The Importance of Incentives and Recognition on Workplace Performance in a Tight Labor Market

Research from TLNT shows some interesting facts about the role of incentives, rewards and recognition in companies today.  Following are some key points from that research: 

• While 93% of organizations are aligning their rewards programs with organizational goals, only a third of them say performance or productivity motivation is a primary goal.

• 71% of organizations say the objective of their programs is to increase employee engagement.

 • 45% of companies see IRR programs as strategic, training managers on how to use them, encouraging and monitoring their usage.

• Non-cash incentives are taking on an ever greater importance. In 1996 24% of organizations reported using non-cash incentives. In 2016, 84% were.

 • The effectiveness of cash-based annual incentive plans is questionable. 42% of companies see them as effective; 36% are undecided.

• 37% of HR professions say that non cash incentives in the form of recognition awards, gift cards, etc. have a greater impact on engagement, while less than a third say that about cash.

What Does It Take to Become One of the “100 Best Companies”?

The “100 Best Companies to Work For” list is administered by an organization called the Great Place to Work Institute, which accordingly calls itself the “global authority on workplace culture.”  We thought that sounded a little arrogant until we looked into the steps you have to take and the investment in time and money you have to make to be on the list.

To be considered, companies have to go through a strenuous application process which includes an extensive heavily-weighted employee engagement survey, and as many as 15 open-ended essay questions on topics like trust, values, and communications. From what we could determine the questions we very comprehensive, compelling and complex.

The Best Companies Had These Attributes.

Just about all every company has a mission statement, but in the “Best” ones the mission is not just a statement—it’s—well, a mission. These organizations know just what they do better than anyone else, and employees understand exactly where they fit in this picture. They know not only what they are doing, but why.

Values are taken seriously.

The “Best” take corporate values seriously and the employees are rewarded for living the values. Leaders at every level are held accountable for modeling them. In some cases, employees even have a hand in developing or refining them.

Communication is king.

At 100 Best Companies, communication is multi-faceted and multi-directional. It’s happening all the time, both formally and informally. Leaders talk—candidly—about what’s going on. Perhaps more important, leaders listen. And employees from the bottom-most position on up know if they have an idea, it will be taken seriously.

Compensation is fair and inclusive.

At 100 Best Companies, having competitive compensation is just a starting point. Pay policies are transparent and even-handed. They are regularly analyzed and adjusted to ensure equity across gender, race, and more. Profit-sharing is common and applies to employees at every level, regardless of their role. Benefits policies are similarly not stratified  but any policy differences are not based on role or pay structure (i.e., hourly vs. salaried).

 “Thanks” is not a four-letter word.

The best organizations recognize employees for their hard work, cultivating both formal and informal cultures of recognition. There are awards ceremonies, trophies, and prizes. Rewards are often thoughtful and creative, like a day off at the end of busy season, or ice cream for all when that big account is clinched. Managers are expected to thank employees early and often, and teams are encouraged (and often funded) to celebrate their successes. Perhaps most importantly, when the organization has a win, everyone celebrates it.

Careers matter.

“Training and development” is not just a department it’s a way of life. Every employee can see clear options for advancement and clear paths for getting there; development planning is personalized, and a decent amount of resources go into supporting it

So do personal lives.

100 Best Companies understand the work-life balance. Employees have the flexibility to do their work where and when they see fit, without rebuke. Workloads are reasonable, and long hours and weekend work are done by choice, rather than the rule. Employees are given the paid time they need to grow and care for their families. Other supports are in place as well: back-up dependent care programs, concierge services, lactation support, adoption/surrogacy reimbursement and so on.

Cost and Benefit

Research has shown that not every 100 Best company models every single one of these traits. But many of them get surprisingly close. And most of these companies are highly ranked in their industry. However we have not found any empirical research to show the correlation of financial performance to making the list.  When considering applying to be the “Best” you should consider putting together a good cost benefit analysis.

Making Sales Motivation Programs Effective

Cash isn’t always the right award to motivate your sales force.  For years we’ve seen companies throw cash at sales objectives with poor results.  It is the obvious go to award and the easiest to implement and administer but not always the best one.  To make a motivation program effective, you need to make the rewards relevant and specific to the needs and demographics of your sales force.  

For most salespeople there are three instinctive motivations that can influence their performance:

1.     The proper balance between remuneration and rewards 

2.     The desire to achieve success and exceed goals 

3.     Recognition and security

It is essential that remuneration and rewards for salespeople be strongly linked to performance. If you already have a very strong cash incentive or bonus, it might not be best to just add more cash to it to get a boost in a particular objective.  If an increase in sales is how your salespeople earn their base and bonus compensation, the best ones will be doing all they can to earn as much as they can already.  Probably more than any one type of employee, salespeople will work to seek their comfort level, and when they achieve it, they don’t move much to get more.

If you don’t have a sound compensation package not linked to accomplishments, don’t be surprised by the poor performance of your salespeople or by seeing the best of them move on. When designing your system, it's critical to have a real gap between the excellent, the good, the average and the people who struggle. The best won't be motivated to go above and beyond if there's little-to-no difference. For motivation programs to achieve incremental performance over a short time, consider non cash awards interesting to demographics of your people.  And in those types of programs choice of award is critical.  Let them set their sights on what they want for their own lifestyle.  Do you really think that the hot briefcase of the moment or a new watch will motivate everyone?  It surely motivates the ad rep that is selling them to you.

Any decent sales person we’ve ever met is driven by success. They need victories to move forward so put in place objectives around the different selling steps for your product and formally recognize those who achieve them.  Then grow those objectives and set increasingly ambitious targets to move that group to higher and higher levels of performance and recognition.  A myriad of selling skills can be addressed in these types of programs.  One of the main benefits is that it is easy for each salesperson to measure their real contribution to the company and enjoy the recognition they receive from it.

Good salespeople are typically less concerned with job security, than the average employee. They can take risks more easily than the general population. This allows them not only to be at ease in a job where the activity is clearly measured and driven by performance, but also to change jobs if a more interesting offer comes along in another company. When you are finalizing your overall program be sure to congratulate and celebrate the ultimate successes.  These are the group of people that you will move your company forward.

Recognize Employees at More All Levels of Performance

Superstars will always be superstars.  That’s what they do, that’s what they have done, and that’s what they will continue to do.  And your superstars will always be the ones who get the recognition, who get the awards, who get the promotions.  And frankly that’s as it should be.

But we keep hearing from managers and employees alike, that there’s a whole group of just regular performers out there who rarely if ever get any of recognition or appreciation at work.  We see that all the time in employee surveys that say that lack of recognition and appreciation are top reasons why people leave their company and search for a new career.

It’s unfortunate, but while managers know this exists they are either reluctant or uncommitted to find a way to recognize performance at all levels.  It’s easy to reward someone who hit the cover off the ball, but what do you do with the consistent faithful workers who are there day after day just doing their job?  They probably represent the middle 70-80% of your workforce that is called just “regular” employees.  They are the hard working people you can’t do without.  They are the ones who quietly slip out the back door for another company who will respect them more than you do.  They are the backbone of your company.

Unlike superstars, there might not be any standout performance or above and beyond behaviors in this group, but we all know that nothing would get done without them.  And it’s precisely because they don’t produce standout exceptional work that they are ignored, and if you are implementing a recognition program based on the above and beyond, these will never be winners.

Do you know what it’s like to go through you work life and not be recognized? 

In any well planned recognition system you must be careful to not just recognize the superstars.  A great way to accomplish that is to apportion some of your recognition budget for a peer to peer program and let your employees recognize themselves.  You may be surprised who they find to reward, and as easily surprised at the reasons for the award. 

The United States has a long and proud history of our men and women in the military.  Did you know that the vast majority of the recipients of the Medal of Honor were not the standouts, not the he superstars, not the leading officers of their time?  They came from the “regular army, navy air force and marines.”  They were just the middle of the pack that did extraordinary things at extraordinary times.  We often term the majority of our employees as “regulars.”  Is it time to see them in a different light?

These are the people who are trained and focused on doing the right thing and they do it day in and day out.  These truly deserve your appreciation.  Don’t forget them when you plan your next recognition campaign.