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12/16/2010

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This post resonates a lot with Paul Hebert's recent post comparing smoking with incentives. The once-a-year type of recognition won't do much to re-enforce and/or modify behaviors. Those non-cash forms of recognition throughout the year definitely takes the burden off of huge cash bonuses at the end of every year

Appreciate the comparison to Paul, Drew. That's a huge compliment, indeed!

Yes, if the goal is to reinforce or modify *behavior*, once-a-year (or even once-a-quarter) programs simply won't cut it. In the moment, specific, actionable and authentic praise and recognition is the way to go for true behavior change.

There are a lot of good points here, Derek. For example, inflated bonuses creating negative incentives on Wall Street. Or the silliness of letting people walk for lack of appreciation. I couldn't agree more about the importance of recognition throughout the year - not just good business but good business etiquette - but I also think the cash needs to be there as well. If you tell someone how great they are every day for a year then fail to provide any sort of monetary reward it starts to sound like lip service - the good news is that if you show appreciation you don't have to try to make up for lack of appreciation with unreasonably inflated cash bonuses. Appreciation isn't a replacement for cash, it's another incentive that satisfies a different need.

Derek,
Nice article and it comes at a good time for me as I'm working with a new prospective client that is struggling with their compensation packages which, in recent years, has included significant year-end bonuses to senior executives with no real criteria on which they are based. I think we're going to need to restructure that program.

I also agree with Laura's comments regarding on-going positive recognition for achievement throughout the year needing to lead to some type of year-end salary adjustment/bonus, etc.

But, at least it will be based on a valid recognition of true contribution that both parties have agreed on, instead of being seen as arbitrary and capricious or non-existent and the employee is left guessing what they need to do because the feedback isn't specific enough for anyone to effectively judge or be judged.

Skip, "arbitrary and capricious" -- that's what performance reviews are to far too many employees the world over. Thanks for chiming in with that. It's an important consideration, as well.

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