From the Directors Chair: A Follow Up to “Incentives and Incentive Programs"
Within a few days of writing the article, “Incentives and Incentive Programs”, an article appeared in the Wall Street Journal on Tuesday, October 30th, titled “The Best Ways to Give Employees Performance Awards”. This is an extremely insightful article written by Jana Gallus. Dr. Gallus is an assistant professor of strategy and behavioral decision making at UCLA’s Anderson School of Management.
The premise of the article is: “Companies often reward too many workers, and in ways that can do a lot of damage.
Dr. Gallus observes “that recognizing exceptional employee performance with an honor or award is an easy, inexpensive way to boost productivity and morale”. She contends, “Too many organizations do it wrong”.
Some of her thoughts on why they do it wrong are:
• Companies focus on only one type of award
• Companies give out too many awards
• Companies give out cash awards, which is an erroneous assumption that people are motivated by money.
Here are some Dos and Don’ts from Dr. Gallus’s article
Rely solely on confirmatory awards, an award based on predefined criteria, such as “Top Salesperson of the Month”. The downside of this type of award includes employees may try to game the system or concentrate on meeting the award’s criteria at the expense of less measurable tasks.
Use “discretionary” awards, an award or honor where a manager, without any obligation, chooses to recognize noteworthy performance. This type of award provides an opportunity to reward exceptional behavior that goes beyond what is expected, or asked for, and that isn’t already acknowledged by bonuses or other incentives.
Over do it. Too many people winning the same award diminish the significance of the award. (Are you tired of all the award shows on TV? e.g. The Oscars, the Emmy’s, the Grammy’s, etc.) When awards become a matter of course, they quickly lose their power to motivate.
Diversify Awards. Create different levels of the same award, by naming a gold, silver, and bronze winner or achiever. (e.g. The Gold, Silver, Bronze levels for SME Lean Certification). Awards should recognize behaviors that are critical to achieving the company’s objectives, and each award should have a unique identity so that it holds special value.
Mindlessly tack on money. Human nature being what it is, invites comparisons between different awards and associated tasks. Is the cash award too high? Too low? Employees will start making a comparison between what they received and what a co-worker received, which can lead to destructive behaviors fueled by envy.
Signal an award’s importance in other ways. Personal recognition from managers can be far more effective than cash in indicating how much the recipient is valued. Well-designed award ceremonies demonstrate to winners and non recipients alike how important the award and the underlying behavior are considered to be.
Dr. Gallus goes on to report:
About nine in ten companies have employee-recognition programs. Among the most common are:
• Length of Service – 87%
• Above-and-beyond performance – 77%
• Programs to motivate specific behaviors – 51%
(Source: WorldatWork Trends in Employee Recognition 2017.)
I can make a strong recommendation to read the full article for any company or organization that presently gives out awards and other forms of recognition to their employees as the information is very insightful to what motivates or de-motivates human behavior.