Reward and Recognition
“Tell me how you will measure me, and I will tell you how I will behave” E Goldratt (Ref 3)
A company’s reward and recognition system provides tools management can use to positively influence workplace morale, improve employee motivation and drive desired behaviours. It is also important in attracting and retaining high quality people. Used poorly, however, reward and recognition systems have the power to significantly damage morale and motivation, and drive undesired behaviour.
When people think about reward and recognition, they often limit their thinking to the formal performance management system that gives rise to salary increases or bonuses. While this is an important part, there is a much broader arsenal at a manager’s disposal.
Organisational behaviour theory tells us that people act to satisfy needs...which may be physical (hunger, thirst, money, security), social (affection, belonging) or related to self-esteem and fulfilment. So in additional to financial rewards, people can be motivated by:
- A genuine and private thank-you,
- Public recognition of achievement,
- Access to training or development opportunities,
- More interesting work opportunities,
- Valued work conditions, like flexible working hours.
People are motivated to perform when there is the expectation of a link between effort, performance, and reward. A successful reward and recognition program requires:
- Clearly defined rules,
- Achievable and measurable criteria for success.
- Suitable, personalised rewards, and
- Effective communication strategies to manage expectations.
Since value is in the eye of the beholder, there is no use rewarding someone with a bigger office if they value personal developmental. In order to properly motivate, programs must be designed to offer a variation of products and services to program participants based on their unique interests and diverse needs.
Establishing what to reward is as important as how to reward...since what gets measured gets done. In his book “Doing What Matters”, James Kilt (Ref 9) tells a story about when he took over as CEO of Gillette. He found net sales, net profit and net earnings all stalled at zero growth, yet more than half of the managers had received a performance rating of Exceeds Expectation or Outstanding. So what was everyone so outstanding at…effort. The company was rewarding effort rather than results…and unfortunately that’s what they were getting.
Objectives should be based on the organizations strategic and tactical goals and should be straightforward and specific so participants clearly understand the expectations. The Cascading Balanced Scorecard process is an excellent tool for ensuring this alignment. Targets should be challenging, yet achievable. Targets that are viewed as unattainable, or outside the person’s control, will be de-motivating.
There is a need to achieve a balance between rewarding outcomes and rewarding behaviour. Programs that place too much emphasis on outcomes can drive counterproductive behaviour, like sandbagging budgets and deferring maintenance. Again, the Balanced Scorecard can provide a useful framework for developing a well-rounded set of objectives.