Workforce editors decided to ask some of the 1998 Workforce Magazine Optimas Award winners how they motivate and reward employees for demonstrating sustained commitment to their firms' business goals. Their strategies are presented here with some outside perspective from reward and recognition industry gurus. The result of these conversations reveals a dramatic shift in rewards strategy over the past few years and provides a snapshot that human resources professionals can use to apply to their own rewards programs.
Tie rewards together with a complete strategy. Talk to the best minds in the incentive, recognition and compensation disciplines of human resources today, and you'll hear a common theme: Give incentives, rewards and cash bonuses to employees for specific performance related to your business' mission, vision, values and goals. In fact, according to a spring 1997 survey of 200 CEOs and HR vice presidents sponsored jointly by McLean, Virginia-based Wirthlin Worldwide and O.C. Tanner Co. based in Salt Lake City, 78 percent of CEOs and 58 percent of HR VPs say they have rewards programs that recognize performance or productivity.
While the days of rewarding employees for long-term service aren't over (service awards are still common), a growing number of organizations are bestowing specific rewards to workers who reach targeted business results and who demonstrate exacting goal-oriented behaviors. "When employers narrow the target, employees feel they can make a difference," says Jan Burnham, a communications specialist in Cooper & Lybrand LLP's Chicago practice. The old incentive and rewards programs elicited a cynical response from employees because people felt the targets were too big. Employers now are smarter about how to organize goals, communicate them and then reward for reaching them.
"It all has to do with the new deal," says Howard Goldsmith, a consultant in the compensation practice at The Segal Company, based in New York City. In the world of the new deal, employers don't guarantee jobs for life. Instead they guarantee employees will get the right tools to help their organizations reach their goals, such as giving world-class customer service or making products that are defect-free. To the extent that employees are successful in using those tools to reach the goals their employers set, employers are rewarding them with various cash bonuses, incentive gifts and more prestigious recognition ceremonies and accompanying awards.
"I believe that aligning human resources strategies, including recognition programs, to business goals serves several purposes," says Doug Walker, director of communications for the federal Office of Personnel Management (OPM), this year's Workforce Magazine Optimas Award winner in the Managing Change category. (See page 60 for OPM's story.) According to Walker, targeted recognition programs help streamline and eliminate unnecessary work, dramatically change operating incentives to focus on results and customers, and help deliver services more efficiently and effectively using available resources. "Because the federal government is shifting to a results-based strategy, OPM has created a more customer-oriented agency with its mission, vision, values and core functions clearly defined," says Walker. "The criteria in our [rewards] programs reflect this shift in strategy."
Increasingly, rewards programs are moving toward the total rewards concept that compensation and benefits programs have been gravitating to over the past few years. "Companies are going more toward the partnership approach with employees," says Marty Collins, a total compensation expert in the Fort Lee, New Jersey-based Kwasha Lipton group of Coopers & Lybrand LLP. When employees don't help meet goals, they get limited or no extra rewards-just like senior executives. But when employees do help meet corporate goals, they get rewarded. And the new rewards are bonding an organization from top to bottom through a common purpose.
Link the reward strategy across divisions. One of the most important differences in rewards strategy over the past couple of years is how employers are linking their rewards strategies across entire businesses. HR managers are realizing that giving an employee a $1,000 cash bonus for meeting a certain business goal in one division while giving an employee a pat on the back for meeting the same goal in another, sends a mixed message. "Consistency is key," says David Land, vice president of custom solutions for Minneapolis-based Jostens Inc., a specialist in recognition strategy and products. According to Land, a good recognition system should provide frequent reinforcement at the behavioral level to employees and then progressively build upon achievements and breakthroughs throughout the organization.
Each time an employee is recognized or rewarded for a certain behavior, company managers need to make sure the employee knows specifically what output he or she is being rewarded for. The reward should always be tied to the company's business mission, vision, values and goals. For example, when an employee makes a small, but meaningful contribution toward a business goal, such as customer service or quality, his or her manager can write a thank you note on a note card inscribed with the company's logo and mission statement. The manager can even put a check mark next to the area of the mission that the employee's achievement demonstrated. Otherwise, as nice as the "pat on the back" moment is for both individuals, the employee experiences only a short-term glow without lasting value if he or she doesn't understand what he or she did right. "That's why reward and recognition takes place-to advance the goals of the enterprise," says Land. It's also there to thank employees for a job well done. Increasingly, both managers and employees are getting the option to choose programs and gifts for themselves.
Structure rewards programs, but allow flexibility. The trickiest part of this new reward strategy is how to link business goals across an organization while allowing managers enough flexibility to recognize people in their own divisions, in their own particular way.
"My firm belief is that as soon as you give a reward or recognition program to HR it's dead, meaningless," says Cara Jane Finn, vice president of employee services at Mountain View, California-based Remedy Corp., this year's Workforce Magazine Optimas Award winner in the Competitive Advantage category. (See page 38 for Remedy's story.) "The best programs come from teams and managers, so we try very hard not to standardize. We give managers a tremendous amount of latitude." The rewards that Remedy managers dole out range from American Express gift certificates to spot bonuses and movie tickets. Finn is quick to point out that managers must follow through to demonstrate which of Remedy's eight values the gifts reward when they're distributed.
This year's Workforce Optimas Award winner for General Excellence, Dallas-based Texas Instruments (TI), also has a noncash recognition program (in addition to cash-based rewards programs) that line managers can use at their discretion to celebrate employees' achievements of specific business and project goals. (See page 30 for TI's story.) "We started this program two years ago and use of it has more than tripled since its introduction," says Melendy Lovett, manager of HR services at Texas Instruments. Noncash recognition offerings include clothing and jackets with TI's logo, shopping sprees, celebration events, spa days, airline travel vouchers, "nights on the town" with dinner and a movie, and many other gifts. "We overhauled the prior program because it wasn't valued by employees and was costly to administer. Also, more and more of our compensation and benefit programs are moving away from being service-based and toward being performance-based," explains Lovett. This new rewards program moves TI in that direction.
In the same way, the federal Office of Personnel Management encourages its various agencies to implement recognition programs that support their own specific missions. For instance, some OPM agencies use gain sharing and goal sharing compensation strategies or time off with pay as incentives and rewards.
But now, as more companies give managers flexibility in how they administer gifts in the areas of incentives and cash rewards, HR managers are structuring programs so that employees also can choose their rewards rather than getting one-size-fits-all gifts. "Ultimately, I think companies want to get to where they're giving one pot of credits or money that people can flexibly choose from as their reward," says Collins of Kwasha Lipton.
Choice is one of the many elements that Webster, New York-based Trident Precision Manufacturing Inc. incorporates into its new rewards strategy. Trident is the Workforce Magazine Optimas Award winner in the Financial Impact category. (See page 44 for Trident's story.) After managers revamped their employee rewards program in 1988, company managers surveyed employees to find out what kinds of rewards they wanted when they reach certain company goals like customer service and safety. "We surveyed our employees and something they really like is food," says April V. Lusk, Trident's total quality administrator. So an example of a reward now is, if employees go 90 days without experiencing a reportable accident, the company extends the half-hour lunch break to an hour and the firm's 17 administrative staff members serve pizza to the entire workforce of 178 people. "Employees get a kick out of seeing us take care of them [when they've reached a company goal]. It makes them feel good," explains Lusk. "And we've seen a reduction in those nasty cuts and serious back injuries that are common in our manufacturing industry." The excitement that such events generate helps perpetuate employees' interest in reaching business goals. And one of the biggest corporate goals, often, is retention.
Rewards increase retention. "Our thought on recognition strategy is: After we've presumably attracted the best and the brightest, we want to keep them," says Bill Hubert, HR manager for corporate workforce planning and staffing for Cambridge, Massachusetts-based Polaroid Corp., this year's Workforce Magazine Optimas Award winner in the Vision category. (See Polaroid's story on page 82.) When Polaroid introduced a total quality ownership program in 1991, the firm sent all employees (who are now also stockholders) through total quality training. "So, if you're owning stock in the future of the company, you obviously want to do the best you can to make the company profitable and successful," says Hubert. It starts with thinking about quality at the beginning of each new project. "And a way to recognize that is to acknowledge it when it happens."
To recognize quality-related employee achievements, Polaroid has a President's Award program that comprises a series of quarterly and semi-annual awards, certificates, events and cash bonuses, and culminates in a luncheon with the top winners at the end of the year with Polaroid's CEO.
And at the City of Phoenix, this year's recipient of the Workforce Magazine Optimas Award in the Quality of Life category, the voluntary turnover rate has held steady at 5 percent or lower over the past few years. (See Phoenix's story on page 72.) Does this low rate directly correlate to the city's extensive rewards strategy? Probably. Rewards include on-the-spot awards and quarterly, annual and team-recognition awards when employees reach the city's exacting customer-service goals. Given the fact that 81 percent of residents polled recently say they're satisfied with the city's overall performance in providing services, the city's personnel director, Donald E. Walsh, sees Phoenix's recognition programs as a major element in achieving this positive organizational outcome.
It certainly is difficult to argue with this kind of success. So don't. Instead, reward it-and watch the results jump.
Workforce, February 1998, Vol. 77, No. 2, pp. 88-92.