Recognising and rewarding good performance is crucial to retaining talented workers. Human Resources magazine looks at some of the latest developments in this area and examines how organisations can make the most of gift and reward programs
Recognising and rewarding good performance is crucial to retaining talented workers. Human Resources magazine looks at some of the latest developments in this area and examines how organisations can make the most of gift and reward programs
Many areas of HR are coming under more scrutiny, with a view to greater cost effectiveness. Reward and recognition programs are one such area, with companies reviewing links to the bottom line and how to best tailor such programs.
Some leading organisations are investing considerably more – approximately 1 to 2 per cent – of their payroll on non-cash rewards for recognition-based programs, according to Adrian Finlayson, CEO of Wishlist Holdings. While there is no industry-wide, fact-based research on the actual spend on employee gift and rewards, he estimates that spend on such initiatives probably represents about 0.5 per cent of payroll across all sectors.
“In recent years we have seen a significant expansion in the range of products and services that are being offered to employees as part of their incentive and recognition programs. Once well-known branded products were being offered, but now more inspirational choices are being offered such as unforgettable experiences such as a NASCAR drive, a weekend getaway, swimming with the whales and much more,”says Finlayson.
The days of an employee waiting for months to get their reward are over and does little to drive greater employee performance, he adds. Therefore, an ever increasing importance is being placed on the ability to deliver the reward as quickly as possible after the employee has accumulated enough points to redeem the reward of their choice. “Ideally the rewards delivery should be no more than a few days to a week but this is not always possible, so a strong customer service ethic is required to ensure if this can’t be achieved then the participant is contacted and provided with advice and options.”
Tailoring rewards
The starting point for tailoring an employee rewards program is to start with the end in mind, according to Finlayson. “Key stakeholders need to agree on what are their business objectives. What are we looking to achieve? Increased employee engagement? Increased employee satisfaction? Engage and motivate the majority of our employees (not just the top performers)? Unify disparate departmental rewards programs into one multi-faceted company initiative?”
Once the business objectives are agreed among the key stakeholders a program can be designed that will deliver the results. The program design needs to continue to define the business outcomes such as how the program design will achieve behavioural engagement, what value will be placed on each behaviour and reward, and how to create the greatest awareness and participation, he says.
What type of incentive to give your staff will depend on varying factors such as the demographics of employees and the needs of workers, according to Louise Carmody, national sales and marketing manager, EzyBite – Accor Services. “For example, engineers might value training and investment in their existing education more than a gold watch so reward programs should be tailored to meet those needs.”
Another trait of a successful reward and recognition program includes consultation or focus groups with the management team and then with employee stakeholder groups across the organisation, Finlayson says. “Generally, management has a very good handle on what the employees will respond to; however, the extra effort of engaging with employees through focus groups can provide a unique perspective for an organisation and creates buy-in.”
Common pitfalls
A common pitfall that companies often fall into is to offer rewards in one division but not others, or offer rewards of varying value, according to Carmody. “Recognition programs should be consistently applied across the company. Otherwise staff can often feel alienated if they didn’t receive an incentive and other staff did or vice versa. Employees do not want to ever be seen as favouring one department over another or favouring one person over another.”
Other common pitfalls are that cash incentives can often be forgotten and also can create a feeling of competition between the employees, she adds.
Similarly, Finlayson says good incentive and recognition programs should provide incentive each and every day for employees to do their very best, and the reward they have set their sights on must reinforce their belief in their performance.
“It’s important that the rewards don’t just become an expected part of the job, just for doing the job they are already paid to do. If this happens then the program will have very little credibility in the eyes of the participants and will not deliver the returns that management expect,” he says.
A good incentive program evolves over time as the challenges for the business change, according to Finlayson, so what’s working today might not be the best solution in a year or two, and must be rigorously reviewed and refined to ensure it is performing at an optimum level.
Measuring ROI
Measuring return on investment (ROI) of employee benefit programs is difficult because improved staff morale is often an intangible element of the workplace, says Carmody. Looking at aspects such as improved sales, lower absenteeism than past years and lower staff turnover are areas that can prove that your incentive program is working. “These factors are not always indicators of a successful retention program as other external and internal influences could be making these changes.”
Staff surveys and consistent communication are other ways in which upper managers can monitor the results of the gift and incentive programs, she adds. “Fluid lines of communication between managers and employees should give managers an idea of whether the incentive programs are working in their workplace.”
There is a growing trend towards much greater accountability and the need to deliver results, according to Finlayson. “The key to proving an ROI – and indeed achieving a positive ROI – is extensive analysis of the current situation and then rewarding behavioural changes which lead to the desired business outcomes that can be tracked and measured by the program,” he says.
“Most organisations generally implement a range of initiatives that complement each other and therefore it is difficult to fully attribute the results to just one program. However, with a solid business case and firm objectives it is possible to create a strong link between the outcomes and the various initiatives which lead to the results.
Alberto Culver revamps rewards
Alberto Culver is a global company which produces hair and beauty products. In Australia, the company has recently taken a more strategic approach to reward and recognition.
The senior management team wants to acknowledge and reward people in a more consistent manner, according to Neil Perrett, HR director for Alberto Culver Australia. "It's more than just the emails that go out from time to time or recognition from managers. Quite often a manger might be more aware of these issues than others, so their department might be getting more regular recognition than others because of this. Our management team has discussed this and they want to recognise and reward performance in a way that ensures there is consistency and equality across the organisation," he says.
Perrett says it's important to have executive support in place for such initiatives, which also reinforces employees' perceptions of the importance of reward and recognition programs. "The way we used to do things was to focus on business benefits from a HR point of view. The HR function is not the first to be expendable. As such, the programs and policies and systems we put in place need to be directly related to a core part of the business as well as top down support."
