When staff members are committed to the company, it leads to superior business performance. A study done in the United Kingdom revealed that companies which had made it to The Sunday Times’ “Best Companies to Work For” list demonstrated better business performance compared to companies that had made it to the FTSE 100 index.
So how can companies engage and motivate their employees? One of the most effective methods is through structured Rewards and Recognition (R&R) schemes. A well-planned, clearly defined R&R system is a crucial tool that motivates and uplifts the majority of a company’s employees. This has been proven to increase the organisation’s business performance far more effectively than a scheme that is targeted at an elite group of star performers.
Look beyond cash
R&R refers to the returns, beyond the basic salary, that an employee receives for delivering preferred results. Typically, rewards involve tangible returns, while recognition involves both tangible and intangible results. In the past, HR professionals assumed that cash rewards motivated staff the best, as this was usually what they asked for.
However, it has been found that while most employees state that they prefer cash, the majority show a stronger improvement in performance when they are pursuing non-cash incentives.
This is because cash incentives typically offer minimal emotional engagement between the individual and the company.
For instance, two employees in a large multinational company surpassed their sales targets. The company rewarded Employee A’s good work with an overseas weekend stay for him and his family at a top-notch beach resort in Bali. Employee B received a cash reward of equivalent value, which she used to pay off a credit card debt.
It is easy to see why Employee A’s positive memories of this reward will have a stronger and more lasting impact and motivate him to do better in the future. Employee A’s colleagues, who see his holiday pictures, will also be more motivated to try to reach their targets.
Companies can increase the emotional impact of non-cash rewards by personalising them, such as offering a meal at the employee’s favourite restaurant or a branded handbag that has been on the employee’s wish list.
For an R&R system to be truly effective, it needs to be part of a coherent framework that is communicated across the entire company.
The elements fundamental to the successful implementation of a structured R&R programme are:
A clearly communicated, coherent framework. This needs to be understood by all personnel and allows individuals to be recognised by their peers and managers when they exceed expectations.
Clear and fair criteria. Transparency is key. Everyone must be able to see who has been recognised and why. Some people may question the validity of specific criteria, though this allows for healthy debate and over time will help to raise the performance bar.
Consistency of language and positioning. The terminology must be clear, and unnecessary jargon avoided. The place of the scheme within the overall operational framework must be explained.
Non-cash “treats”. Research has shown that non-cash incentives have the greatest motivational impact on employees.
Sufficient flexibility to meet local business needs. Programmes may need to vary across different units, so flexibility is important. A good programme will have a balance between observed/ behavioural targets (for example, good customer service) and achievement-based targets (for example, quantifiable sales).
Immediacy of recognition. The right behaviours must be recognised at the right time, as impact is lost when there is a long gap between earning and receiving. At the Grass Roots Group, a business improvement company, the chairman will make a long-distance call to thank an employee when he has done excellent work.
Workable governance, including budgetary control. While organisations need to prioritise their budgets to take into account R&R programmes, budget alone is not sufficient. There also must be the governance in place to provide budgetary control, to identify where and why resources are being used, and more importantly when they are not being used.
ROI measured from the start. Companies must put the right measures in place to identify whether the R&R programme is having its desired effect. For example, this could be the scores in an annual staff attitude survey. The company will also need to measure the impact of the programme on specific metrics, based on the objectives of the R&R scheme. Some examples include staff retention, customer satisfaction and sales performance.
Having the right R&R scheme in place allows employees to feel that they serve a real purpose and their good work is being noticed. This will allow them to embrace the company’s mission, goals and values, resulting in increased motivation and higher performance.