‘Psychic income’ might be an abstraction, but that doesn’t mean it isn’t real.
By Dirk Olin
Woody Allen famously said that “80 percent of success is showing up.” While that might be true, it’s the remaining 20 percent that is hardest to come by. If it weren’t, all of us would be zillionaire genius filmmakers. So what is the key—or, rather, what are the keys—for human resources professionals seeking to improve employee engagement and, by extension, employee performance? This question is central to our package of stories exploring the state of employee recognition programs. It figures prominently in our cover feature, which tells the tale of how O.C. Tanner’s Chester Elton (the “Dalai Lama of Workplace Trauma”) helped The Nielsen Company’s Eric Lange (SVP HR) take the ratings company’s recognition plan global. The same question animates many of the customer rankings of program providers that appear in our annual Baker’s Dozen.
It is axiomatic among some that if you want to show appreciation, “say it with green.” But in practice, smart recognition providers know that cash is an amnesiac. As Lange points out, if you give employees some extra dough and ask them six-months later what they did with it, the typical answer is “I forget,” or “I paid some bills.” Valuable swag yoked to highly public commendation for achievement is far more memorable in most instances than a slightly fatter check for one pay cycle. Ask any World Series victor which he valued more, the championship bonus or the band of gold? He’ll hold up his ring finger. And that’s as true of the bad boys as the team captains. You don’t have to be a goody-two-shoes to want extra credit from your teacher.
Back in the ‘70s, Jerry Brown, then-Governor of California (who was somewhat unfairly tarred with the epithet “Governor Moonbeam” for his occasional New Age-isms) rationalized pay cuts for government employees by telling them to value the “psychic income” that came with public service. This provoked scorn, but not because the concept was invalid. Brown’s disconnect lay in his failure to build a meaningful, high-visibility system of exchange for dispersing his abstract currency.
Employee recognition is not just a way for HR leaders to economize while squinting through the dustbowl that currently swirls around us. Sure, budgets are being slashed, variable incentives are varying downward, and bonuses are drying up. But employees consistently rank recognition as one of their greatest needs. Indeed, Recognition Management Institute founder Roy Saunderson says that the lack of such programs are among the top reasons cited by departing employees during exit interviews.
Even during flush times, a raise is rarely a life-changer. Jeffrey Pfeffer, Organizational Behavior Professor at Stanford’s Graduate School of Business, recently explained this to Workforce Management (a competitor of ours, but what the heck.) “Typical pay increases are not enough to motivate employees, but they are enough to irritate them,” he said. “Even when companies create seemingly significant pay differentiation between low and high performers, the actual cash increase is insufficient to sustain performance—or it drives the wrong behaviors. . . . Effective management is a system, not a pay plan. The mistake is that companies try to solve all their problems with pay.”
A corollary of this is that, while metrics matter, not everything can be measured. Champions of employee recognition must get buy-in from the C-Suite and the green eyeshade brigade based on appeals to common sense. At the risk of quoting another Californian (albeit an émigré from Minnesota): “You don’t need a weatherman to know which way the wind blows.”
Three elements of effective employee recognition consistently emerge from the literature. Be public. Whether by e-card or in an auditorium, make sure employees receive their rewards in a forum that is shared by their peers and superiors. Be specific. Describe the achievement in question, and articulate its alignment with core corporate principles. Last, be meritocratic. A 10-year pin or quarter-century gold watch might still be part of your recognition regime, but when it comes to promoting excellence, avoid doling out awards to those who are just showing up.
