Rewards and recognitions strategies.

Extrinsic Rewards: The Pavlovian School

If you havenít got the time to develop a thoughtful rewards & recognition plan, youíll likely end up with something that rewards employees with small tokens of appreciation. If you must go this route, remember that unlike Pavlovís dogs, people are rarely motivated to perform in the long run by small cash rewards and other ìtreatsî. In fact, there is some evidence that small cash rewards can even become disincentives.

For example, during an incentive campaign several years ago to increase sales of the Aquatred tire, Goodyear and BI Performance Services of Minneapolis found that employees who were offered non-cash rewards ñ a combination of merchandise and travel-related rewards ñ performed nearly 50% better than their peers who were offered cash. The non-cash group generated a positive ROI of 31% compared to that of negative 20% by the cash group.

There are numerous references in the literature supporting the view that cash rewards are less effective than non-cash rewards. There is also evidence that no rewards outperformed small cash rewards, but large cash rewards generated the most effort and best performance. Large cash rewards, however, are not practical in recognizing and rewarding staff frequently.

Where small rewards are offered, non-cash rewards, in which employees can accumulate ìpointsî and finally purchase something of their choice, may be more meaningful and effective because the employee has something tangible by which to remember the event and the organization.

Gift certificates rather than cash might be appreciated for tax reasons also. Through its Air Miles Program, The Toronto-based Loyalty Group, for example, has experience working with organizations to set up non cash-based rewards programs that can be used to purchase everything from vacations to electronics, entertainment, flowers and other merchandise and services.

Most studies do not reveal what happens in the long-term, after the novelty of gifts and tokens of appreciation wears off. It is likely that organizations experience an initial surge in productivity when they launch a good recognition program; this might be attributed to the ìHawthorne Effectî 1, however, and might not last.

For a recognition program based on small awards to have a chance at effectiveness over time, some effort should be put into determining what the organization can offer employees that will contribute to their quality of life. Some employers awarded with time off, first pick of assignments, flexible work schedules, specialized training, greater autonomy and increased responsibility, for example. In a small survey of staff done for this article, paid time off was the preferred motivator. Friday afternoons off, especially in summer, for example, are worth far more to most recipients than their equivalent value in cash; which would be taxed and would likely ìdisappearî into the employeeís bi-weekly or monthly paycheck.

In addition to monetary or other rewards, a physical or virtual ìHall of Fameî might be established. Exceptional or frequent reward recipients would be nominated to the hall of fame where their name and photo would remain permanently beside a description their achievement(s). Like sports halls of fame, a ceiling on the number of inductees per year could be set to keep it meaningful.

Perhaps a better approach to recognition, however, is to take the time to develop a program that gets to the ìroot causesî of poor performance, high turnover and low employee motivation.The

Maslowian Approach: Intrinsic RewardsìThe primary goal of a recognition fund is to express appreciation for the efforts and achievements of employeesî. 2 The objective is to make employees (especially high performers) feel valued and appreciated by appealing to their intrinsic need for belonging, acceptance and appreciation.

The literature demonstrates that recognition limited to a sincere thanks from a respected manager can be as effective as many tangible rewards. In response to part two of this series, a reader wrote:

ìAlmost without exception, any cash or other award incentives I've been given during my career have seemed hollowî.

ìThere was one exception: after working long and hard on a contract proposal, a VP came by to personally thank each and every worker, at their individual desk, for a job well-done. He also gave us each a ballpoint pen engraved with the name of the contract. One of the most inexpensive awards I've every received, but his individual thanks was what stood outî.

The challenge may be to find skilled leaders who have the confidence, knowledge and experience necessary to know when to acknowledge excellence, and how to make it sincere and motivating. The V.P. in this case had the skills to know when and how to recognize his staff. His choice of gifts was on the mark also because despite their low tangible value, the pens were mementos of exceptional teamwork, a mark of pride and achievement, and as such they had a different, higher value.

The adage that ìemployees leave managers not companiesî is borne out in exit interviews and employee surveys. According to reviews of corporate exit surveys done by Janice Lachance for the Public Personnel Management Journal in 2000, employees ìliked the work and even the pay, they just could no longer stand the way their supervisor failed to involve them or recognize their contributions.

Using Maslowís hierarchy of needs as reference, if employees are paid fairly, their basic needs (insofar as the employer can impact) are met. With that as a foundation, we can move on to ìhigher needsî such as belief in their work, belief in their contribution and belief in greater, team oriented objectives. The diagram below represents Maslowís hierarchy of needs.

In the workplace, it is generally assumed that provided they are paid a living wage, employers are starting at the ìBelonging Needsî stage. Employers usually donít have much trouble fulfilling these needs. The act of hiring a person and giving them a meaningful role within a larger group is usually enough because much of the belonging need is fulfilled outside work through family and friends. Esteem Needs are where the workplace most often plays the largest role.

Countless factors, almost from birth, impact on a personís self-esteem. Nonetheless, nearly everyone understands what motivates and angers people at work because almost all of us react the same way to good managers and bad ones - thatís what makes bad managers so infuriating, there is simply no excuse.

For example, youíve put in exceptionally long hours, researched a subject or strategy thoroughly and have prepared your presentation. You make your recommendations to senior management. If they listen, display the right body language, ask thoughtful questions and give sincere feedback, they will make you feel respected, needed and appreciated. You will return to your tasks energized and motivated, even if they didnít agree with everything you proposed.

If, on the other hand, they cut you off, rush you through without meaningful comment, bump you arbitrarily for other agenda items, fail to provide feedback on your presentation or do any of a host of other things that make it obvious to you that youíre wasting your time, youíll leave resentful and, to save your self esteem, with hostility toward your incompetent managers. Repeat this scenario several times and you may develop a ìwhy botherî attitude toward the company.

It all comes down to motivation. The ability to motivate others is fundamental to excellence in leadership. Motivational skills are comprised, in large part, of simply listening to employees, demonstrably valuing their time and input and treating them with respect. These should not be seen as skills, they are manners and courtesies that everyone in a workplace should possess.

Knowing when and how to recognize and reinforce positive behavior, on the other hand is a skillset. Assuming these skills can be learned, organizations might get the best return on investment for their rewards programs by training their managers. If these skills cannot be learned, the investment might be better spent in figuring out how to recruit and retain managers who already have the skills rather than funding a chest of prizes to be doled out by bad or incompetent managers.

Bonuses and pay raises have their place, of course. Employees have to know that they are being compensated fairly and competitively for their efforts. The company that monitors total compensation in their industry and geography and ensures that its staff are adequately paid, can put that issue to bed for the most part, and concentrate on intrinsic motivation when rewarding and recognizing staff. There are some, but very few organizations that are beyond Esteem Needs and into the Self-Actualization level. Most often, a worker must quit his or her job to strive for this level of need, perhaps to start their own business in a field theyíve always wanted to enter, or to travel, climb mountains, become a professional bowler, etc. That said, there can be no greater reward, after the other levels in Maslowís hierarchy are fulfilled, than to indulge an employeeís needs for self-actualization -- but thatís another article.

Between 1927-1932, Elton Mayo conducted experiments into the positive, but fleeting effects of attention on workers. Most famous are the experiments that showed short-term productivity improvements based on raising or lowering the lighting levels in factories.

Maximizing the Impact of Recognition, Donald W. Hay, Towers Perrin

Allan Schweyer has been involved in Internet recruiting since 1994 when he pioneered e-recruitment solutions for Human Resources Development Canada. From 1995 to 1999, Allan directed the award-winning National Graduate Register, Campus WorkLink and SkillNet.ca programs with Industry Canada, which introduced the concepts of applicant tracking and advanced screening to job boards and ìcareer networksî to job seekers. In 1999, Allan formed the On-line Recruitersí Association of Canada. In 2000 and 2001, he worked with Cahners Business Information in Boston to build information portals for technical professionals and attended graduate school at Harvard University. Allan currently consults with large organizations on HR strategies and specializes in e-recruitment projects. He is a senior researcher and analyst with HR.com and the guest editor of the HR.com staffing vertical.