Rewards Get Results

here are two things that people want more than sex and money: recognition and praise. The observation is attributed to Mary Kay Ash, founder of Mary Kay Cosmetics. But it could have been made by scores of HR professionals who are astute students of human nature.

    High-performance companies, of course, have always understood the importance of offering awards and incentives that recognize, validate, and value outstanding work. They help keep employees motivated and productive, and are effective methods of reinforcing company expectations and goals.

    Non-cash awards and incentives -- ranging from a Post-it that says, "Good Job," to a set of golf clubs or a vacation package -- can be not only cost-effective, but also valuable tools that help raise morale, increase productivity, and improve quality, safety standards, and customer service.

    At a time of economic deficits, frozen wages, and wrenching layoffs, lavishing employees with cash awards and stock options for excellence is a luxury that few companies can afford. Given this reality, one of the most urgent questions facing HR in every sector is this: How do you maintain and improve worker morale while reining in costs?

    At Intuit, the Silicon Valley maker of Quicken and TurboTax, Jim Grenier directs the Total Rewards and HR Shared Services program. He attributes the companys recent placement as number 45 among Fortunes Best Companies to Work For to a corporate culture that has always focused on employee recognition.

    Like many other large companies, Intuit spends 1.5 percent of its base payroll on various forms of awards and incentives. With more than 6,000 employees, that is about $3.5 to $4 million a year. Because the company has 10 major U.S. sites and three small locations in Canada, the program hasnt always been centralized. Several months ago, it pulled the best ideas together to build a single incentives program that has several components.

    One is a Thanks Program, which comes with a variety of small non-cash awards such as gift certificates to restaurants or movie tickets, and written notes of thanks. Each local site establishes its own criteria. At one site, for example, an award might be given to an employee who goes above and beyond her regular duties to help another employee. Another might offer a special incentive to an employee who participates in a community-service project such as mentoring at a public school.

    The firm also bestows technical achievement and "bright ideas" awards for everyday activities such as process improvements and eliminating bureaucracy. Others, such as the On-The-Town award, are given for contributing to outstanding business results and can come with as much as $1,000 in merchandise or cash -- or more -- depending on the magnitude of the achievement.

    At Intuit, its up to managers to decide how to extend awards, but they are provided with background information about the companys philosophy and implementation policies. The firm has developed a Web site that helps supervisors effectively use awards and incentives. Awards arent given for doing expected work. They are designated for people who perform well beyond expectations. The company is currently developing a spot on the Web site to showcase employee achievements.

    "Public recognition is an important component of the award," Grenier says. "Awards affect more than one employee. The manager has to be able to say, Heres why we recognize this person. We link the award to our business objectives. We focus the recognition around performance criteria and consistency in program execution. We make sure management understands.

    "Awards must be customized," he adds. "We had a manager once who gave away tickets to a Star Trek movie. Most people could have cared less. It backfired. We have a Web-based awards and incentives service now, and all a manager has to do is decide a category and pick a level of merchandise. The employee picks something from the category, and doesnt know what it cost. Its quick, easy, and effective."

    How does the company measure the success of the award and incentives program? "One, we look at awards to see what the correlation is to performance levels," Grenier says. "Two, we rank people according to five performance levels. By definition, the lowest-ranking employees should get the minimal recognition. Three, we conduct an employee survey."

    Responses to the survey are rated on a five-point scale: Strongly Agree, Agree, Neutral, Disagree, Strongly Disagree. Questions include:

• My total compensation package is fair and competitive.
• My pay is tied to my performance.
• I am rewarded and recognized when I do a great job.

    Brendan Keegan, president and CEO of Bravanta, Inc., an incentive business in San Francisco, says that many companies -- especially software clients in Silicon Valley -- are seeing their tenured employees resign. The employees commonly cite lack of appreciation as a top reason for getting another job.

    The company provides Web-based awards and recognition solutions to leading companies such as Intuit, Gateway, and Charles Schwab. Bravanta also has developed a custom incentives program for its own employees based on how the company did against six goals: (1) winning culture in teams, (2) revenue growth, (3) profitability, (4) valued client partnerships, (5) market-leading solutions, and (6) excellence.

    Every month, employees who meet and surpass goals receive points. Progress is posted on the companys Web site and outside the presidents office for all employees to see. Employees can redeem points for a variety of items, including CD players, golf jackets, and flat-screen TVs.

    Other awards are given to employees who achieve a significant goal or milestone, and are presented by managers. Recently, for example, Bravantas CFO gave a dinner certificate to an employee in accounts receivable who had achieved a goal of reducing the amount of time it takes for customers and clients to pay their bills. The award was announced to the whole company so that everyone would know about the employees contributions.

    "Non-cash awards give employees solid, lasting reinforcement," Keegan says. "People remember what they got when theyre given a non-cash award, and they remember what they did to get it. The idea is to help people understand what actions warrant rewards and why, so that employees know how to improve their performance."

Hazards of safety awards
    Harvard professor and author Rosabeth Moss Kanter addresses the subject of motivating a high-talent workforce in her new book Evolve: Succeeding in the Digital Culture of Tomorrow. She says that incentives should be given for broad goals, and should have clear measures. "Otherwise, its like factory piecework. Its important that the incentives that do exist support the goals employees are expected to achieve -- not that managers should walk around with rolls of dollar bills to hand out every time someone does the right thing."

    In the often-hazardous manufacturing industry, safety awards and incentives programs have long been mired in controversy and dysfunction. OSHA advisory committees have reported strong concern that safety contests and incentive programs cause employees to hide injuries because they fear spoiling safety records, letting their coworkers down, and not receiving awards.

    Chris Henderson, manager of safety and the environment for the 7,000 employees who work for the Jennie-O Foods Turkey Store, headquartered in Willmar, Minnesota, says the safety agencys concerns are valid. Seven years ago, the firm -- the largest turkey company in the world -- began a unique safety-incentives program that isnt based on numbers of accidents, as such programs typically are. Rather, it shifted the ownership of safety from the supervisor to the employee.

    Every worker is given detailed "safety audits" on dozens of categories such as the placement of electrical wire or the condition of the work floor, and is randomly interviewed at various times throughout the year about safety guidelines. The person is given a score for answers to safety questions. If a persons score is, say, 40, she might be given an incentive award when her score jumps to 70 in six months.

    When the goal has been achieved, the worker might receive a free dinner, and perhaps $20 in coupons to local stores, and various amounts of turkey meat. The worker who is in charge of a team receives double the incentives.

    "Our workers are not highly skilled, turnover is fairly high in this industry, and the work can be quite hazardous. We farm, process -- everything," Henderson says. "We give incentives without focusing on accidents, and it works because the ownership is in the hands of the people.

    "And it works because its based on safety performance that is measured. We have random audits. New people come in and know were serious about safety. If someone working with a knife isnt using steel-mesh protection, the other employees say, Hey, go get your [protection] stuff.

    "Obviously, the program more than pays for itself," he adds. "It impacts the bottom line significantly because much less money is spent on workers comp and reduced or lost time because of injuries. And, it makes the workplace nicer."

Involving employees
    While no one agrees on the principles, definitions, or guidelines upon which to base safety awards and incentive programs, Henderson says everybody who works in the safety area does agree that good performance should be recognized and rewarded.

    "Absolutely," echoes Marvin Menesini, the safety and health team leader for the Nevada Power Company. He says the utility traditionally has had an awards and incentives program based on an employees lost-time accident history. Different departments have had different standards for earning awards and for the amount of the incentives, and the program hasnt been as good as hed like it to be.

    He is currently trying to develop a more consistent plan. Points programs can work fine, he says. "But they should be based on participation. The program should be pro-active. Workers should be involved before there are accidents. They should get points if there are no accidents, but they shouldnt lose points if they are in an accident -- so they can be safe. It takes more effort to administer that kind of program, but it promotes employee involvement.

    "With passive systems, theres no gain in safety, and there is a possible loss in reporting," Menesini adds. "The best program should actually improve safety. It is a continuous effort, because our business and new technology is constantly changing. Our industry is changing daily, phenomenally. People in the utility business dont know which way is up. We cant be static. We have to keep safety dynamic."

When it backfires
    For all the talk about the impact of technology and the corresponding need to create more personal and human workplaces, there are diehards who balk at awards and incentives as the ruination of the work ethic. People get paid to work hard, they argue. End of story. Plus, theres a real risk of alienating employees who dont get awards.

    They have a point. When an award smacks of favoritism or becomes a personality contest rather than clear recognition of top performance that demonstrably enriches the company, its obviously a morale-buster.

    "It can be the cruelest of jokes," says Bill Rothenbach, vice president and service director for human capital strategies for the Syndicated Research Group in Baltimore. "If five people win a trip to the Caribbean and the other 9,995 employees dont... Well, thats not so good. And when one or more of the five are perceived as unworthy, the entire credibility of the award is suspect. Employees are thinking, Is that what the company rewards?

    "Companies like KFC have a variety of awards. They give pictures and plaques. The program is always changing. Its dynamic. Service awards based solely on length of service -- simply for having survived -- are static. An award is only as good as the people who are selected.

    "There are two words that sum up awards and incentives -- whether they are cash or non-cash," Rothenbach adds. "Value creation. A program must have a performance component or it is meaningless."

Workforce, April 2002, pp. 42-48 -- Subscribe Now!