The last few years have been difficult, indeed, for many organizations. Layoffs, pay cuts, pay freezes – these were the norm across organizations of all sizes and industries of all types. In recent months, we’ve begun to see a turnaround as struggling companies see a return to profitability.
How organizations react to that success is quite telling. And that reaction usually takes one of two forms:
- Recognize and reward the top performers only
- Recognize and reward appropriately all those who contributed
Reward Top Performers Only
Ron Thomas recently related the story of Benjamin Moore. Theirs was the typical story of layoffs, slashed commissions and frozen salaries for five years. Then, as a way of celebrating the first quarterly sales increase in years, the CEO decided to “fly the senior team down to Bermuda, charter a yacht, have a sumptuous meal, and live large.”
Sadly, this is not unusual or unexpected, though it is a bit unique in that the top sales reps don’t seem to be included. I’m sure most readers see familiarity in a rewards program that honors only those in the top 10%.
But what about the rest? The Benjamin Moore executive team didn’t achieve quarterly sales increases in a vacuum. I’m sure sales team members had marketing reps, administrative assistants, and yes, HR Pros, behind them.
Reward Appropriately All Those Who Contribute
It's time to take down the these false barriers to recognition and reward. I had the opportunity to see Pixar’s latest movie, Brave, this past week. A friend told me to be sure to watch the credits in full to see the secret scene at the end. I’m very glad I did. While I enjoyed the movie, I was truly astounded to see listed in the credits the entire staff of Pixar Studios – Marketing, Accounting, HR, everyone. I’m told this is standard in Pixar movies and one reason they usually include a “secret scene” at the end – to ensure everyone involved in creating their award-winning movies receives the recognition they deserve. I know of no other studio that does this, and it’s a hallmark of Pixar’s strong culture of recognition.
My Compensation Café colleague, Jacque Vilet, related another strong case-in-point just last week when describing how team members in Japan chose to address the “collectivist” culture in which individual rewards are counter to cultural expectations.
“He said that each salesperson was given his quota (no saleswomen here!) and at the end of each quarter was awarded his commission. All the salesmen then took their awards, decided as a team how to divide the money up and paid every person in the office ----- customer service reps, inside sales reps, administrative assistants, IT people, field techs, accountants -- even HR! Everyone received something. The rationale was that the salespeople could not succeed without the help of everyone. So this was not just about the sales team ---- the ‘team’ was the entire office.”
Jacque’s post highlights two important considerations in appropriate rewards: (1) honor the local culture, and (2) reward appropriately. No, every employee does not deserve the exact same reward as their contributions where likely very different. That’s why it’s important to reward appropriately while ensuring the opportunity for recognition and reward is available for all.
The Fallout of Inappropriate Rewards
What happens when you get this wrong? In many companies that emphasize the top 10% only, the only fallout is the loss of exponential returns they could realize by expanding the opportunity for recognition and reward to the vast majority of employees. Think how the quality of movies coming out of Hollywood might change if all studios had a culture similar to Pixar’s.
In the case of Benjamin Moore, however, the story ended far more justly in my opinion. As Ron Thomas related in the article referenced above: “Warren Buffett, who owns Benjamin Moore, made the decision to oust the CEO basically for being clueless. He flew in a group of officials and they fired Benjamin Moore CEO Denis Abrams on the spot.”
What approach to rewarding success does your organization follow? Recognize the many or the few? Which approach do you find to be more effective?
As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.