"What if we spend on employee rewards and they don't have any effect on our workforce?"
(a moment's pause)
"True. But what if they do?"
Are "Employee Reward" s just fancy "Business School" jargon?
It's easy to fall into the rut. Believe the voice in your head that all this hoopla about employee rewards programs and incentive is, frankly, a wee bit over-rated. Fancy mumbo-jumbo only ivy league trained executives to love to bandy about over their morning croissant and coffee.
That in reality, teams don't need it.
Certainly not your team. They're good with the package they get at the end of the month. And even if that weren't the case - if your guys have indeed been faltering a little too frequently for your comfort in recent times - you're confident the answer didn't lie in quote-unquote R.E.W.A.R.D.S.
After all, as a dead-in-the-wool entrepreneur and business owner, deep down, you know it's H.R.'s fault. Always has been. Their talent filtering tools are so overrated. But that loops in the I.T. and procurement folks, too, doesn't it? So let them pick up a slice each from the blame pie, as well. If everything fails? No matter. You know your faithful ace-in-the-pack won't: a good old-fashioned team reshuffle—the faithful pink slip.
Oh, this is one endless rabbit hole.
Positive effects of employee rewards
Rewarding employees may cost you resources. But ignoring them can cost you your business.
There is a murmur in the woods - a significant part of it wafting in from the general direction of the accounting department - that incentives and rewards like prizes, gifts, and souvenirs are draining the coffers. That they are nonessential luxuries, we must rethink.
Discretionary expenses we could, perchance, skip - especially with a pandemic raging around us, warning us to be more cautious in every move. It may be tempting for a C.E.O. to fall for that sentiment. And respond by reaching out for the low-hanging peach of cost-cutting.
A display of "unimpeachable intent" to save the ship during duress. But there's a catch, and it's this: when you cut back on incentives and rewards, you cut back on the one mojo your people work with: motivation. It's like trying to purr your car engine to life after it has been sucked dry of gasoline.
Adverse effects of not having employee rewards
No motivation, no go. The Incentive Theory of motivation states that human behavior is motivated by the urge to be compensated by reinforcements and incentives.
The power of employee rewards in engaging the mind and propelling the business is well documented, but let's run the numbers one more time.
- Business profitability rises by 21% when teams are greatly engaged. (Source: Gallup)
- Employees who are motivated operate 20% better. (Source: Gallup)
- Employee engagement and motivation can bring down absenteeism by 41%. (Source: Gallup)
- Motivated employees are 87% less likely to quit their jobs. (Source: I.N.C. Magazine)
- A motivational program can help a company retain up to two-thirds of its employees. (Source: Harvard Business Review)
- When scanning potential employers, rewards and incentives are important considerations for as many as 42% of talent. (Source: D.C.R. Strategies)
The flip side presents an equally compelling case for rewards
Gallup notes actively disengaged employees are emotionally disconnected from the company culture - negatively influencing peers and driving patrons away, creating the most damage.
The cost of scrimping on rewards
- An under-motivated bunch of workers can cost an organization up to $550 billion a year. (Source: Gallup)
- Employers lose over $5,000 every time a worker puts in the papers. (Source: S.H.R.M.)
- Organizations boasting actively motivated teams tend to realize a 27% higher profit. (Source: Achievers Engagement Blog)
- Even if you lead a small business of 250 people, a complacent attitude to rewards can cost you over $3 million a year.
Case study: How can rewards boost business?
Leaders who treat rewards as strategic tools and high-return investments get handsomely rewarded.
- E-comm great Z.A.P.P.O.S. rewards employees with a novel combination of personalization, team involvement, and locationization. Redeemable "Zappos Dollars", peer-to-peer bonuses, and Hero Capes keep things meaningful and authentic. It also attracts top talent.
- Industry leader G.E. Healthcare's employee recognition program is part of a greater plan, involving employees in its initiatives for environmental conservation and making employees feel secure about big organizational decisions. Wall-mounted dashboards, outdoor meetings, and posters of standout employees all ensure morale doesn't flag. And add to the goodwill G.E. already enjoys amongst stakeholders.
- Apple's methods of appreciating employees range from extended vacations (paid ones, of course) that help employees club solidary calendar holidays to customizing rewards according to region, culture, and personal taste. The result? Great employer branding positions the innovation giant top-of-mind of top talent as a "great place to work."
- German utility company E.On's simple, personalized "thank you" notes are industry lore and an introductory case study in classrooms and boardrooms. It has boosted its staff motivation score from 61% to 69%.
- The Dow Chemical Company's purpose-driven employee incentive program "Accelerate Great" went beyond monetary rewards (where the incremental benefit was beginning to plateau) by decoding worker needs at a deeply personal level. Not surprisingly, the number of employees engaged in their formal recognition and reward program witnessed a lift of 11%.
- Bayern Canada's innovative incentive program also rises above the cliche of cash, with a culture that keeps adapting itself to the evolving needs of its employees - almost in real-time. This makes for bespoke and instant rewards and has resulted in a 92% employee engagement rate.
- Realizing that a single day isn't enough to acknowledge the many ways in which employees create a "ding" in its universe, tech company Motley Fool converted every day of the year into employee recognition day: With peer-to-peer recognition and redeemable shout-outs (which can be exchanged for rewards) significantly boosting the company's image as a "cool place to work."
- Fairmont Hotels & Resorts turned its brand promise - "turning moments into memories for our guests" - inwards, deploying the gesture on its employees. As a culture of celebration followed, with coworkers sharing stories and bestowing employee-of-the-month awards to peers, the company witnessed a 98% score on employee engagement surveys.
- Norton Healthcare wanted healthcare jobs - which can be thankless and stressful at times - to be a truly rewarding experience for every employee. The "N Recognition of You" initiative that followed - appreciating every little and large contribution by every employee - lifted their engagement survey results from 55th percentile to 83rd, positioning the organization favorably in the healthcare market.
Best practices for reaping the benefits from your rewards and recognition strategy
1. Start by linking the reward to the KPIs and success behaviors that matter to your business and function. This way, you will ensure energy, endeavor, and goals are seamlessly synced. Offer referral rewards for employees who will bring great talents, and consider doing referral tracking to track your program's efficiency.
2. Make sure you reward ASAP - before the vibe grows cold so that you can take advantage of the "magic of the moment" and ensure the winning tempo doesn't flag.
A Bravo Delayed is Bravo Denied!
3. Personalize the experience. Ensure the reward maps to your employees' intrinsic (inner passions and personal aspirations) and extrinsic (fame, money, and material indulgences) motivations. Doing so successfully will make the prospect of earning the reward irresistible to the recipient and turn its pursuit into a spontaneous and repeated behavior code at work. It will also tell them that you have taken the trouble of stepping beyond the standard gift list to trawl the market and find something that is genuinely appropriate - engineering the powerful emotion of gratitude.
4. Remember that rewards are a form of recognition. The gesture of acknowledging attachment and involvement, ultimately, matters more than the actual reward. Respecting the spirit of the gesture is more important than following it letter for letter. Therefore, recognizing and rewarding intent and effort is as important as rewarding target achievement and generating results.
5. Another critical element to plan is whether you should do the act of giving rewards a public or private affair. If there is no particular reason for choosing the latter route, go ahead and make a meal of it by planning an "evening with the guys" that lets everyone catch up over the award ceremony, recharge sparks, and rekindle bonds.
6. Finally, do make the value of the reward commensurate with the magnitude of the occasion, a rockstar who has just sold a sports car deserves more than a pizza voucher, and an Account Development Manager who has finally cracked a stubborn V.I.P. category will feel "short changed" if s/he receives only free steam at the neighborhood salon. Bottom line? Get involved so that you are tasteful, thoughtful, and meaningful when picking and choosing your rewards.
7 Rewarding is a habit, not an act. It is a workplace habit that must be enforced top-down by the leadership. Review your rewards policy frequently, keep things "real", be generous in dispensing praises and plaudits - and you could be pleasantly surprised at the big shifts your small gestures of appreciation are ushering at work.
…And having a strategic reward and recognition program can help you land that talent.
The best bosses are maestros of motivation. They are "people people" who realize that wo/man doesn't live by bread alone. That we need the butter and the marmalade, and nobody's complaining if there's avocado atop that toast, either. They also realize that - in a V.U.C.A. world - talent is their only insurance: the ace in their pack that can help them stay afloat in times of crisis and ahead in moments of peace.
Put two and two together, and rewards instantly go from a "nice to have" H.R. accessory to a "must-have" boardroom tool. Not having the right incentive and rewards framework at every step of the workflow exposes you to the risk of losing your finest performers (in all probability, to your closest rival) - a risk no leader can afford. Which converts rewards into the prophylactic you must take TODAY, if you want to avoid the pain-killer (you are terrified of), TOMORROW.