Employee recognition is vital for performance-oriented companies that look for mobilizing all employees and stakeholders, prominently dealers and distributors, in the direction of clear business objectives ascertained by sales, profits, customer satisfaction, and productivity. Such performance driven companies need to regularly communicate and strengthen their dynamic aims. Nevertheless, recognition for such organizations goes beyond the conventional character of service awards. In spite of the fact that recognition and incentive seem interchangeable, the two terms should not be confused with one another. While the recognition includes all the means that draw attention to employees who perform, the incentives usually employ discerning means to persuade people to accomplish a particular objective like increasing sales. Recognition can be impromptu, indeed to the level that there is no ceremonial announcement that the organization has a recognition program, while the incentives are well known so as to build enthusiasm through material reward. The true beauty of the recognition programs based on performance is their nature of surprise that is in contrast to service-award programs that make necessary ceremonies holding on a routine basis. In this way the employees would be much more interested in performing better rather than just concentrating on the reward.
Employee recognition domain has become to gain recognition among organizations as they begin to judge the impact of downsizing on long-term productivity, profits, and the quality of products and services. Previously, employee recognition meant service awards, wherein recognition of their service years in a company people got an intensifying series of awards accompanying a mention in the employee newsletter, while staying until retirement, they might get a gold watch. From time to time, companies expanded these programs to comprise recognition for diverse actions like superlative customer service; nevertheless often these were limited to rewarding nature.
In the present era, no one just simply depends on the incentives and reward system, rather in a downsized company; employees would ridicule a service award if there were one. Thus, with more understanding of the employees’ needs, companies are becoming more proactive when it comes to the employee recognition. While the effective recognition include activities like day-to-day, informal, and formal. For example, commendation is an illustration of day-to-day recognition that costs nothing and can be given by any person, to anyone anytime. While the form of informal recognition can take a diversity of forms, it has certain limitations and oftentimes contains a low-cost, material beckoning of appreciation or congratulations, the formal recognition includes awards for achievements, service, etc., and the celebration episodes at which all contributing employees take part and get recognition. However, a formal recognition customarily has inevitable policy and legal requirements.
In “1001 Ways to Reward Employees” and the “1001 Ways to Energize Employees”, Bob Nelson and suggests the significance of awards and recognition and the reason that they are essential tool of employee motivation, team building and productivity. According to Nelson, the American organizations did not always identify or accept this, as for a much longer time corporate America thought that high salaries, cash bonuses and good employee benefits were all that was needed to motivate their employees. While these factors do in an effective way provide a form of short-term motivation, however, much research finding points out that money is not an effective long-term motivational tool. Before 1954, what termed corporate motivation was the formula of Frederick W. Taylor that encapsulates that money was the primary motivator for all performance. Contrary to this scientific management formula, in the Hierarchy of Needs Abraham Maslow in 1950′s denied this scientific management and originated that individuals were not machines as they in truth have various levels of motivational contentment that need to be appeased to a certain degree. Form this theory it becomes apparent that contentment on top of that degree could be better consummated by using other less expensive and increasingly effectual forms of reward.
In the 1995 issue of “Employee Relations Today”, Professor Kenneth Kovach reported that his most recent research proved the two most referred to factors of motivation by employees were not salary and benefits, but more or less, an interesting job and recognition for doing that job well. Frederick Herzberg also identified this importance of recognition by the employer in his finding that employee accomplishment and recognition are two motivating factors inherent to the job environment. Furthermore, he asserted that the job satisfaction is contingent on these factors over and above anything. Thus a well planned recognition program can, lessen turnover, assist in retaining competent people and elevate pride and loyalty in the company, which not only improves performance but also brings about positive attitudes and raise a productive and perpetual work environment.
The programs that are meant to serve the purpose of recognizing employees’ efforts must be designed in a manner that not just satisfies the importance of employees’ recognition, but also take into consideration the workforce diversity. Another thing is the involvement of the employees in this program downright the grassroots level. Once designed, it is the responsibility of the management to evaluate the existing program and make changes whenever and wherever feasible. Giving lapel pins or corporate logo jewelry where the employees already possess them would not create much of the sensation or motivation. Kovach (1995) accentuates that there definitely is a gap that exists between employee needs and employer’s understanding of those needs. This gap is widened as the management overlooks the differences in corporate culture and the consequent contrariety in personal tastes evident in distinct departments within an organization or at dormitories strewn across expansively “different demographic, psychographic and geographic areas”. Current research corroborates that a selection “program targeted at the employee’s lifestyle is the most appreciated and cost effective approach. The awards should be something that the employee wants, needs and will use and cherish. It should be something special to the recipient. People never forget who gave them something of personal value, nor do they ever forget why it was given.
The problem is that many recognition programs do not offer awards that employees really want. There is no validity in benchmarking the most popular items in most existing programs because the selections are often obsolete. The most expensive award you can give someone is something they didn’t want in the first place, have no use for and will not use” (Nicastro, 2002). Accordingly, Nicastro (2002) further researches in to the subject and narrates that the things that are considered practically accepted with today’s employees are “electronics, fashion jewelry, brand name timepieces and watches, collectibles, sporting goods and lifestyle targeted gifts. The most appreciated awards are items that the recipient would like to own, but has not or can not justify buying for themselves”. Nicastro (2002) further investigates that in a study of 3000 service recognition programs, it was found out that the awards that are most adored are when they are given on or near the employee’s employment anniversary date. The study also revealed that the “most common complaints by employees is that their anniversary came and went without any recognition. Whenever possible awards should be presented in front of peers, with someone from administration, who is known, recognized and respected making the presentation. This does not mean you need to have an awards banquet; a small departmental ceremony with cake and coffee can be just as effective. Recognize the achievement, talk about the recipients accomplishments, contributions to the company and a short work related anecdote. Make the recipient and the accomplishment special. It’s the timeliness, the respect and the special recognition that makes a lasting impression”.
In the article, “Consultant Dispels Myths About Award Programs”, Bob Nelson (2001) further elucidates most of recognition programs are outmoded. This Nelson references to the 10-year national study, the Independent National Study of Recognition Policies and Practices, by Perspectives Resources, Inc. This study finds out that the outmoded factors of recognition de motivates rather than motivates the employees as they no longer meet the employees needs and the corporate objectives. “Companies are spending more than $500 million annually on service award programs that don’t work,” says Edward L. Ford, recognition consultant, “and minor changes will not address the problems. At the same time, with all the downsizing and change taking place in business today, recognition is more important to the morale of employees than ever. It is imperative that companies take a fresh look at what constitutes effective recognition — including what the needs of the award recipient are.” Giving insights in to the less important award program as compared to reward program, Nelson assets that organizations are haunted by myths that were prevalent in 60′s and 70′s. The first one that he points out is that “Logo emblems of gold and diamonds make the best award”. Where for the myth he gives that the “Corporate emblems are outdated, and 95.8 percent of employees would rather have practical merchandise items as awards”.
The reason that he points out is that employees are used to these service awards and that these have little bearing as to the impact of the awards. Secondly, with the downsizing culture, employees in this era do not possess any corporate identity, which further yields it insignificant. In a study, that based on the Employee Needs and Wants Recognition Index (ENRI) only 4.2% of employees choose logo jewelry over merchandise for awards. The second myth highlighted is “Recognition programs incorporate award choices that employees really want”, wherefore, the fact is, “According to the ENRI, 70 percent of employees would choose something other than what they are offered”. The third myth outlined goes as “A simple change in selection or awards will substantially improve your recognition program”, where the fact “To address employees’ changing attitudes, more and more companies are reengineering their recognition policies”. Nelson suggests that the reengineering process actually do help companies salvage money “rather than spend more on recognition, while allowing them to provide awards that employees really want. For example, 117 companies that re-engineered their programs during 1994 and 1995 saved an average of 42.9 percent on their programs, and their average award cost per employee per year dropped from $17.66 before reengineering to $9.21 afterwards”. The fourth myth is “Companies should reduce or eliminate years of service awards”, where as the fact is “Companies should not cut programs at random. Instead, they need to make all recognition programs more effective by aligning them with shifting employee attitudes and updating them annually”. Nelson asserts that the companies must first “identify which types of awards are most appropriate in your present corporate culture. Employees may like the types or recognition your program offers. Their dissatisfaction may lie in the awards they are offered”.
Today, majority of the employee service programs involve giving an employee logo jewelry with a “jewelling sequence” for their consequential years of service in the organization. In spite of the fact that the cost of such programs can cost millions of dollars, unluckily, there are some deadly flaws regarding their effectiveness. For instance, oftentimes an employee’s anniversary date goes overlooked, though in the employee’s mind the specific anniversary date is important. The faults in the recognition programs can be eliminated thereby reducing the company’s cost and increasing the effectiveness of the employee recognition programs standardizing the activity of recognizing each employee’s anniversary, while consequently letting increased pliancy of choice on the part of the employee of items of similar value. “Each year a new selection of gifts would be made available so that with each significant anniversary, employees have a fresh selection of gifts to choose from” (Sims, 2001).
Thus, the center of the program is on the employee’s anniversary, and not on the increased value of a gift he receives. Nelson explains that the companies that have engineered this method have noticed remarkable improvement in their service program in terms of efficacy noted satisfaction and decreased costs. 500 of the Fortune 500 companies have formal Service Recognition Programs as they clearly accepts that these programs pay by yielding reduced turnover, improved safety performance and lower unscheduled absenteeism costs. These companies have come to know that the employee turnover is one of the greatest covert costs, where on an average you hire three and retain one each year. The training cost on the average for the newly trained employee comes out to be eight hours, as an example then the it costs at least $60 to train a new employee, excluding mistakes and poor quality costs. Resulting, in the actual training cost to be at the amount of $180 for one employee that stayed for one year. This amount will build up as you may hire at least 20 employee to keep one for five years costing $1,000.
Employee recognition programs save much for the company as no tax is levied on these programs, as tangible gifts above $400 attracts 40% tax. Recognition brings in social acclaim for the employee and is something “extra” for the employee.
By far, recognition is the “Number One” reward that employees react to and is far more significant than salary and benefits. Evelyn Clark designs and suggests a new way to recognize the employees’ efforts, which is by story telling. Clark asserts that the “managers who consistently tell stories of people “caught doing something right” discover that recognition is truly a highly valued reward. The benefits are numerous:
- “The employee is pleased that the manager noticed a job well done and took the time to acknowledge it
- Other employees learn more about the behavior that the company values
- Employees are motivated to enhance their performance
- Employees take more pride in their affiliation with the company
- Productivity and profitability increase”
David Saxby narrates, “I’m amazed by the number of companies that spend thousands of dollars to improve their technology, increase their marketing efforts and set up that next killer sales program. Yet they don’t quite see the benefit of making an investment in recognizing the most valuable asset they have: their front-line employees. These are the people who interact with the customer every day, handle customer-service conflicts and generate revenue for the company”. According to Saxby, recognition does not only means honoring the top performers, rather it is regarding recognizing people who better their skills all the time to give improved customer service and sell more product. Saxby points out that recognition does not talk only of money, rather it concerns about a mere hand-written thank-you note or an inscription that sits in the entryway for the world to look at. Further, recognition must not be limited to the annual event or the monthly meeting where people are acclaimed for their efforts, rather a positive attitude or an improved behavior must be recognized and praised immediately.
Recognition can come in different ways, like reinforcing positive performance, providing incentives and rewards, motivating with “high-impact” messages, rewarding extra efforts, honoring current employees and personalizing the work experience.
Hiam (2002) suggests, “If you recognize and make a bit of a fuss about the good things employees do, then you will find yourself spending a lot less time worrying about the bad things they do. They will do less of the negative, and they will strive to do more of the positive things you are recognizing. It is far, far easier to lead people to improved performances by thanking them when they do it right than giving them “grief” when they do it wrong”. Hiam (2002) further incorporates that employers must “praise and recognize” their “star performers”, and “recognize good effort, not just results”.
Handel in the employeessurvey.com reports, “In the business world, the greatest commodity to have is the best and brightest people. A recent survey by World at Work and the National Association for Employee Recognition (NAER) shows that companies are beginning to realize this more each day, as employee recognition programs are still used extensively in these tough economic times. According to the 2002 Employee Recognition Survey, 84 percent of the 391 responding companies have an employee recognition program. This shows that despite a tough economy, companies realize the importance of making sure their top performers are happy. In fact, although the economy has dipped substantially, employee recognition programs are gaining in popularity, as 41 percent of respondents indicate they are doing more with their recognition programs than they were 12 months ago. More than half (54 percent) of the respondents that said they do not currently have a program indicated they are considering implementing one in the next 12 months. Companies hope to achieve a number of things through their recognition programs, but creating a positive work environment is the top reason cited, with 84 percent of responding companies citing this as a goal of their program. Other goals include, reinforcing desired behaviors (76 percent) motivating high performance (73 percent), increasing morale (69 percent) and supporting organizational mission/values (68 percent). The most popular method of recognizing employees is through gift certificates and cash, with 63 percent and 58 percent of companies reporting they use these forms of recognition. The most common reason for giving a recognition award is “length of service,” (75 percent) followed by “above and beyond” performance (64 percent)”.
Emery (2000) reports that “In today’s fiercely competitive labor market, cash is key to attracting skilled technical employees, human resources managers and business experts agree. But spiraling salaries and mammoth bonuses don’t bind workers to their employers. What employees really want is recognition for a job well done.”
Experts maintain that it is not just the money that binds employees to the organization; rather it’s the recognition. However, if the awards are tied to the performance, then only the money matters but does not lessen the importance of recognition programs. Experts further elucidates that the “companies that offer cash bonuses tied to performance are using their money productively, but they need to offer other rewards and make sure those rewards are tailored to the organization and its employees”.
Why Good Employees Leave:
- 41% Feelings that opportunities for advancement are limited
- 25% Lack of recognition
- 15% inadequate salary and benefits
- 10% Unhappiness with Management
- 5% Bored with Jobs
- 4% don’t know/didn’t answer
(Source: Robert Half International Inc.)
In a NAER Regional Conference, Empowering Excellence Through Recognition, 2002, following factors were identified as to the significance and materiality of the employee recognition programs. The first factor that was identified was knowing whether the employee wants recognition in private or public keeping in place the cultural norms and etiquette. There was also a suggestion of creating a web site of generic recognition that can be individualized. There must be a cultural promotion of peer to peer recognition so as to make everyone responsible to recognize every other peer. Such sort of employee recognition programs and cultural initiates have no cost at all, and organizations need to worry about the cost that are or need to be incurred. Once embedded in the culture, it’s a free ride. Further it can be an easy way to retain and motivate, and may be a part of fun as recognizing for an accomplishment or improved performance may bring in surprises. This would not only makes the employee think they are valuable for the company but also ingrain in them a sense of belonging and association with the company. Involving employees in the design and implementation of the employee recognition programs also bring about great sense of valuation among the employees. It would certainly be more fun if the “employees tell YOU what they enjoy”.
An employee recognition program must incorporate both the formal and informal awards in the program, if given instantly have great significant value and esteem and pride. A just Thank you card would serve the purpose most often. Other forms of recognition identified in the conference were singing recognition that generates no cost to the company, an on-line thank you where the management gets a copy, meaningful and sincere feelings both by the giver and the presenter, and even more better if the nominator is involved.
But all this recognition efforts comes when the manager is well aware of the beneficial impacts of the employee recognition programs and the positive attitudinal effects it brings about. And training the managers can do this. Which involves cost. Managers must be made aware of how recognition makes people feel through statistics and survey results, and must have a control of recognition, even if they don’t have a budget. This is the only short-term cost that is and must be borne by the companies to carry out the recognition culture in the organization, and once ingrained in the company’s culture, the managers and the companies need only to harvest the fruit. Thus, concluding, recognition is a mean to set up a high performance team in addition to other methods. Nevertheless, it is not a mathematical formula of calculating how much must be spend on employee recognition per person. This would mean recognizing the poor performers too, and that would reduce the impact and the excitement of the recognition program. Of course, there must be a budget set for the awards and incentives, but when it comes to the recognition, there, as has been discussed not much investment to be made. Juts make the horse understand how to carry the cart and drink the water from the well. The rest is done automatically. However, the first part is admittedly hard to accomplish, and that depends upon the managers’ aptitude and competence. Some are charismatic and needs little training while some need not to train, as they are unchangeable.
Nicastro, Ric. The Best Ways to Motivate And Reward Employees, The Need For Recognition, San Diego Business Journal, reprinted in 2002
Nelson, Bob. Consultant Dispels Myths About Award Programs, 2001 Rewarding Employees Smarter. New Employee Recognition Ideas From Bill Sims! Reprinted with Permission from Bob Nelson, author of the Best Selling Book “1001 Ways to Reward Employees”. Topic: RECOGNIZE YEARS OF SERVICE, DON’T REWARD
Kovach, Professor Kenneth. Employee Relations Today, 1995
Clark, Evelyn. Retain Employees through Recognition–Tell Their Stories!
Ellender, David E. Employee Benefits: Asset or Expense? 2000
Saxby, David. Employee Recognition Can Make a Difference.
Hiam, Alex. Employee Recognition: Why It Matters. Rewarding employees for a job well-done will do wonders for their performance–and your bottom line, 2002
Handel, Jeremy. Employee Recognition Programs Increasing Despite Softer Economy, Oct. 29, 2002.
Emery, Gail Repsher. EMPLOYEES: Show Me the Recognition, Vol. 15 No. 14, 2000 “Empowering Excellence Through Recognition” NAER Regional Conference Summary, Seattle, WA September 20, 2002