Why Most Rewards And Recognition Programs Fail

Foundations for Failure:

There are several reasons that the proverbial garbage bin of employee awards programs is overflowing. Chief among them, however, is the fact that most programs are still designed around concepts of Pavlovian conditioning that assume people will respond predictably to repeated stimuli. In other words, dangle a set of theatre tickets in front of a group of workers and they will instinctively become more productive and even compete with one another for the reward.

This bizarre philosophy of performance management is often implemented in the absence of any examination into what the company wants to achieve through its awards program. Obviously recognition awards should be designed to help achieve the organizationís strategic objectives. Programs should also align with organizational values and culture and avoid contributing to mixed messages. Organizations should be careful to reward behaviors and outcomes that are consistent with the culture and values it is trying to foster. What results do you want to achieve, and what employee behaviors are required to achieve those results?

For example, seniority-based rewards such as longevity with the organization may not fit with corporate objectives unless the recognition is tied to measurable outcomes. Awards distributed for long service, for example, could be enhanced through recognition funds for employees who effectively transfer their knowledge to other staff or into a knowledge repository.

The purpose of the recognition fund must be determined before the program is launched. Assuming one objective is to promote and create a culture of recognition, how should it be structured? What types of rewards should be given and who should be eligible? Is it your intention to encourage team efforts over individual efforts?

Program Design:

Before embarking very far down the road to program design, it is best practice for organizations to canvass the opinions of the eventual participants. Typically, this is done through staff surveys and focus groups. If you have not offered an organization-wide recognition program in the past, employee involvement in determining things like types of rewards and how decisions are made on giving rewards is more crucial. This exercise will also help promote the program and get buy-in. Donít forget to canvass line managers and supervisors, especially if you anticipate their involvement in distributing awards. Youíll probably find that managers and supervisors are anxious to avoid any program that sets them up as judges, exposing them to the criticism and resentment of their staff.

As far as the rewards themselves are concerned, I am not a fan of programs that distribute tokens of appreciation such as cash, tickets, dinners out, etc. ñ partly because they often devolve into meaninglessness. Organizations should be extremely careful not to let the distribution of rewards get out of control. Aside from the expense, awards given for average performance will destroy the program and worse, cause resentment and a dismissive attitude toward the program among staff. The vast majority of programs include ìtoken incentivesî, the next article in this series proposes, what I believe, is a much better approach.

Best Practices:

There are differing schools of thought around the effectiveness of cash vs. non-cash rewards and large, infrequent vs. small, frequent awards. One program cannot satisfy every objective so it is important to know the types and intents of the various award programs already in use throughout the organization to find the best fit for a new recognition program.

If you want to use a recognition fund to promote behaviors consistent with the philosophy of higher performance, quality, learning and managed risk-taking through the fund, it may be necessary to give managers and supervisors the flexibility to make on the spot, small rewards. According to performance management experts, recognition has the greatest impact when it immediately follows the behaviors or results being encouraged. For more consistent and high-level performance, peers and/or supervisors might nominate persons for larger rewards. This may involve senior management approval and a more formal recognition event.

Senior management must provide guidelines on what types of behaviors and results are to be rewarded and at what level. As above, certain types of traditional recognition, i.e. for longevity of service, might be inconsistent with the objectives of the program and the philosophy the organization is trying to promote. If, however, the primary purpose of the fund is to promote a culture of recognition, fewer guidelines will be needed around the type of behavior and outcomes to reward.

In any case, studies demonstrate that the greatest risks of failure are underutilization of the program (contributed to by strict rules) the perception of arbitrary rewards (unfairness) and insincerity (rewarding individuals for mediocre work), which may result from the absence of sufficient rules or guidelines.

In order to arrive at guidelines for the program, the allocation of funds should be determined. How much will be earmarked for small ìspotî rewards? How much will be set aside for greater achievements or sustained high performance? If there will be larger rewards, it will probably be necessary to determine a nomination process, the size and type of reward, and how they will be presented.

Small, ìspotî rewards are sometimes effective because they are given immediately and by someone with a close working relationship to the recipient. They can consist of small cash rewards, reward points that can be accumulated or paid time off (summer long weekends for example). Spot rewards can be formalized, if desired, by announcements at team or group meetings.

Larger recognition rewards might involve employees by letting them, as well as managers, nominate their peers. Management can evaluate the nominations and grant larger cash rewards to winners at more formal ceremonies involving peers, supervisors and senior management. Winners should be able to select from a variety of rewards (cash, time-off, etc).

After it is decided what is to be rewarded, how and how much, the program will need an administrative structure. Best practice is to maintain a database of who received rewards, why and of what type or amount. A database of this nature with a Web front-end should be constructed in which managers/supervisors can log their rewards through an intranet user interface. If a nomination process is required, this could also be made available through the site, with nominations captured in a database accessible to the review committee. The database and intranet site can also be used to promote the program and its award recipients.

The program must also have success measures built-in so that it can be monitored and adjusted as needed. For example, how much is the program being utilized? What are the numbers of nominations? This type of information can be captured in reports from the database. Employees and managersí perceptions of how the program is working must also be tracked. This can be done through surveys and/or additional focus groups.

Conclusions:

In summary, most rewards programs have no chance for success from the beginning because they reward inappropriately and unimaginatively. This problem is exacerbated when too little thought is put into alignment with corporate culture and objectives, improper, too little or too much, structure is implemented, and designers fail to consult with stakeholders (i.e. line managers, employees, unions, etc.). At the very root, however, is the assumption that human beings will respond to token reward-based ìstimuliî indefinitely. While it is usually true that some recognition is better than none, humansí response is infinitely complex and cannot be predicted much less controlled. The next, and final article in this series argues for a Maslowian approach to reward and recognition programs.


Allan Schweyer
aschweyer@hr.com
www.hr.com

Allan Schweyer has been involved in Internet recruiting since 1994 when he pioneered e-recruitment solutions for Human Resources Development Canada. From 1995 to 1999, Allan directed the award-winning National Graduate Register, Campus WorkLink and SkillNet.ca programs with Industry Canada, which introduced the concepts of applicant tracking and advanced screening to job boards and ìcareer networksî to job seekers. In 1999, Allan formed the On-line Recruitersí Association of Canada. In 2000 and 2001, he worked with Cahners Business Information in Boston to build information portals for technical professionals and attended graduate school at Harvard University. Allan currently consults with large organizations on HR strategies and specializes in e-recruitment projects. He is a senior researcher and analyst with HR.com and the guest editor of the HR.com staffing vertical.