Recognition and Rewards

Question to Ask the Workplace Doctors about employee recognition & rewards:

I have been researching “employee recognition & rewards” – specifically monetary v. non-monetary rewards. Findings: No empirical evidence for a correlation between non-monetary rewards/recognition and improved performance. Are you aware of any research in this area? I think it would be a great thesis or dissertation for a doctoral student as this area is huge for corporations that want to give a “kick in the pants” to their operation.

Signed, HR Specialist

Dear HR Specialist:

You are right; both money and non-monetary rewards are the stable of corporate life, and the correlation between them and improved performance is academically disputable. Dissertations beg for a definitive answer. Yet common sense tells us that money matters! Money motivates. Early research on extrinsic rewards suggests that they reduce intrinsic interest in enjoyable activities. In short, the theory and anecdotal observation argue increasing the pay, such as big commissions, tends to become a goal in itself and overrides the joy of the job, and we have seen to result in overselling and fraud.

This is to suggest that providing that pay is adequate, incentives are far less motivating than seeing one’s job as meaningful. Theodore Roosevelt’s advice applies, “Far and away the best prize that life offers is the chance to work hard at work worth doing.”Does extrinsic-intrinsic theory apply also to non-monetary rewards of recognition? Probably like pay, they motivate to the degree that they are wanted, but are less important than believing one’s work is worth doing. Deming demeaned such extrinsic rewards as grades. Rather his quality Six Sigma improvement approach and after that Baldrige Award competition demonstrate a link between corporate commitment to quality improvement and workplace performance. All you have to do to see project work teams in a state competition cheering like they had won the World Series, to see that recognition is truly motivating performance as are six sigma, innovative quality improvement efforts, and meaningful work deeply satisfying. From year to year, comparison of Baldrige Award recipients to the Standard & Poor’s 500 (S&P 500) shows, for example, that in one year the 24 publicly-traded, Baldrige Award recipients, as a group, outperformed the S&P 500 by approximately 3.8 to 1.The six publicly-traded, whole company Award recipients, as a group, outperformed the S&P 500 by approximately 4.8 to 1. But to the best of my knowledge, no careful look has been measured the extent of how monetary and non-monetary reward are linked to performance in these companies.I like Winning Workplace’s Success Stories http://www.winningworkplaces.org/library/success/the_three_ps.php They describe the many ways particular small businesses involve, recognize and reward employees.Research into recognition and rewards is not double-blind and hard-nosed, but there is much available of a looser sort.

Excerpts form several sources that can be accessed on the Internet follow: Strategic Guidelines to Managing Cash and Non-Cash Employee Motivation Programs http://www.performanceforum.org/Rewards_and_Recognition.50.0.html#9 The findings of a survey administered to attendees of four major industry conferences was analyzed to assess the effectiveness of cash and non-cash incentive, reward and recognition programs in a Forum report entitled Strategic Guidelines to Managing Cash and Non-Cash Employee Motivation Programs. Respondents of the survey–conducted at the National Association of Employee Recognition (NAER) Spring 2005 Conference, The Motivation Show (Fall 2005), The Integrated Marketing Summit (Fall 2005) and the Fall 2005 Promo Expo; represent a cross-section of individuals who select and implement reward and recognition programs. Overall, managers express a preference for non-cash programs. They view them as more important, more effective and generally superior for achieving the majority of the specific organizational objectives listed in the questionnaire although non-cash incentives were reported as being the most commonly used approach. The leading specific non-cash incentives are, in order, employee recognition, gift certificates, merchandise incentives, worklife benefits, special events and individual travel.

The research project also sheds light on the types or forms of motivational programs best suited to achieve varied organizational objectives and provides strategic guidance for organizations that are both providing and using reward/recognition programs. Any Incentive Is Better Than No Incentive at AllIn order to answer the question, “Which incentive is best?” the authors of this study created a sales contest for an independent sales agency for a major insurance company that used a different reward; cash, travel, and merchandise; for three different sales groups within the agency. The 45-person sales organization was divided into three groups of equal size and took part in a sales contest with the same format and the same goal; acquiring new-business clients; but with a different reward. “The incentive program was set up so that the top salesperson for each team would win the prize for his team’s experimental treatment,” and all members of the top-performing team would earn a smaller prize in their designated reward group. Key findings: According to the authors, “The results indicate that the group with the travel/entertainment incentives performed best, followed by the group with the cash incentive and, lastly, by the merchandise incentives. However, all treatments produced an increase over the previous year’s production,” showing an overall 39 percent improvement in new client sales over the previous year. In addition, say the authors, “Although the merchandise incentive did not produce as large an increase in new clients as the trip/entertainment and cash incentives, it is clear that any incentives are better than nothing at all.” “A Comparative Study of Incentives in a Sales Force Contest,” Marjorie J. Caballero, Journal of Personal Selling & Sales Management, Vol. 8, May 1988, pp. 55-58.Supporting Evidence http://recognitionrewards.com/recognition_evidence.htm According to “Measuring Engagement,” published Thursday, August 28, 2003, by Paul Bernthal, Ph.D., Manager, Center for Applied Behavioral Research, Development Dimensions International, Inc.: “The [U.S. Department] of Labor conducted a comprehensive review of more than 100 studies and found that people practices have.

According to Karen Hessian, Senior Director, Employee Performance Solutions, Carlson Marketing Group, research clearly shows a link between organizations that have high employee engagement, and those that are the most successful at the bottom line.” According to a Gallup survey of more than 80,000 employees, recognition is a key factor in employee satisfaction and retention. The purpose of the survey was “to identify” the consistent dimensions of quality workplaces, defined as those in which four critical outcomes–employee retention, customer satisfaction, productivity, and profitability–are all at high levels. Recognition and praise ranked fourth among the twelve dimensions that consistently correlated with those work groups that have higher employee retention, higher customer satisfaction, higher productivity, and higher profits.

At update: In conclusion look at “3 Questions That Will Motivate Your Employees” by Laura Garnett in Inc. http://www.inc.com/laura-garnett/3-questions-that-will-motivate-your-employees.html:

“It’s a widespread problem: According to Gallup’s most recent engagement research, 71 percent of Americans are “not engaged” or “actively disengaged” in their work. Those workers are less likely to be productive.

“The traditional methods — higher pay, for example — produce mixed results. As Tomas Chamorro-Premuzic writes in Harvard Business Review, “If we want an engaged workforce, money is clearly not the answer. In fact, if we want employees to be happy with their pay, money is not the answer. In a nutshell: money does not buy engagement.”

“So if the evidence is convincing, that higher pay doesn’t motivate, what does? The science tells us that intrinsic motivation, when there is interest or enjoyment of a task, is what really drives satisfaction at work. Dan Pink, author of the book Drive: The Surprising Truth About What Motivates Us, says there are three key drivers of motivation: autonomy, mastery, and purpose.”

Working together with hands, head, and heart takes and makes big WEGOS

William Gorden