In my business, which is centered around changing behavior to achieve measurable outcomes, I have seen every sort of recognition and reward strategy imaginable, from the stellar to the cellar… There are some simple predictors of failure that are just too hard to ignore.
The first warning sign is when recognition is based solely on subjective factors, as is too often the case with “manager discretionary” rewards programs. Unless there are some guideposts established around what is worthy of recognition, and how much value should be assigned to the types of behaviors which earn recognition awards, you risk claims of “favoritism” or “selective administration”, neither of which will benefit your long-term effort. Training, communications and measurement are central to making sure that everyone understands when, where, how and with whom the recognition should take place.
A second red-flag is invisibility within the organization. Unless the opportunity to be recognized is valued, present and accounted for across the company, and at every level, it will tend to be forgotten about or overlooked. Some companies will intentionally bury the recognition opportunities as a means of minimizing the expense associated with rewarding exceptional contribution. If you see the initiative as an expense, rather than an investment, odds are it will live up (or down) to your expectations.
One of the most common flaws I have seen is when a recognition and rewards program simply mirrors job requirements. In other words, the basis for being recognized is largely lined up with what people are paid to do anyway. While the employees may love it, the effort is not going to generate much in the way of incremental or innovative effort. Recognition programs should target behaviors that are either outside an associate’s compensation or possibly even in opposition to the requirements of the compensation (but are strategically important). Example: A call-center rep may be expected to handle X number of calls per hour, with a targeted average call handling time. However, if the strategic direction is to migrate that rep from customer service to generating revenue, it needs to be understood that average handling time may be longer. Thus while the rep is paid to efficiently manage the call volume, the effective use of incentives might be applied against improving revenue growth.
The biggest faux pas, though, is when those planning the initiative myopically center attention on “getting the most value” for the employees in terms of rewards. Typically this means looking for the most transparent cash-equivalent reward media, such as dollar-denominated gift cards or non-reloadable debit cards. These are generally sold with a fee attached for fulfillment and touted as providing the “best value” for the user. However, as many studies have shown, using money (in any form, including cash, debit cards, gift cards or any other form of dollar-based media) as an inducement to drive performance is more likely to backfire than it is to deliver the outcome you are looking for.
There is a solid backdrop of quantitative behavioral research that demonstrates the point that once you introduce dollars into a recognition and rewards environment, you bring into play a complex, subconscious computational process that instantly calculates the individual “relative worth” of the effort required to perform at a higher level. Usually, when this happens, the company loses (unless they are offering an unreasonably high reward for a relatively low level of effort).
Another problem is human nature. People want more money, in any form or format, but they suffer guilt if they use it on something that is purely hedonic. If you are rewarded with an additional $100 in your check, it tends to blend in with your other income, and you either don’t notice it or you use it to pay regular bills with.
If you are given a $100 gift card, you may or may not use it, and if you do use it, you are likely going to spend more than the value of the card, and again on something may you feel “obligated” to buy. This is okay, but it doesn’t really represent a meaningful, memorable act of recognition. Ditto for the debit card.
If you are rewarded using an award media that is not articulated in dollar-terms, you are far more likely to use it (guilt-free) to redeem for something that you really want (but won’t buy, even if you have a debit or gift card to use for the purchase). One of the concerns that many clients have had in the past is that there simply is not enough value in the points provided to purchase awards on par with the values available at retail. That is an old story, and one which is no longer the case. Our company, for example, which does more of these kinds of programs than just about anyone else, has over 40,000 reward selections, on its way to over 100,000 reward selections, many of which are priced at/below retail counterparts.
So how do you insure that your employee rewards and recognition program is going to be a success? You can increase your odds by aligning yourself with a company that has been doing this for 50+ years, can bring you a stream of innovative, new technology and is willing to invest in the success of your initiatives. Your employees are your most valued assets, and deserve the best, most effective rewards. Logic might say, “give ‘em money”, but experience has proven, time and again, that it takes a lot more than that to inspire, mobilize and sustain an innovative employee base.