See how varying incentive programs transformed five organizations.
By the Editors
Recognition comes in all shapes and sizes—from a simple “thank you” from the CEO to monetary gift cards to newer social recognition technologies. But its underlying commonality is its power to transform organizations by inspiring employees to reach beyond their everyday capabilities to accelerate the bottom line. So for our special issue on incentives, we at HRO Today wanted to examine several different approaches to rewards and recognition for varying industries. The results of five engagements appear in the following pages. We hope you’ll be inspired to bring something similar to your organization.
Ramping Up Rewards
Engagement. Efficiency. Ease of administration. That’s what one tech company gets from its new incentive program.
Ask Network Solutions how much the Internet has evolved and they will be the first ones to tell you the change has been exponential. The domain name provider has expanded its services over the years to include web site design, e-commerce solutions, online security products, and search engine marketing to cater to the ever-changing marketplace. One area where the organization needed to evolve internally was recognition. With approximately 750 employees across multiple locations in the U.S. and Argentina, the human resources team sought to consolidate its multiple employee recognition programs into a more efficient and effective solution.
With components of Network Solutions’ reward and recognition program operating independent of one another, there was no standard measurement tools or reward offerings. This was a main driver to switching to a comprehensive solution that delivered:
• Everything from spot recognition to years of service awards;
• A streamlined recognition process for the human resources and management teams;
• A perceived value to employees by allowing them to consolidate all their earnings in a point bank; and
• Rewards that make a lasting impression.
Strategic Solution
For the new incentive solution, the process required a consolidation of the existing programs used by Network Solutions’ executives and management, and the creation of an overarching program that would become a single solution for the organization. The company partnered with Rymax Marketing Services, Inc. to collaborate on the integration process and the relaunch of their reward and recognition program.
Rymax worked closely with the human resources team to customize a program that incorporated the company’s corporate pillars and helped achieve specific goals. The outsourcing provider converted all of the existing employee recognition efforts into a streamlined, point-based recognition program that achieved consistent results across the organization’s multiple hubs.
As the foundation of the program, Network Solutions utilizes Rymax’s MaxSite™ platform, a web-based solution for managing users, tracking programs, awarding points, communicating customized messages to employees, and accessing various reports.
MaxSite also serves as the secure online rewards redemption catalog and checkout platform for employees, offering access to thousands of brand-name reward choice. With the platform came a comprehensive solution that engages Network Solutions’ employees to earn and accumulate points throughout the year and spend those points as they choose. For example, the employee recognition component of the program provides on-the-spot employee recognition from managers to their employees for going above and beyond. Call center employees receive points for providing excellent customer service to Network Solutions’ customer base. Employees also receive points on their service anniversary recognizing their dedication to the company.
Employees are able to redeem their points immediately through MaxSite for a reward of their choice. They also have the ability to store up their points to save up for a higher-value reward. For the company’s Argentinean office location, Rymax customized a program that allows employees to redeem their points for the most desired local vouchers found in Argentina.
To increase engagement, Rymax trained an internal team of super-users who would become the go-to experts of the program. This group was then equipped to show executives and management how to use the system to reward employees. Employees were also given an introduction to the web site and the product offerings, as well as the overall program and how they would earn points.
Rewarding Results
Network Solutions was able to streamline its employee recognition program. The new solution allows Network Solutions several advantages:
• Save money by working with one centralized vendor for all rewards rather than ordering products on an ad-hoc basis;
• The ability to communicate to employees in a consistent manner;
• Saves time and reduces excess paperwork;
• Easy to train management on awarding points; and
• An efficient process that increased adoption and engagement of program.
“Employees are our most important asset and the driving force behind the success of our company. The Rymax platform allows us to offer our employees a program that is fun and easy to use,” says Stacy Krell, manager, human resources, Network Solutions. “Managers can easily provide recognition that is timely, personal, and specific to our corporate goals. In addition, employees enjoy shopping from the catalog and choosing awards that they value.”
Streamlining the System
Parker Hannifin needed a rewards program to seamlessly serve its international population. The solution? Going online, going global.
Motion and control technologies manufacturer Parker Hannifin faced a few problems with its archaic awards program: It served its domestic employees only; the gift selection was limited— logoed watches, pins, and crystal pieces— and its employees weren’t pleased with the overall experience. Even more, some employees had repeat gift choices over the years due to the company’s high retention rate.
The process itself lacked standardization without any help from today’s technologies. The HR executive received employees orders via email, compiled them into a spreadsheet, and delivered them to the vendor. Since the vendor did not ship internationally, gifts for overseas employees would be double shipped, first to Parker Hannifin’s distribution center and then on to the final destination. Double the shipping equaled double the fees.
The lack of standardization resulted in inconsistent recognition experiences for employees, as well as a lack of control over spend. Invoices were paper based and separated by location, which led to a cumbersome accounting process.
A change was long overdue.
Parker Hannifin was concerned initially about whether a single provider could understand its diversity of locations and provide efficient customer service for its entire employee population. The company was also apprehensive about an automated system.
Solution
In the summer of 2008, Nick Conley, corporate supply chain manager at Parker Hannifin, vetted Michael C. Fina for a request for proposal (RFP) for a new and improved service award program. Conley says the provider’s global capabilities, expertise, and outstanding customer service coupled with the family atmosphere at the company (which is owned and operated by the third generation of the Fina family) made them the right fit.
Terris Mahone, director of human resources at Parker Hannifin, agrees. “I liked the fact that both the VPs and managers were very involved with the employees. As we walked the floor it was clear that everyone knew each other on a first-name basis. It was a family atmosphere, and it was clear that the employees in every department knew and practiced the company’s core values.”
In 2010, Michael C. Fina became Parker Hannifin’s sole vendor for domestic service awards. Branches had the option of either holding banquets to recognize employees or providing employees with an award packet. Award packets contain a personalized letter, order form, custom brochure, and ring sizer. Every gift level contains nearly 78 items to chose from, whether it be cookware, furniture, electronics, jewelry, or sporting goods.
With the domestic program up and running, attention was turned to going global. With a presence in 53 countries, Parker Hannifin looked to Michael C. Fina to set up a global supply chain to ensure that duties, taxes, and shipping costs were minimized. The provider also delivered reports on cultural preferences and best practices for recognition for each country to ensure meeting the unique needs of each country.
Initially, getting executive buy-in was quite a challenge. It had to be introduced country-by-country to HR coordinators who, in some cases, were already administering an existing program. Parker Hannifin appointed Michael C. Fina as the single point for the recognition program across all locations. Once HR executives began to understand the ease of the new process, the buy-in rate increased to 98 percent.
The program was implemented gradually in 14 countries, including Argentina, Aus- tralia, Brazil, China, Denmark, Hong Kong, Japan, Mexico, New Zealand, South Korea, Taiwan, Thailand, Turkey, and the UK. Belgium, Germany, the Netherlands, and Poland are up next, set to launch in 2012.
GiftNET is the online user interface employees visit for selecting their gift. It is available in multiple languages, including Spanish, Portuguese, and Chinese. Employee ID numbers unlock the gift selection that has been set up for that country and year of service. Award selection has been specifically chosen based on culture, brand preferences, price, and shipping logistics. In many countries, preselected gifts are sent to those who neglect to order to ensure that everyone is recognized.
While standardization was a main goal of the new process, Parker Hannifin asked Michael C. Fina to make an exception for its largest international hub, Mexico. Limited Internet access posed the biggest hurdle to the program, so Michael C. Fina sends award packages in bulk to HR coordinators so they can be presented to employees in front of their peers at an awards banquet. Gifts are delivered prior to the company event so that everyone is able to receive a reward.
Today the program is thriving, with hundreds of international recipients being celebrated. Parker Hannifin spends about the same amount of money on its new recognition program, but now receives more valuable and varied gift selections, administrative support, excellent customer service, and a standardized program that nearly all locations can easily plug into.
Michael C. Fina also provides Parker Hannifin with compiled electronic invoices that make tracking program spend much easier, along with Fina Direct, a comprehensive reporting web site. With Fina Direct, administrators have real-time visibility into program activity and can add, edit, or delete employee information as needed.
Employee feedback about the program has been overwhelmingly positive (see Survey Says). Parker Hannifin is currently exploring the possibility of expanding its recognition program from a focus on service awards only to include on-boarding, safety, and an initiative-based points program. The next step in improving its service award program will be to implement Michael C. Fina’s automated manager reminder e-mail service and online presentation toolkit to further ensure consistency in the recognition experience for the entire employee population.
Survey Says
In 2010, Parker Hannifin’s United Kingdom hub conducted a survey to get feedback on the new recognition program.
Here are the results:
How easy was the gift ordering web site to use?
97.8 percent said very easy.
How would you rate the gift ordering web site overall?
94.5 percent said excellent or good.
Do you feel you were given sufficient time to make your choice?
98 percent said yes.
How do you rate the gifts?
81 percent said excellent or good.
If you have received a service award before, how was your experience in comparison?
78 percent said better than anything they had experienced before.
Do you feel that by using Michael C. Fina your company has achieved its objectives of enhancing and improving its employee recognition process?
85 percent said either improved or significantly improved.
Order Up!
How one eatery created a culture of fun through recognition.
Walk into any Texas Roadhouse restaurant and you will see, smell, and hear the very tangible culture of this company. In a word, it’s fun.
“If your employees are having fun, they are going to have fun with the guests,” says restaurant founder Kent Taylor. “The biggest compliment I get when I talk to people coming out of our stores is not that they had great food or great service, but that they had fun.”
Make no mistake, this party has purpose. “Culture by design, not default,” is the Texas Roadhouse leadership team’s mantra. The rapidly growing, $1.2 billion (including franchise sales), 335-unit restaurant chain is proud of its rowdy reputation and the culture it encourages among employees and guests.
“Culture for us really is one of our biggest assets,” says Dave Dodson, communications director. “We talk all the time about really making sure that we are protecting our culture, that we’re investing in our culture, that people understand our culture, that new people we are bringing into our company learn the culture.”
What does “culture” mean to Texas Roadhouse or any organization trying to find, instill, and promote a sense of identity and belonging among its employees?
“Organizational culture is possibly the most critical factor determining an organization’s capacity, effectiveness, and longevity,” says Linda Devis, expert in building high performance cultures and organizational development. “[Culture] also contributes significantly to the organization’s brand image and brand promise.”
The company has been called to defend its efforts to maintain and promote company culture in recent months. Texas Roadhouse CEO, G.J. Hart, appeared on CNBC to answer tough questions about why the company has continued to invest in recognition events and celebrations with shareholders and current economic conditions to consider.
“We’re all about our people and our culture,” Hart told the CNBC interviewer. “We live by a philosophy in our company that if we take care of our people, they’ll take care of our guests. And that’s exactly why events like these are important in times like this. We’ve got to give a little to get a lot…and, in fact, I’m not sure we’re doing enough.”
Hart pointed to recent company earnings, growth, and the fact that 70 percent of the restaurant’s guests are repeat customers as evidence of the success of Texas Roadhouse’s attention to cultivating culture.
Creating a Framework for Fun
How do you train fun? Texas Roadhouse founder, Kent Taylor, believes it all begins with recognition.
“Before I started this restaurant, I worked for others,” explains Taylor. “I did a lot of contests for employees and other crazy things in the store that I got in trouble for. Many times we had to hide stuff so that the people at the corporate office didn’t know I was doing fun things in the stores that cost money. So I said one day, if I get to open my own restaurant, I’m going to recognize and celebrate people the way I want to and not worry about somebody looking over my shoulder telling me I can’t do it.”
Today, Taylor realizes that while fun is the focus, formalizing recognition and putting a framework around how to celebrate helps maintain a focus on the brand and keeps the business strategy intact.
“You have to formalize the recognition when you get to the size we are because you can’t go into every store and try to get people to get it,” says Taylor. “I can remember having an area manager come to me and say, ‘I found a way to save money at the openings.’ He said, ‘We need to cut out all these crazy contests and things we do to recognize people.’ And so I kept him in training an extra six weeks because he didn’t get it.”
Formalizing recognition—standardizing the many contests, promotions, and recognition occurring in hundreds of locations across the country, required a plan.
“Our promotions centered on different parts of the business—meat cutters, bar tenders, line dancers,” says Dodson. “The recognition was good, but there wasn’t much that tied it together. We were looking to create a movement among all our employees and that required a more cohesive approach.”
Dodson and his team partnered with O.C. Tanner to create “Living Legends,” a branded approach to recognition at Texas Roadhouse that allows the restaurant to communicate tools, training, goals, and messaging in one well-understood format while offering milestone and performance recognition with more meaning.
“Through our partnership with O.C. Tanner and the creation of our ‘Living Legends’ recognition platform, we have developed a tool box of materials that our operators can reach out and use to aid their efforts that they already have in place in their stores,” says Dodson. “To us, it serves as a trigger for recognition. Whether it’s an employee service milestone or an employee performance achievement, our stores have something that they can reach out and use to support all the great things they do in the store.”
The “Living Legends” program awards based on service, performance, and an employee of the month, quarter, and year. Managers access a recognition hub that is set up online to track and reward employees. Recipients browse a brochure, then visit an online portal to place their award order. Service award winners get a crystal trophy as well.
Dodson and his team of trainers rely on O.C. Tanner’s carrot culture team to keep them up to date on the latest best practices and information when it comes to recognition.
“We’ve been involved in developing recognition in our company for many years, but it doesn’t mean we’re experts,” says Dodson. “Carrot culture training really helps us to take our internal training to the next level. The training always focuses on the best, most recent information, including new studies and best practices. And it’s at that point you know the results organizations are generating through smart recognition programs are not just ideas. That’s exciting.”
Real Results
Paying attention to culture. Recognizing achievement. Celebrating like family. It’s an approach that has earned Texas Roadhouse greater levels of employee satisfaction and an impressive 30 percent reduction in turnover in its locations that use recognition most.
Other company metrics also speak to the success of Texas Roadhouse’s approach to cultivating culture.
In 2009:
• Diluted earnings per share increased 29 percent
• Year-to-date stock is up 58.63 percent from Dec. 30, 2008, to Dec. 29, 2009
• Five company restaurants opened and one franchise restaurant was acquired
• Restaurant margins increased 237 basis points to 17.4 percent
“Why create a culture, when you can create a movement?” says Dodson. “We want to create a movement that our employees and our customers can really engage in. Being smart about showing our appreciation in as many ways, for as many results as we can think of, will help create that movement.”
“We’ve also seen amazing reductions in negative employee phone calls,” he continues. “Alongside measurements like how much the program is being used, those types of culture shifts tell us we’re doing something right.”
And while every company is different, Dodson believes every company has to create a unique culture for themselves, and anyone can create a culture that people can embrace and believe in.
“Recognition really is a simple choice,” says Dodson. “We have seen that over 16 years of our business at Texas Roadhouse. Taking care of your people makes a difference. It drives results. It creates success.”
From Antiquated to Online
How Eli Lilly Canada made the move to a points-based, employee-pleasing program.
Best in class. It’s something that Eli Lilly, the 10th largest pharmaceutical company in the world, strives for in everything it does. In fact, 20 years ago the Harvard Business School Review cited the company as a thought leader for its best-in-class approach.
The company’s talent management strategy is tightly integrated with its succession management strategy. It has 38,165 employees across the globe with research and development facilities located in 8 countries, manufacturing plants in 13 countries, and markets products to 143 countries. To create happy employees and a high retention rate, Eli Lilly Canada turned its focus to recognition. It was working with an antiquated rewards process that was typically only used by managers in a downward manner, and it required a formal awards nomination process to award employees for the previous year’s accomplishments.
Eli Lilly Canada wanted to move to a solution that would recognize in three ways: peer-to-peer, supervisor-to-subordinate, and subordinate-to-supervisor. The company also wanted something easy to use, easy to roll out to their employee base, and a solution that was up to date with the latest technologies.
The Solution
In 2010, Eli Lilly Canada determined that Achievers, formerly I Love Rewards, had all the aspects of a solution the team was looking for—multitier recognition, an easy-to-use interface, and an outlet to develop a culture for recognition.
Eli Lilly Canada seamlessly transferred the budget that was allocated for dinners and gift cards into a points-based Achievers’ system. Points budgets for supervisors were developed based on the number of people each supervisor managed. Executives were still responsible for reaching targets set regarding talent metrics. The solution was implemented to mimic the same performance leadership behaviors that show up in Eli Lilly Canada’s performance management system and code of conduct, where performance management, leadership assessment, and rewards are tightly integrated together.
The Impact
The implementation of Eli Lilly Canada’s new recognition program has proven very successful. Over the course of a year, overall employee engagement scores skyrocketed from a low-to-mid range score to an impressive high score. The company is now the number one affiliate worldwide when ranked against peer affiliates in employee engagement.
Training and transparency were the two keys to a successful implementation. Achievers’ online platform provided an environment for managers to see who was—and wasn’t—actively recognizing and what behaviors they were rewarding. The transparency of the system also helped managers learn best practices from one another.
For training, the HR team used both formal practices and learn-as-we-go processes to bring the platform to managers. There was some managerial concern about recognition.
Implementation of Achievers has also given Eli Lilly Canada a way to track employee satisfaction and engagement. The team used its 2010 data to evaluate usage as well as response to Eli Lilly Canada’s Voice of the Employee survey. The team was pleased by the initial response from employees (see Results Achieved).
The company is now looking at how recognition can help gain and maintain high employee retention rates. Eli Lilly Canada makes it known to candidates that as employees they will be groomed in the affiliate for future roles in other Lilly offices around the world. In an organization known for seeking out top talent and then grooming them for future success, implementation of Achievers has helped Eli Lilly level the playing field of rewards and recognition.
Looking toward the future, the company plans to use the program to evaluate and correlate business impacts such as, manager and employee turnover rates, high potential turnover, and sales performance.
Results Achieved
• Voice of the Employee survey results showed a 10 percent increase in the positive response rates on recognition from 55 percent respondents positive to 65 percent positive.
• Engagement factors increased across the company with 16 out of 20 categories in the annual engagement survey increasing an average of 4 percentage points.
• 98 percent of employees enrolled in the program in the first month.
• Program administration time for HR decreased by 30 percent.
• Central tracking of money spent linked with payroll system.
Reconsidering Consolidation
A new approach allowed Siemens to streamline managing multiple employee recognition programs.
By Mike Ryan
Creating and deploying a successful company-wide employee recognition program can be a challenge in any environment. But the obstacles are inherently more complex within a highly autonomous business structure. Siemens USA—with 60,000 employees in all 50 states and Puerto Rico—is an independent subsidiary of German parent Siemens AG. It is a decentralized organization comprised of autonomous business units—many of which have had their own employee reward and recognition programs in place for years. It was time to make the migration into a company-wide program. But making the transition wouldn’t be easy.
The Business Case for Consolidating Programs
A decentralized operating model has long allowed Siemens to move with speed and agility across its key business sectors: industry, energy, and healthcare, as well as its corporate and cross-sector functions. But that operational independence has also meant that recognition and reward programs varied across business units and were not consistently connected to corporate imperatives.
Susan Brown, director of compensation at Siemens USA, wanted a streamlined recognition program in order to:
• Motivate, unite, and engage a diverse workforce;
• Bring consistency to the units’ disparate approaches to employee recognition and their supporting processes;
• Give human resources better insight and oversight of the eligibility, nomination, approval, and reward issuance process; and
• Allow finance to tightly track rewards as part of the total compensation equation.
Siemens never considered an in-house build. Brown recognized it wasn’t a core competency of Siemens nor was it a sensible assignment for resources that were continuously focused on supporting core business requirements. She quickly ascertained that the best solution would be one built specifically for Siemens. “Not only is our structure complex, the nuance of our data is complicated. It became clear that we needed a solution that would not only be flexible but reliable as well.”
Getting Stakeholder Buy-in
Brown started the journey by building consensus with counterparts in compensation and HR, across business units. “We collected and shared common processes, current practices, common themes, and approval structures,” she explains. These inputs were used to define an overarching approach for the new, company-wide employee reward and recognition program, and to help gain buy-in across multiple stakeholders.
“This was not a difficult sell,” she recalls, since more than half of the business units had some kind of reward program in place. “The business executives’ enthusiasm was clear; Siemens had made a decision to invest in a reward program to motivate our workforce during very challenging economic times. That was never in doubt. The question was: ‘What is the best form for it?’”
Choosing a Technology
Technology plays a major role in any employee reward and recognition initiative. Siemens considered both off-the-shelf packages as well as customized solutions, weighing four factors: the ability to tailor the solution to meet the company’s needs, implementation time and effort, reliability, and cost.
In assessing different vendors and their technology offerings, Siemens USA had specific requirements. The platform had to address the company’s needs for:
Compliance: the ability to automatically manage the program’s policies and rules.
Control: the capacity to gain deeper visibility into program activity at both the summary and granular level.
Consistency: in both form and function across all of Siemens USA, while simultaneously presenting a personalized user experience at the business unit level for all stakeholders.
Convenience: the chosen system had to automate all aspects of the program in a seamless, simple, and intuitive manner.
Siemens USA ultimately chose to partner with New York-based Madison Performance Group, which built a custom platform using proven technology called “You Answered.” For consistency and convenience, the design of the program looked similar for every business sector, but catered to its preferences. The award approval process was also based upon shared rules as well as exception scenarios unique to each sector. For convenience, a common award currency promoted Siemens’ external brand promise while offering employees a wide range of award options. And since all activity within the enterprise was captured by the system and was reportable, the organization had enhanced abilities to control—or track—the recognition activity, including its impact on business performance.
Living the Brand
Brown and HR leadership worked with Siemens AG world headquarters in Germany to apprise global management of the program, and to secure approval for its branding elements. “We wanted to ensure that our internal program’s brand message would be consistent with the external message Siemens presents globally.”
From the onset, Brown’s team saw the opportunity to connect employees with Siemens external branding message. “The program name ‘You Answered’ complemented Siemens AG’s global ‘Answers’ advertising campaign, which shows how Siemens can answer the world’s toughest questions around environmental issues, city expansion, and building infrastructure. These are big issues that very few companies have the resources and knowledge capital to address,” she says, adding, “Our employees provide Siemens’ answers—and the ‘You Answered’ program recognizes their contributions in doing so.”
By dovetailing the internal reward program with the external campaign, “You Answered” aligns employee’s behaviors with the expectations the campaign created, helping to reinforce corporate values and linking employees’ efforts directly to the company’s success.
With the infrastructure in place, the final consideration was the design of the program’s reward currency. That step, Brown recognized, presented an ideal branding vehicle. “Instead of using a generic gift card, we realized that a branded reward card would be a powerful way to extend the program’s impact,” she says. The card, which features the “You Answered” logo and a color palate derived from Siemens’ global branding guidelines, “reminds recipients of their role in our company’s mission—to be the Answer—every time they take it out and use it.”
Creating and deploying a successful company-wide employee recognition program is indeed a challenge, but by taking the time to properly establish the foundation of its “You Answered” program, Siemens USA helped ensure its successful launch and ongoing momentum. The result is an employee reward and recognition program that meets Siemens USA’s strategic and tactical objectives today, and has the flexibility to grow as needs change over time.
“At Siemens, our employees value being part of the answer,” Brown says. “Our people are thinking about our business and the role they play in making it better constantly. Whether that takes the form of delivering a higher level of value to a customer or a new idea that leads to a better way of doing things, that sense of being the answer is becoming ingrained in our culture. And our recognition program is an extension of that culture, strengthening the connection that employees feel toward the business.”
So How is the Program Performing?
Brown says that Siemens takes a highly analytical approach to managing the impact of all its investments, and recognition is no exception. “We examine every vital sign, utilization across sectors along with award issuance volume and frequency. We know who is using the system and under what circumstances. But it is the anecdotal evidence that is the most gratifying. “You Answered” has really become part of our vocabulary. Our managers, including our senior level leaders have really embraced it. It’s embedded in our culture.”
Mike Ryan is Madison Performance Group’s SVP of marketing and strategy.
