A Legal Perspective on the Pitfalls of Employee of the Month Programs

All employee recognition is good, right? Unfortunately, no. I’ve heard (and shared here) several stories of recognition gone wrong. Indeed, when it goes horribly wrong, it causes the opposite of the desired effect, demotivating employees and causing them to further disengage.

Yet, in my consultations with leaders in global industries, I find people wedded to “how we’ve always done things,” unwilling to make a strategic change even in the face of proof after proof of the wisdom in doing so.

For example, one common employee recognition program rife with opportunities for demotivating employees is the very traditional Employee of the Month. The two most typical challenges with Employee of the Month programs are what I refer to as “Teacher’s Pet” and “Who’s Turn Is It?” In the former, the same people tend to win again and again, leaving the vast majority of employees disheartened at best. In the latter, employees know the “winner” is merely rotated through the ranks each month, regardless of performance.

Then I read this article in the U.S. National Law Review, making a strong case against Employee of the Month programs for these reasons and more (including the liability of potential discrimination lawsuits):

“Employers frequently utilize recognition programs as a way of rewarding employees for a job well done and boosting office morale.  'Employee of the Month' programs ('EMP'), however, can sometimes have the opposite effect and can actually become liability traps for employers if not run fairly.

“Although competition can sometimes drive performance, it can also create unnecessary hostility.  As a practical matter, most workers fall into one of three categories: the good, the average, and, the barely-making-the-cut. Assuming the EMP is truly based on performance, then the employer’s 'good' employees will always win.  This reality will likely only dishearten the 'average' employees and will do nothing to encourage those barely making the cut.  On the other hand, if the award is simply passed from one person to the next so as not to leave anyone out, is it really even a reward? What if no one performed particularly well in a given month? In that case, is giving an award encouraging mediocre performance? For these reasons, many HR professionals question the effectiveness of EMPs altogether.

“Another common problem with EMPs is that those who receive the honor often do not understand what they did to earn it.  Whether the award is for having the highest sales in a given month or for a good deed to a fellow employee, without set criteria, the award may appear arbitrary.  In the workplace, arbitrary can often be mistaken for discrimination.”

Instead of relying on old stand-bys like Employee of the Month, consider a more strategic approach to employee recognition. What’s the difference? Strategic employee recognition hallmarks include:

• Recognition based on company core values or strategic objectives – Employees know the criteria for being recognized, and every recognition moment reinforces what’s most important to your organization’s success in the recipient’s daily work.
• Target 80-90% of employees recognized annually – Recognition based on your core values is one of the fastest ways to influence your company culture and refocus all employees on top priorities. This cannot be achieved if the same 10% of top performers are the only employees receiving recognition. Expand the “winners’ circle” to include 80-90% of employees who are touched by recognition.
• Encourage everyone to recognize excellence in others – Even the best managers cannot see every good thing happening on their teams. Empower everyone, regardless of role or level, to “catch someone doing something good” and recognize them for it.

What’s your opinion of Employee of the Month programs?

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.

Comments

[John A Bushfield]

Derek - EMP's are not sustainable as credible recognition programs, for all the reasons you've outlined. Any such program tied to recurring time frames will ultimately fail, because at some point you'll cycle through all legitimate contenders and either start repeating or selecting those who have not yet won, for the wrong reasons.

Readers of this blog already know that the best and most effective recognition programs are ad hoc and event driven exercises that reinforce cultural importance. Once begun, however, they need to be sustainable and carefully managed, else their effectiveness will become compromised.