Performance Management & Rewards

CEO’s Letter: Why Recognition Works

By Elliot H. Clark, CEO

The reason recognition works is that employees are people. And in our increasingly automated, robotically controlled, computer optimized world, they will continue to be people. And people need to feel appreciation and respected. It makes them more engaged and committed. Everyone knows this intuitively. The hard part for HR is to tap into it universally across a workforce.

Recognition appeals to different people differently. Some like the giveaways, but I believe most like applause and the pride that comes with it. One of the most well-known and highly regarded rewards programs is military decorations. There is great pride and achievement in the ribbons and medals acquired over a military career—and they are highly prized even without arriving bundled with an Amazon gift card. It is more about the achievement than the giveaway, so people who contend that recognition without reward is meaningless should think about the above.

Our research shows that the best programs combine both concepts. Recently, I saw the power of recognition and the way rewards interact for some people. I heard my son commenting that my daughter-in-law, a top sales professional for a multi- national, had “thousands of rewards points”—that she had not mentioned to him—and he was figuring out how to use them for a home renovation. She was less interested in how many points and more interesting in winning. I know many people who are like this and “unredeemed” awards can be frustrating to the companies because the presumption is that the rewards are “unappreciated.” Another possibility is that some employees are more focused on the “reward” than the “award.”

What this means to HR is having a program that is easy to use for all employees and incentivizes the right kind of behaviors and generates awareness of exceptional performance across the business.

If recognition programs did not work, this magazine might cease to exist because some of our value is our customer satisfaction based rating systems and our executive recognition program: the annual CHRO of Year awards.

When choosing a recognition provider, HR must sift through myriad choices, from highly automated and advanced technologically driven systems for rewards calculation and management to companies that provide printed and online catalogs for redeeming reward points. In fact, the standard deviation on breadth of service from this year’s Baker’s Dozen runs 2.56 in a sample of 13 that ranges from 9.26 at the low end to 18.57 for the market leader. Now all companies may claim to do everything, but we only measure what they actually sell to their customers in our sample of well over 300 clients.

Much of the selection of a vendor depends on what the organization really need. For some, less services in the bundle might be acceptable: this is sometimes driven by budget considerations and philosophy. Some leadership teams do not believe in incentives and rewards as much as others (we call this class of executive “near extinction” but that is just my opinion). For other organizations, recognition is an important and pervasive program that requires much more attention, management and technology. In our cover story, we highlight the rewards program for MGM Resorts International and how they manage the program (see page 8). MGM has made rewards an important part of their culture, and with a distributed workforce, uses a provider (Achievers) that has built an extensive technology platform. MGM has learned that moving up workforce productivity by even a small margin more than compensates for the expense of a more full bodied system.

Recognition and rewards programs are important tool in the motivational construct of the modern enterprise. While different aspects may motivate people differently, the better the program, the better the return. In this issue, we recognize the top service providers of these programs in our annual Baker’s Dozen. Please see Bakers Dozen Recognition 2015 for our entire list.

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