Thank-you very much

by 07 Jun 2007

Although rewards and recognition are a part of many organisations employee benefits, they dont have a great impact on employee engagement. Teresa Russell talks with two employers that can see and measure the positive changes after revitalising their rewards and recognition programs

Everyone knows the sound of the hollow ‘thank you’. It emanates from the lips of many a retail cashier handing you change; from young children learning their manners; and from world-weary bosses who don’t care how much of your soul you put into that last business proposal that will never see the light of day.

But when you hear a truly heartfelt “thank you”, you can really hear the difference – not just hear it, but see it and feel it too.

Measure it

Fiona Heywood is HR manager, reward and recognition, at KPMG – a leading audit, tax and advisory firm with 4,500 people employed around Australia. The company’s biannual global people survey has specific questions about how well KPMG’s people feel their work and worth is recognised.

“In 2004 our results were positive, but they weren’t at the level we thought they should have been around the recognition piece. Recognition was being done in different ways throughout the organisation. We wanted to make sure that there was a firm-wide view of what recognition was, then communicate to all our people what tools were available and how they should be used,” says Heywood.

Insurance Australia Group (IAG), an Australian-owned general insurance company with well-known brands such as NRMA Insurance, CGU and NZI, experienced high growth through acquisition in 2003. Francesca Wood, remuneration specialist – responsible for reward and recognition, says the organisation conducts an annual survey of its 10,000 Australian employees. The survey includes direct questions about reward and recognition. Results in 2003 showed that there were improvements needed in that area.

“Because of all the acquisitions, each of the brands had different reward and recognition programs. We reviewed what each division was doing. We wanted to bring in something solid across the whole organisation that gave a longstanding commitment to recognise and reward employees,” says Wood.

Define it

Reward usually refers to monetary compensation and recognition refers to a whole range of other ways to say thank you. At KPMG, people are recognised for team or individual business results; for being role models of the firm’s values; for being a consistent team member and for community involvement and contribution.

At IAG, they too have defined what should be rewarded. These include helping internal or external customers, achievement, leadership, sustainability and innovation and loyalty.

Both KPMG and IAG clearly define what is to be rewarded to ensure consistency in recognition across their organisations.

Reward and recognise it

There are four parts to KPMG’s recognition program that was launched 12 months ago. They are celebration, balance, development and accolades. Celebration includes thank you morning teas and lunches. Balance involves making sure that life and work priorities are balanced. Development provides the employee with learning and development opportunities. Accolades is an online gift program that gives people a tangible reminder of the organisation’s appreciation for what they have done.

Before introducing this program, Heywood researched other organisations, both in Australia and overseas, to try to discover what the best approach should be. “My research confirmed that the best programs provide recognition that is most meaningful to the individual. During focus groups, people said saying ‘thank you’ was the most meaningful to them. But because people are all different, we needed to offer a range of things that would make people feel recognised,” says Heywood.

It is up to the manager at KPMG to choose the category of recognition. If they choose an accolade, they may select a specific reward or just the level of reward (colour-coded on the website) so the employee can go online to choose something themselves.

KPMG outsourced the provision of its accolade prizes to API Leisure & Lifestyle. “We wanted both products and experiences for our people to choose from. We’d had positive experiences with API in another program and found they could tailor their offering to suit our needs,” says Heywood.

IAG looked at both outsourcing and in-house provision of the reward and recognition program. They decided to design ‘rewardhelp’ (the name of their reward and recognition program) in-house. “We did that to ensure the scheme was strongly connected to the brand and the culture of IAG,”explains Wood.

They outsourced the complete online part of their reward and recognition system to Accumulate, which offers an online nomination and approval process, products, services and vouchers, as well as simple things such as specially designed e-cards available to all staff.

Prior to rolling the program out to the whole organisation, IAG did a ‘paper pilot’ of the process in two of its largest divisions. Any employee could nominate another for a reward, and then send it on to the nominee’s line manager for approval, who arranged the recognition event. In some areas of the pilot they had a committee that provided oversight to ensure fairness between teams. The process is now computerised, using Accumulate’s online tailored program.

“We needed to ensure flexibility in our program, so that it balanced the differing needs of the various parts of our organisation,” says Wood. She gives an example of this from late last year, when some parts of the organisation automatically gave employees points and other parts wanted to give employees the option of saving them for themselves or donating them to the Salvation Army’s Christmas Appeal, which was coordinated through Accumulate.

Measure it again

Wood says that the goal of the recognition and reward program at IAG is to improve employee engagement and satisfaction with reward and recognition, as measured in the annual employee survey. Following the introduction of the program, its 2005 survey showed a 30 per cent improvement in the way employees perceived that IAG acknowledged and encouraged good employee performance. There was also a 10 per cent increase in the perception that employees were adequately recognised for their contribution. Both results have since experienced steady annual improvement following the initial leap.

“We have both a formal and an informal process to recognise exceptional behaviour and service. This encourages repeat behaviour. It also empowers all employees (not just managers) to recognise individuals. Everyone enjoys that,” says Wood.

In KPMG’s latest global people survey, conducted in 2006, its largest improvement area was in the reward and recognition category. Results were up 12 percentage points over its previous survey. “This shows that our people are pleased with the market competitiveness of remuneration and the introduction of meaningful recognition and benefits programs,” says Heywood. KPMG’s retention rates have also improved over the last few years – another reflection of improved employee engagement.

Tips for effective reward and recognition

Heywood and Wood agree it is important to keep the rewards interesting and meaningful to employees. The online reward and recognition providers for both IAG and KPMG refresh their offerings at least three times per year, removing the least popular and always trying to find new ones that capture the interest of reward recipients. IAG has just refreshed its program, which includes a new look to its online site.

“You must listen to what managers and employees are saying about recognition programs and make sure that whatever you implement is appropriate for your business. Tailor it to your organisation. But the key to a good program is getting executive buy-in, including the CEO,” says Wood.

“Once you have a program that is meaningful to your people, you have to communicate it to them in clear and simple terms. Make sure they are not only aware of it, but that they fully understand it,”urges Heywood.