Rewards that encourage engagement
October 12, 2009
Mention incentives to old-school managers and they’ll roll their eyes to communicate their distaste for rewarding folks who are “just doing their job.” Having been in the marketing and motivation business for over 25 years, I can’t say I find fault with the attitudes of these crusty supervisors. After all, incentives to improve safety performance have all too often been ineffective, or worse, acted as a de-motivator.
Well-intentioned management has traditionally believed that employees can be motivated to perform at a higher level if they have a group goal â€” a milestone the entire team can be proud of achieving. Management can also justify the incentive payout to bean counters who take note of accomplishments such as no lost time for over one year or the lowest OSHA recordable rate since 1947.
There are, however, two primary problems with this outlook:
1) None of us wants to disappoint the team and risk being ostracized. That’s why milestone awards usually have the opposite effect from what’s intended. For instance, if someone has an injury close to the end date of the milestone period, he “ruins” it for everyone else. The likely scenario is that the injury goes unreported and the hazard is not addressed.
2) In the contest-oriented reward systems used in most incentive programs, “losers” outnumber “winners.” This is toxic for morale because it creates a false competition that pits employees against one another instead of developing a culture that binds them to the common purpose of enhanced safety. Instead of advancing best practices, this approach advances only best temporary results with little regard for sustainable system improvements and employee development.
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Thankfully, the role of incentives is improving in American business. Few doubt that successful enterprises are those in which employees collaborate, are fully engaged and exhibit proprietorship. Research indicates that rewards and recognition encourage enablement and contribute to the elements of support, emotion and task value essential to project and process success.
Businesses must be nimble enough to adapt to the challenges and opportunities in the new global economy. Today’s leaders are using incentives and motivation to encourage a higher level of systems thinking and collaboration, resulting in an organizational culture that is flexible and able to embrace change.
“The Economics of Engagement,” a report from the Enterprise Engagement Alliance (EEA) provides a comprehensive analysis of research in the emerging field of “enterprise engagement” and offers how-to information on recently developed benchmarking tools that can quantitatively measure the benefits of employee and customer engagement. Written by Allen Schweyer of the Human Capital Institute, the report notes that $350 billion is lost annually in decreased productivity, accidents, theft and turnover. These costs are directly related to the rising levels of employee disengagement. Recent studies by Gallup, Towers Perrin and others specify the crucial links between robust employee engagement and better performance. The EEA report offers proof that corporate financial performance is improved when employee engagement is a priority.
Alex Edmans of the Wharton School of Business also provides evidence of the importance of engagement in terms of share price performance. In a study based on stock performance in Fortune magazine’s “100 Best Companies to Work For” between 1998 and 2005, Edmans finds that companies with “engaged” employees returned 14 percent per year on each dollar invested, while the overall market return was only 6 percent per year. “The traditional view,” says Edmans, “was that every dollar paid to employees was a dollar taken away from shareholders. But more recent studies have suggested that engaged employees can lead to higher profits.”
Employee satisfaction and engagement are being recognized as factors in increased levels of discretionary effort, identification with the organization and lower turnover. In our work with clients, we’ve encouraged management to include the following markers to guide their culture enrichment efforts:
1. Establish an index of activities that employees can perform that strengthen the values of the company while enhancing the development of employees’ skills and competence. The performance of these discretionary actions should be clearly communicated, reported and rewarded within the organization. New metrics should be composed primarily of the results of these activities.
2. Put the right people in the right jobs based on more than just skill level. Employees’ commitment to the improvement of the corporate culture should be a factor in performance ratings and in the differentiation between workers. Those who are developing as systems thinkers should be put into leadership roles.
3. Root out bad business practices such as unnecessary work and duplication that can adversely affect employee enablement. This requires a continuous process of system improvements.
4. Encourage meaningful dialogue across all levels of the organization. This requires a commitment to the free and open exchange of ideas and opinions.
5. Monitor and improve the work climate within the organization by ensuring that leaders have the right competencies and management styles to motivate employees.
6. Focus on non-monetary rewards such as career growth opportunities, employee development, and employee-recognition programs. All rewards should be linked to metrics of improvement of the corporate culture. Tangible awards such as iPods, cameras, tools and apparel are more effective than cash, require a lower outlay of funds and are tax-free to the recipient.
7. Most importantly, establish a culture management system to monitor what is really happening at all levels of the organization. One approach might be a Web-based system that features personal accounts where employees accumulate earned points for a variety of involvement activities. These pro-active and discretionary efforts might include performing a job site safety audit, conducting a tool box talk, or submitting a near-miss report. They might also include health-related actions such as attending a smoking cessation class or participating in a stretch-and-flex program.
Using rewards and recognition in your culture-change initiatives is a vital component to enterprise-wide success.