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For too long now organizations have seen the ‘problem’ of employee or business partner motivation being solved by mechanical means. It would appear that by introducing some kind of non-monetary reward or recognition scheme the sponsor can change human behaviour at work in a quick, predictable way. But no sooner are such programmes introduced than unexpected results happen. They stop working. So another programme is needed to patch up the initial plan. And then another. And then another. What starts out as an ambition to achieve a fully integrated people motivation programme often results in conflicting activities that cancel each other out. Confusion abounds. Participants ignore the numerous, stop–start messages and carry on with their day-to-day business, as usual. No one wants to appear ungrateful, but why can’t they just leave us alone to get on with our jobs?, they cry. In this book I will review what produces an effective and sustainable reward and recognition programme, whether your organization is a multinational conglomerate or a local engineering supplier. We start with what human motivation within a corporate or non-profit organization context looks like and what the theories tell us about applying the principles to modern organizations. We will then explore the four key elements of a performance improvement programme (PIP): research, skills development, communication and rewards/incentives. In particular you need to know about the different types of recognition programmes and reward options so that you can make the right choices for your specific employee or distributor participant profile. The final part of the process is implementing the programmes in an effective way and budgeting for performance variations. The principles of human motivation are universal. We will explore programmes from around the world to show that subject to cultural attitudes the rules for sound employee motivation can be applied wherever you happen to be based. By the end of this review you should be able to improve the operational effectiveness of your current schemes, create new ones with confidence and have a broader understanding of why reward and recognition programmes are designed the way they are and how to make them more effective when the opportunity comes to review how they operate. There is often a specific issue with non-monetary rewards, better described as incentives, which are over and above take-home pay and benefits. Daniel Pink, in Drive (2009), describes the phenomenon very succinctly: ‘Goals may cause systematic problems for organizations due to narrowed focus, unethical behaviour, increased risk-taking, decreased cooperation and decreased intrinsic motivation.’ So, before you know it, you have a dozen reward and recognition (R&R) programmes running, none of which are ‘working’. The larger the organization, the worse the cumulative effect is. Every three or four years, a new VP or senior executive comes in and decides to review it all. The same analysis of performance is undertaken with the same sample groups of workers. A new scheme is born, using new research to support the changes in emphasis. This may be about reward choice, team structures, new recognition media or possibly issues to do with the communication media or even the underlying economy itself. But they don’t work either – or, at least, not as well as the return on investment (ROI) proposal said they would. ROI is the standard measure most programmes are subject to in order to determine what organizational benefit may derive from implementing them. But it is hard to establish such a measure for employee schemes, as sponsors often say that administration teams are almost impossible to measure in terms of returns in the financial sense. It would appear that changing human performance at work is not as easy as it looks. A recent white paper by one of the world’s leading ‘performance improvement’ consultancies, BI Inc, supported by many other earlier studies, declared that gift cards with a
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monetary value, for example, are less effective than tangible items such as merchandise in promoting higher performance – and yet most large multinationals still use gift cards or other cash substitutes as the go-to reward for employee incentives, recognition and reward. Furthermore, the report says, gift cards actively encourage winners to add as much as 220 per cent of the reward in their own cash when they are redeeming. So most of the reward is, in fact, funded by the participants themselves, out of their own pockets. Was this really what was intended by the sponsor? What started out as a discretionary incentive and a reward for superior performance has become a discount on cash purchases employees may well have been planning to make anyway.
Incentives versus recognition
Then there’s the idea that recognition is for employees and incentives are for salespeople, largely speaking. The accepted wisdom is that employees get recognition only because, to be frank, it is too expensive to give them all lavish rewards. On the other hand salespeople need incentives because they have little job security beyond achieving their targets. Just as with politicians, most salespeople’s careers end in failure. Incentives compensate for the fact they will at some stage falter in their expected performance and be out of a job. What is often not appreciated is that recognition and reward/incentives are part of the same continuum, with low-cost, esteem communication at one end and naked, somewhat expensive bribery, you might say, at the other. Recognition is usually long term. Incentives are usually short term. Recognition promotes loyalty, whereas incentives promote quick, tactical change. They are rarely mutually exclusive. Some of the best examples of incentives are in fact long-term recognition schemes for salespeople, such as sales clubs. But few programmes are sufficiently well thought through to allow for both types of motivational intervention to take place. Why it tends to be one or the other remains a corporate, decision-making mystery. There should be no reward without recognition and no recognition without reward, even if it is only in token amounts of either element.
Does recognition really work?
If an employee goes above and beyond the call of duty and provides exceptional service or assists with an unexpected commercial deal many organizations will recognize this performance publicly and sometimes attach a small reward to say thanks. But why? Because they know that better employee engagement with the published values of the business leads to better bottom-line performance and in turn a higher stock price. But many managers need to be taught how to look out for exceptional performance and promote it appropriately. In some cultures singling out team members for specific praise is actually frowned upon. In some circumstances the praise itself may be demotivational for other team members, who may claim that the recognized person is not as hard-working as they are and that the boss never notices their efforts. Many managers say that identifying employees for special praise leads to more harm than good, as they cannot be expected to spot every incidence of exceptional performance. So the model of praising everyone for everything is not necessarily effective. It’s all about context. Who decides what level of reward is appropriate? Typically, administration staff receive much lower rewards than salespeople do for what might be described as similar exceptional activities. And is the size of the reward relevant anyway for employees who have an intrinsic interest in doing the tasks for the tasks’ sake?
The balanced scorecard
One way around this dual tension is to introduce the balanced scorecard or a system based on key performance indicators (KPIs). In theory this provides a way to recognize and reward great all-round performance whether you administrate policy or you sell products. The trouble is, once the internal group of ‘advisers’ get their teeth into the constituents which
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make up good performance, things start to get complicated