, CEO, Accumulate.
“We find that where programmes fail, it’s generally because of a range of factors – not just one single thing. Common issues include programme objectives not being aligned to company objectives, programme structure not being tailored to the organisational culture and education and ongoing communication being limited,” he says.
The companies that avoid these pitfalls are likely to see improved motivation and engagement at work, as well as higher retention rates – all of which bring positive bottom line results.
Prior to setting up an R&R programme, consultation with employees, managers and senior management needs to take place. This allows for alignment between what the organisation wants to achieve and the things that will motivate individuals to behave the way the organisation needs them to behave.
“The overall objective of an R&R programme varies from company to company. If the objective is employee engagement or satisfaction then the programme will take a different form to one with increased sales as the objective,” says Karen Rowell, MD of Trésor Reward & Recognition.
If the programme is intended to deliver a particular outcome, such as increased productivity, it makes sense to structure the programme around this outcome, Finlayson notes. This can mean targeting the programme to the types of behaviours the organisation wishes to reinforce and to the relevant areas of the business, while introducing reporting and measurement mechanisms that enable managers to evaluate how effectively the programme is working.
R&R programme objectives should be agreed to by the CEO and senior executive team and should be tied directly to company objectives. “An R&R programme can be an effective way of motivating individuals to behave in a way that’s consistent with corporate values, business goals and performance targets,” says Finlayson.
“From the employees’ point-of-view, if it’s not tied to company objectives, a reward programme runs the risk of becoming either an expected part of a salary or being mistrusted because there’s a lack of clarity around what employees need to do to earn a reward.”
It is also important to be aware of what other organisations are doing and what potential employees might want from an R&R programme. By studying what others are doing it is possible for companies to build competitive remuneration and benefits packages that use R&R programmes in an innovative way.
How rigid should an R&R programme be? According to the experts HRM contacted, this depends on a number of criteria. Firstly, the organisation’s size and structure has an impact – larger organisations with many employees and more sophisticated monitoring and reporting tend to need more structured programmes.
“Whilst an overall framework is vital, it’s just as important to provide some flexibility at a divisional level within this framework. By allowing the divisions to tailor aspects of the programme to their own circumstances, they’ll be more inclined to support and champion the programme,” says Rowell.
Rowell also recommends that managers of each division be given some discretionary budget to spontaneously allocate small ‘spot’ awards such as double movie passes when they see something worth rewarding.
Indeed, the R&R budget has a significant impact; the bigger the budget, the more control that is needed. “More control means more structure in the R&R programme. Such controls can include how and when rewards can be approved and redeemed,” says Finlayson.
Technology has transformed the administration of R&R programmes by providing great efficiencies and openness in:
reporting – technology platforms can provide instant reports on measures that are built into the programme during the design phase
participant communication, education and training
rewards redemption – systems now exist where participants can jump online and redeem their points on a range of rewards of their choice
budget management – with programme automation, R&R expenditure can be monitored across an organisation in near real-time.
“Technology has removed some of the administrative burden by automating many of the more manual processes. For example, a programme running without the support of an online website would struggle to support an extensive reward range as fulfilling multiple reward options would be far too time consuming,” Rowell notes.
An online programme allows participants to log into a customised, programme-branded website to choose their reward from a broad range and then order it online, drawing down from a points balance in their individual ‘account’. This is a far more efficient process and the back end ensures that the whole transaction is tracked for reporting purposes.
Not everyone will be motivated by the same non-financial rewards, so variety is crucial. For example, some people are motivated by public recognition so simply announcing the value of their contribution to the rest of the team may be more effective than giving them something with a monetary value.
“A reward is more motivating if it’s what someone wants rather than something that is prescribed. People like variety and being able to choose a reward that suits them,” Rowell says. “Understanding your audience – that is, the participants of your programme – and tailoring the reward and recognition options to suit them will ensure that the programme strikes the right chord and is effective.”
Self-selection of rewards is also important, as often a manager will choose a reward that is not appealing to the recipient.
“Someone I met recently told me that her company gave her a bottle of French champagne for achieving a milestone. Whilst some people would have appreciated this gesture, in this case the recipient doesn’t drink alcohol so the reward actually had the opposite effect to what was intended – it made her feel that the company didn’t really know much about her and her likes and dislikes, and therefore didn’t value her much. Had the company been running a programme that offered a choice of rewards she would’ve been able to choose something appropriate and it would’ve been a positive experience – and a far more effective reward,”
says Rowell.
Finlayson notes that recognition is often the ‘forgotten R’. “Variety in how we recognise people is also important to achieving the programmme objectives. This may take the form of peer-to-peer recognition, manager recognition, team recognition, departmental or company wide,” he says.
The types of recognition and the types of reward offered should be tailored to each organisation and this is where external experts can assist in delivering best practice and effective programmes.
Based on Hewitt’s research, employees identify recognition as one of the most effective motivators in Singapore, confirms Puneet Swani, business head, Southeast Asia, Broad Based Compensation Consulting, Hewitt Associates. One-third of employees report that recognition is as effective as job content, incentive pay and management style, says Swani. “Half of employees believe recognition is as effective (if not more effective) as the work environment, as well as work/life and other benefits. Almost half of employees reported praise and recognition as the most important factor in determining their job satisfaction.” Interestingly, he notes, more than one-third of employees reported lack of praise and recognition as one of the main reasons for leaving a job and even small increases in supportive practices are associated with decreased turnover and increased sales/profitability. “Employees who feel that their organisation values them are more likely to value their customers. Appreciation and/or praise are among the top three drivers of employee motivation and engagement across a variety of industries and companies,” he adds.
yes, money talks
Though informal and non-monetary rewards and recognition can go a long way in establishing and demonstrating your appreciation for your employees, monetary rewards like cash and stock options have always had their own additional advantages. Employers must understand the need to balance out the two.
“So far, our rewards and recognition strategies have proven to be successful and have developed a considerable impact over the years to improve employee satisfaction, morale and commitment with the bank. And budgeting for employee rewards is an ongoing process that takes place throughout the year,” Ian Love, HR director, Credit Suisse, shares. “Because the bank recognises the critical role each and everyone of its employees play in the bank’s success, it has created different levels of rewards and recognition programmes for employees in order to share in the financial rewards,” Love says.
In addition to bonuses, Credit Suisse has also introduced a variety of stock awards to reward and recognise employees for their achievements and contributions to the bank. The stock awards are designed generally with the objectives to create a strong ‘ownership’ culture across the entire organisation, align the interest of employees with the interests of the shareholders, and provide an incentive for employees to remain in the service of the bank.
The types of stock awards available to managers to reward employees are as follows:
» The Credit Suisse Group Master Share Plan is an equity-based bonus award plan. According to the Master Share Plan, a portion of the employee performance bonus can be awarded at the discretion of the CC in the form of a mandatory Compensation Award in Blocked Registered Shares or Phantom Shares. Blocked Registered Shares refer to Credit Suisse Group registered shares with a blocking period of four years. Other forms of stock awards which can also be used to reward employees include: Options; Incentive Share Units; Partnership Performance Units; Return on Equity Units; and Alternative Investment Plan Awards. For senior executives, such awards form part of their regular compensation. For more junior staff, the award may be granted from time to time as part of a reward for a good job done or for recognition of an employee’s long service with the bank.
» Single Global Currency Award (SGC) is a motivational tool designed to reward and motivate an individual or team to cross-sell products across divisions and deliver the entire capabilities of the bank to the clients. At the divisional level, SGC Awards accrue to a segregated bonus pool, which will be distributed at year-end by management with detailed input from the One Bank Delivery team.
» Benefits-from-Growth Bonus Award is another performance-driven, structured incentive concept that may be used specifically for recruiting a specific group of employees, particularly the Relationship Managers in the Private Banking division. In connection with the BFG bonus award, clearly defined performance objectives are agreed with the new employees upfront. When the defined performance objectives are met, employees will be rewarded with the award agreed.
» Employee Referral Program rewards employees for their efforts to source the best candidates. Employees who introduce a new permanent employee will be eligible for a cash referral award, provided the referring employee and new employee remain with Credit Suisse for at least six months from his or her hire date and the new employee has successfully concluded any period of probation. The amount of the award depends on the corporate title of the new employee.
» Quarter Century Club is given to employees who reach 25 years of service. The employee will become a member of the Credit Suisse Quarter Century Club and will be presented at an event with a certificate and a recognition award.
» Credit Suisse 150th Anniversary Award is one of a range of initiatives designed to celebrate Credit Suisse employees’ commitment to the success of the banking businesses, both during this special 150th anniversary year and beyond. The Executive Board has granted a recognition award of CHF 150 for each year of service to all employees.