Award Employees

Will corporate award planners every truly understand the difference between an incentive program and a recognition program?  Try as some of the experts in the industry might to educate them; these two terms are constantly being interchanged. 

The Employee Engagement Alliance defines the two types of programs as this…

“Incentive programs are used to drive behaviors conducive to practically any business objective. Recognition programs are used to recognize individuals whose accomplishments were particularly noteworthy.” 

We’ve addressed the issue on several occasions but many folks still persist on confusing them.   Here’s an excellent post from our friend Paul Hebert at I2I Incentive Intelligence that will give you one way of looking at a difference between the two.  Another great way to differentiate them is by reading this post from the Compensation Café on the Right vs Wrong Incentives.  As this article comes to us from a well-respected blog on cash compensation, it gives us a good look at the same things we need to consider when discussing incentives or recognition to improve performance.   

The key paragraph in this compensation piece is the discussion of a financial rationale and these questions… 

“What will the company receive in return for the increased costs of an incentive program?” and “If you are planning to increase your targeted compensation costs of an affected group, how will you answer the ROI question? 

All well planned non-cash incentive programs follow the same methodology.  They plan for an ROI.  This is the single largest difference between incentives and recognition! 

The award industry has struggled for years to apply any sort of meaningful ROI to a recognition system.  They haven’t figured out a good way to do it and never will based on the metrics and fundamental structure they use for these types of programs. 

And as mentioned in the Compensation Café article…

Caution: You had better provide a business rationale, and not subjective phraseology like “survey says” or “everyone else is doing it” or even “it’s the right thing to do.’ Management tends to frown on such trivial rationalizations.

So for all corporate award planners, please get your definitions straight.  Regardless of what all the prize peddlers in the industry tell you, you won’t change behavior and drive significant results with a recognition program.  Recognition programs can provide you with a whole different set of benefits.  You can drive results with an incentive program that is well designed and implemented, but it won’t necessarily recognize specific behaviors of employees whose accomplishes are particularly noteworthy.

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According to this article on the PRNNewswire, global employee satisfaction lagged in 2011.  Aon Hewitt, the consultancy that specializes in HR services has released data from their 2011 Employee Engagement Database showing that engagement has been lagging for some time now.  Given the state of the economy both here and around the world, these figures are not all that surprising.   

The AON 5700 employee database which represents over five million employees worldwide, reveals … 

“an engagement level of 56 percent for the end of 2011, which is the same as 2010, but lower than 2009 (60 percent) and 2008 (57 percent). Traditionally, engagement levels between 65 percent and 100 percent represent a high-performing culture; 45 percent to 65 percent indicate the workforce is indifferent to organizational success or failure; and anything lower than 45 percent represents a serious or destructive range.” 

It seems that the largest drop in engagement comes from employees’ perceptions of how companies manage performance.  Or in other words, employees think their bosses have not provided the proper level of management that leads to better productivity.  They also don’t do a very good job of connecting the employees performance overall to company goals. 

The report goes on to state that significant numbers of employees are not motivated to work beyond job requirements and are thinking of leaving in the near future.  When measuring satisfaction scores for key drivers of engagement “appropriate recognition beyond pay and benefits for employee contribution” is only 40% globally, 48% in the US, but still the lowest of the drivers analyzed.  Recognition has been on this list for years.  Does that mean that all the money and time spent on employee recognition programs is not producing results?  Some consultants outside of the recognition industry would support this conclusion.  The analysis concludes that … 

“even at the height of the recession, employees felt a greater connection to their work and role in achieving organizational success than they do now.” This is a harsh reality, but also an opportunity for those employers willing to invest in specific areas that will have the largest impact on employee engagement. While there is an expense in doing so, the return on investment can be well worth the effort.” 

From our perspective, the time for rewarding and recognizing employee performance could not be better.  It is one of the easiest and least expensive ways for improving and maintaining employment engagement, and as mentioned the minor expense per employee for doing so can be well worth that expense.

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We loved this article on CBS Money Watch by Jeff Haden.  We consult with clients about their employee recognition programs on a daily basis.  Our first recommendation is to remind them that the best approach to employee recognition is almost always the simplest one.  The award industry offers a vast array of recognition systems from which to choose and for whatever reason corporate America rarely starts their investigation of employee recognition using the KISS principle.  They often choose the most complex way of handling an issue that should fundamentally be very easy and straightforward.  And in the process they commit large budget dollars to the administration of these systems, essentially taking those dollars away from getting to where they will do the most good….the employees themselves.   

When you think about it, recognizing an employee should be a simple (and happy) thing to do.  But for some reason everyone wants to complicate it. 

Over the years, the recognition companies have dreamed up elaborate schemes to sell their awards, often priced substantially over retail.  But are these elaborate systems what you really need?  We’ve seen countless numbers of them that have feature after costly feature that are rarely used.  One of these features is a training program to teach your management how to recognize employees.  Frankly it’s a shame that has to be done.  Every manager, good and bad and ugly should have at least the ability to thank someone for doing a good job.  If they don’t, they shouldn’t be a manager in the first place! 

When you are thinking of implementing a recognition program, you would do well to start with the list comprised in this article.  Throw out the complicated stuff and just tell your managers to simply recognize their employees for doing a good job whenever and wherever possible.  Measure the managers to make sure it gets done, and give them a budget to do it. Copy this article and send it to all your management.  It’ll save you a lot of money and time and you’ll wind up with a much better program and more satisfied employees. 

If you think you need to give a tangible award there are a lot of choices to pick from.  Do what you think makes sense and within your culture.  If you want a good one with terrific flexibility and value, check out Award of Choice. 

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On the heels of the research we mentioned from Young America in our last blog come the findings of The Incentive Research Foundation in conjunction with The Incentive Federation on mapping reward and recognition program patterns.  Of particular note it shows that while award types are dispersed into a wide variety of items, by far the most used award are gift cards.  Of the firms reporting that have reward programs, 65% said they use gift cards, and 26% are using them exclusively.   

As we’ve mentioned many times on this blog, gift cards are the best award to use for a variety of reasons, not the least of which are that they provide the best choice and they do have the best value.   

That’s not to say that they are the only award you should consider.  To make your program the best that it can be, in your planning phase you need to take a look at all awards that make sense for you.  To build the best incentive program you will need to spend some time and effort determining what award best suits your program audience.    As the research points out, travel awards are overwhelmingly used for the larger budget programs.  Of course that does stand to reason as group travel programs cost the most of any award on a per person basis. 

The next time you’re planning your incentive or recognition program, look at all the awards available to produce results.  Ask yourself what you would want if you were a participant?

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This is a short post this week, because we want you to read this post from an expert in the incentive field.  Paul Hebert from i2i Intelligence is a man much respected in this field for his always frank and truthful writings on the incentive award industry.    

In this post Paul fires a dart into the heat of every incentive salesperson out there who spend all their time trying to finagle the next sale and not nearly enough time working with the client to determine whether or not an incentive or recognition program is even warranted in the first place.   

Early on in our posts we discussed how so many incentive programs have failed to produce results.  When you analyze them carefully you will find that most of them should never have been implemented in the first place. 

Thanks for the worthwhile discussion Paul.

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