Download full-text PDF

The fundamentals of employee recognition

Article (PDF Available)  · April 2005with4,154 Reads
SHRM
WHITE
PAPER
THE FUNDAMENTALS OF EMPLOYEE
RECOGNITION
By Teresa A. Daniel, J.D. and Gary S. Metcalf, Ph.D.
May 2005
Introduction—Rewards Get Results
There are two things that people want more than sex and money—and that is recognition and
praise. This observation is attributed to Mary Kay Ash, the successful founder of Mary Kay
Cosmetics, but could have been made by any number of HR professionals who know this
statement to be true.
High-performance companies understand the importance of offering awards and incentives
that recognize, validate and value outstanding work. They keep employees motivated and are
effective methods of reinforcing company expectations and goals, especially in times when
merit budgets are low (or even frozen), promotions are rare, health care premiums are on the
rise and overall job satisfaction is low.
According to the latest research, nearly nine out of 10 companies offer some sort of
recognition programs for employees. From informal programs (a simple “thank you”) to
formal programs (such as service recognition or above-and-beyond performance programs),
companies are using everything from plaques to vacation packages, merchandise to spa
certificates as a way to say, “Nice job!”
For a program to be effective, however, it must create value. This means that any program
must have a performance component—or it will be meaningless. While many managers,
including those in HR, sometimes dismiss recognition and reward programs as “feel-good”
activities, evidence suggests that there is a strong link between noncash awards and
incentives and improved job performance. In fact, nearly all of the companies responding in
the 2003 National Association for Employee Recognition/WorldatWork study reported
aligning recognition strategies directly to the overall strategy of the organization. This
indicates that companies are thinking very strategically about the programs they implement
and the impact those programs can have on the success of their organizations.
Noncash awards and incentives—ranging from a note to the employee that says, “Good job”
to a gift certificate for a nice dinner—can be a cost-effective and valuable tool that can help
raise employee morale, lower stress, absenteeism and turnover, and increase productivity,
competitiveness, revenue and profits. If you look at companies that people love to work for,
you will find that these are the companies that recognize their people and not only tell them
that they are doing a great job, but show their appreciation through tangible signals such as
incentives, recognition and rewards.
Rationale for Implementing a Recognition Program
In the 2003 National Recognition Survey, sponsored by WorldatWork and the National
Association for Employee Recognition (NAER), 87% of the 413 responding companies
reported that they had some form of an employee recognition program and 40% of the
respondents indicated that they were expanding their programs. Companies hope to achieve
a number of results through their recognition programs, but creating a positive work
environment was the top reason cited in this survey (80%). Other goals included creating a
culture of recognition (76%), motivating high performance (75%), reinforcing desired
behaviors (75%), increasing employee morale (71%), supporting the organization’s mission
and values (66%), increasing retention/decreasing turnover (51%), encouraging loyalty
(40%), supporting a culture change (24%) and other (5%).
Companies have also cited a number of additional reasons for adopting these types of
programs, including the following: reducing costs; attracting and retaining key employees;
increasing employee productivity, competitiveness, revenues and profitability; improving
quality, safety and customer service; and lowering stress, absenteeism and turnover.
While it is clear that employees benefit from these types of programs, it is the companies
adopting them that benefit the most. Findings from a recent Watson Wyatt Worldwide study
indicate that companies with an effective recognition program in place realized a median
return to shareholders that was almost double that of companies that did not have any such
programs in place.
Keys to an Effective Program
Employees not only want good pay and benefits, they also want to be valued and appreciated
for their work, to be treated fairly, to do work that is important, and to have opportunities for
advancement and involvement in the company. Recognition and reward programs play an
important role in organizational success by helping attract and retain high-performing
employees.
An effective recognition program should meet several essential criteria, as outlined below.
1. Management Commitment
Managers must commit credible and sufficient resources to any incentive program. The road
to results begins with resources. Simply put, management backing is the key ingredient.
Managers must dedicate the resources, including the time it takes to plan and execute a
program. And managers must provide something else—give employees and supervisors the
power to run the program.
2. Link to Bottom-Line Results of the Company
To be effective, any program must connect with the needs and expectations of the workforce,
as well as the company’s overall goals and strategies. If there is no direct link to the bottom-
line results of the company and no performance measures to establish this link, employees
will be left wondering why the company is offering a program that is so disconnected from
their day-to-day reality and the company will get no meaningful payback on its investment.
3. Recognized Value of Awards to Employees
Employees must understand the mission—why the incentive program is being launched.
They must be convinced that the chosen recognition system is appropriate for the sacrifices
that will be expected in order to achieve the program’s goals. The way to make this happen
and get “buy-in” at the same time is to give employees ownership of the program.
Employees must have some opportunity to make decisions and exert control over the
program’s direction. Any materialistic awards and rewards must be valued by all participants
and perceived as having value, dignity and meaning. A recognition system begins to falter
when employees start thinking that their actions are being insulted by inconsequential
incentives.
4. Fairness/Equity in Distribution of Awards
The participants in the program must believe that the system of recognition is just and
objective. To achieve this, all employees who meet the criteria outlined for receiving the
award should be included and recognized. Some companies even include employees in the
selection of incentive recipients and also in the determination of selection criteria.
5. Simplicity of Program
The entire incentive process should be thoroughly maintained with a minimum of
administrative effort. Keep it simple. Any system that requires either excessive management
control, financial calculations that require complex gyrations or sophisticated plans that
require exceptional employee understanding will not achieve desired results.
6. Continuous Evaluation/Improvement
Programs must be continuously monitored in order to keep them relevant and current. The
evaluative process should include a review of the following types of questions: Does the
program provide rewards that are adequate, fair, competitive and appropriate? Have the
program’s objectives been met? Has it helped to change processes and/or did it support the
company’s other performance initiatives? Are there appropriate levels of communication?
Was there a celebration? Do employees find the program to be meaningful? What would you
do differently the next time? This evaluative process should be completed at the conclusion
of every award cycle so that adjustments can be made to improve the system and also to
update the program to retain employee interest.
What Makes a Good Reward? Be SSMART
Recognition can be delivered in a number of ways, but to be truly effective, it should be
delivered in a SSMART way (with credit to Jim Brintnall for this acronym):
1. Supports Organizational Goals and Values
Any incentives or recognition awards will be most successful when they are congruent with
the organization’s stated mission, vision, values and goals. It is important that employees see
a clear connection between what management says is important and what is actually
rewarded at work.
2. Sincere and Simple
Be sure that the awards are appropriate for your culture and that they are given in a sincere
and heartfelt manner. Managers and supervisors often fail to give recognition because “they
don’t know what to say.” A simple recipe for recognition can work magic in your
organization: thank the employee by name; state what the employee did to earn the
recognition; explain how you felt about the employee’s behavior; state how the behavior
added value to the company; and thank the employee again by name. Calling the person by
name and letting him or her know that you personally value the effort can be as motivating
as the actual reward.
3. Meaningful
An employee who completes a two-year project should be rewarded in a more substantial
way than an employee who simply does a favor for his or her manager. Beware of “canned”
award or incentive programs. Company cultures differ greatly, and what works in one
environment may fail woefully in another. The reward must be meaningful to the individual
receiving it. Since all of us are different, it is incumbent on the person’s manager to learn
enough about his or her subordinates to know what types of things motivate them and what
they would find important. Beware, though, of the form letter. One quick thank you note on
a manager’s personal stationery will have much more impact than a cup with the company’s
logo and a form letter. The way the reward is delivered can make or break the program—
people can be more motivated by a single act of personal consideration by their manager
than by a large cash bonus that is delivered poorly.
4. Adaptable
In addition, certain groups of employees may not be motivated by all of the company’s
incentives. As a result, it is important to offer a variety of incentives and recognition
opportunities in order to meet the varying needs of the workforce. For example, Generation
X employees (those born between 1966 and 1978 and who have earned a reputation for their
lack of commitment to organizations in terms of time and loyalty) are more likely to be
motivated by time off than money, while older workers will likely find the bonus incentives
more attractive.
5. Relevant
The things that get rewarded are the things that get done. It is critical to decide what
behaviors to reward and then to reward them consistently. Be specific as to why the reward
is being given—what behavior occurred that is being reinforced?
6. Timely
The reward or recognition should be made as close to the time of the desired behavior as
humanly possible in order to strengthen the link between the employee’s action and the
result to the company.
Conclusions
The most effective ways to motivate employees to achieve the desired goals of the
organization include creating an environment with strong, respectful and supportive
relationships between the organization’s managers/supervisors and employees and a focus on
genuine expressions of appreciation for specific employee achievements, service milestones
and a day-to-day acknowledgement of performance excellence. In a nutshell, a positive
employee reward and recognition strategy can be summed up by the following: nothing is
better than a sincere “thank you for a job well done.”
Appendix: Climate Assessment for Your Current Recognition Program
While not all-inclusive, your answers to the following questions will provide you with a
“quick and dirty” overview of how well your organization is doing in terms of rewarding and
recognizing employees.
Rate yourself honestly on the True/False questions listed below by noting a T or F beside
each statement:
1. ___ We show some form of appreciation to our employees every week.
2. ___ We measure what we reward and we reward what we measure.
3. ___ We compete, between teams, for gifts and prizes.
4. ___ Employees get to choose at least some of their projects.
5. ___ We reward behaviors linked to only one or two key organizational values.
6. ___ Employees see the rewards we currently offer as valuable.
7. ___ Employees generally think that our reward programs are silly or demeaning.
8. ___ Our organizational, departmental and individual goals are clearly defined and
understood.
9. ___ Peers recognize and reward each other.
10.___ We recognize small improvements as well as the major ones.
To score your answers:
Score one point for TRUE on questions 1, 6 and 10.
Score two points for TRUE on questions 2, 4, 8 and 9.
Score one point for FALSE on questions 3, 5 and 7.
Grand total of your points = ______
What Your Total Score Tells You:
13 – 14 points: EXCELLENT!! You’re doing a great job.
11 – 12 points: Job satisfaction among employees is likely to be fairly high. Keep working to
improve your retention rates.
7 – 10 points: Not bad, but you are still losing key people by missing essential components
in your recognition program.
1 – 6 points: It is time to rethink your recognition program. There are more strategies
available to you.
SHRM wishes to thank Teresa A. Daniel, J.D. and Gary S. Metcalf, Ph.D. for contributing
this paper. It is intended as information only and is not a substitute for legal or professional
advice.
Teresa A. Daniel, J.D.—an employment lawyer, HR consultant and trainer, faculty
instructor and scholar, author and speaker—is the president and owner of InsideOut HR
Solutions PLLC, located in Ashland, Ky. (www.insideout.bz). Established in 1998, her firm
provides people-related consulting and training solutions to small and mid-sized businesses
throughout the United States. She had conducted a variety of workshops for both academics
and business professionals in the United States, China, India, South America and Europe.
Prior to joining the academic world, Dr. Daniel spent 15 years working for a Fortune 50
company in the areas of law and human resources, with a strong focus on employment law,
mergers and acquisitions and people-related issues. Dr. Daniel is also a member of the
faculty of the Lewis College of Business at Marshall University in Huntington, W. Va., where
she teaches courses about entrepreneurship, business law and ehics, as well as small
business consulting. In addition, she is a part-time faculty member at both Kaplan and
DeVry University where she teaches online courses in human resource management,
business ethics and business law.
In 2004, Dr. Daniel was named a Fulbright Senior Specialist, and in 2002 she was honored
as a Distinguished Alumnus at Centre College, Danville, Ky. She is the author of two books
and numerous professional articles in the areas of entrepreneurship, with a particular focus
on people and legal issues in a small business environment. Dr. Daniel can be reached via e-
mail at tdaniel1@alltel.net.
Gary S. Metcalf, Ph.D.—a management consultant, scholar, author and speaker—is
president and owner of Interconnections LLC, a management consulting firm located in
Ashland, Ky. (www.interconnectionsllc.com). The firm provides management consultation
and training, ranging from organizational transformation to leadership, teamwork and
communications. Clients have included the U.S. government (Office of Personnel
Management), Fortune 500 corporations (e.g., Dow Chemical, Amazon.com), international
corporations (e.g., SINOPEC in China), as well as local and nonprofit organizations. Prior
to consulting, Dr. Metcalf spent 12 years in management in a Fortune 50 company and 10
years in nonprofit organizations.
Dr. Metcalf is a part-time faculty member in the organizational systems concentration at
Saybrook Graduate School, in the School of Human Services, Administration and
Management Division at Capella University, and with the Center for Leadership and
Innovation at Ohio University Southern Campus. He currently serves as a vice president for
the International Federation for Systems Research, based in Vienna, Austria. He has taught
workshops and seminars in the United States, South America, Europe, China and India. He
is also the coauthor of a book titled The Management of People in Mergers & Acquisitions
(with Dr. Teresa A. Daniel) and has written numerous journal articles in the field of
organizational systems and intellectual capital. Dr. Metcalf can be reached via e-mail at
gmetcalf@interconnectionsllc.com.
For more information on this subject, send an e-mail to the SHRM Information Center at
infocen@shrm.org, please click here to ask the Information Center for help.

Recommendations


Article
Full-text available
January 2013
    At 6 foot 5 inches tall and weighing in at 312 pounds, Jonathan Martin, an offensive lineman who plays for the Miami Dolphins, is an unlikely candidate to be targeted by a bully. But bullied he was, and here's why. During college and into his professional career, Richie Incognito has had a reputation as a rough player who is willing to do anything to win, even if he has to cross the line and... [Show full abstract]
    Article
      This article examines the ways US corporations unwittingly make workplace bullying a rational choice. We explore the dynamics of the problem from two key perspectives: (1) individual—the unique characteristics of individual bullies, and (2) situational—the influence of the corporate situational context. Is there some aspect of the “DNA” of humans and organizations—the guiding principles by... [Show full abstract]
      Technical Report
      Full-text available
      August 2017
        Executive Summary Purpose—The purpose of the study is to contribute to the future operational readiness and institutional strength of the U.S. Army by examining the perceptions of senior officers about how the core practices of exceptional leaders differ from other types of leaders, and how great leaders impact those under their command and the organization. Design/Methodology/Approach—This... [Show full abstract]
        Discover more