Compensation Cafe

Cafe Classic: What the Oreo Cookie Can Teach Us about Employee Recognition & Rewards

Editor's Note:  We all love a good metaphor and here's one that not only highlights the importance of truly "localizing" your reward programs but also involves chocolate!  Thank you, Derek Irvine!

Is your company global? If not global, do you have multigenerational and multi-cultural workforce? If so, then you likely experience many of the same stressors of global organizations in catering to local employee needs for appropriate compensation, benefits, recognition and rewards.

The greatest challenge of all is first understanding local needs. It’s all too easy for HQ to think they know what employees want (in any capacity). Truly understanding and catering to real local desires, however, is an entirely different matter.

This story in Smart Business about Mondelez International (formerly Kraft Foods) is a terrific illustration of my point. For our American readers, what do you think of when you hear “Oreo cookie*?” Chances are it’s not a small cookie sandwich, with a green-tea flavored crème filing that’s not very sweet. Yet that’s exactly what “Oreo” means to Chinese consumers today.

Mondelez was ready to stop selling traditional, American-style Oreo cookies in China because they were losing money on sales. The cookies were too big, too sweet and not at all appealing to Chinese consumers. Yet, by first listening to what Chinese consumers actually wanted and changing the product to align with those tastes, Chinese Oreo sales now account for nearly half of the  global Oreo business.

This is a powerful lesson for HR pros creating global employee recognition programs, too. Simply recreating your program as designed for the country where HQ is located will almost certainly guarantee failure on a global basis, especially when it comes to rewards (the horror stories are quite compelling). Local tastes and local needs dramatically vary. While I know why clocks are a terrible reward for Chinese employees, I was a bit surprised to learn the most popular reward item – as regularly selected by Chinese employees in their own neighborhoods from a vast selection of reward choice – is fancy baked goods.

My point – never assume your way is the best way for all employees everywhere (or from every generation). While you should always work hard to include all employees in your strategic, social recognition program, you must also work hard to ensure it’s a program that is rewarding to them.

How do you localize your global programs?

*Even writing “cookie” instead of “biscuit” was, for this native Irishman, a customization in honour of the home country of the Oreo. Simple localization of language and terminology can also be a powerful means of acknowledging the importance of local needs in global programs.

As Globoforce’s Vice President of Client Strategy and 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. He is a leader in the WorkHumanmovement and the co-author of "The Power of Thanks" and 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.

Do You Want to Be a Hero?

Do you want to be admired and respected by your colleagues, to be recognized by senior leadership for who and what you are?  Do you want to be known throughout your business universe as one who sets the standard?

Then solve a problem.  Stand up and show someone how to get things done.  Clear the pathway; support someone’s idea, save a step somewhere.  Do what it takes to get the job done.

Just do it.

It's not hard, really, to broaden your view beyond the face looking back at you in the mirror.  It's a matter of thinking not of yourself first and foremost, but of a greater good that is broader than yourself - and of focusing your attention on getting the results that help the department, the team, the business. It's called a giving of yourself.

All too often what we see from many employees at all levels of the organization is an effort to be the star, the success story, the “wunderkind.”  But that often occurs at the expense of someone else.  "Look at me," these eager A-types seem to shout, "look at what I have achieved."  These are folks who seem to have missed reading the memo on team effort.  These are folks who fill every speech or memorandum with only an “I.”  As if no one else had a hand in the success.

We all have these employees in our organization.  They surround us, but I question how much they help us.

Here's another thought.  Isn't it better to be raised up (via reward, recognition, applause etc.) by someone else, rather than to be constantly trying to push yourself up?  All by yourself?  Doesn’t that ego rush get a bit tiring, what with the constant pressure of looking over your shoulder to gauge the competition?  Do you get periodic stress headaches, where the muscles at the back of your neck tighten to stone?  Are you sleeping well?

Now picture yourself receiving that same award, but now with accompanying recognition, spotlight, accolades etc.  Nice feeling, isn’t it?  A proud moment.

I think it does make a difference in how one gets recognized.  I suppose that there are levels of self-satisfaction, but the pinnacle must be when you're lifted on someone else's shoulder.   When you hear the cheer of the audience.  Self-advertisement, political deal-making and passive resistance that holds others back can't provide the same level of genuine personal satisfaction.  Because deep down you'll know you cheated to get there.

Think about someone whom you greatly admire, in whatever field of endeavor you like.   Chances are it’s someone who has accomplished something, delivered the desired results, made something of themselves.   But they tend to share to credit, acknowledging the role of others in their success.  They made the hard decisions and stood up for something.  Likely that admirable person isn't someone who took shortcuts, pushed others aside, ignored the call for help or otherwise kept their focus solely on the mirror.

So why would you want to do that yourself?

Of course, you wouldn't.  Though the temptation must be strong at times.  Now reflect a bit on how you conduct your own relationships at work.  Do you think of yourself first and foremost, or can you spruce up your act a bit, look beyond the tip of your nose and become more of a team player?

Am I naive?  Perhaps I am.  But I think we need more heroes out there, more decision-makers, more team players and more people willing to make a stand for what they believe in.  Your organization needs more people saying “we” instead of “I.”

But that’s just my two cents.

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.

Creative Commons image, "Hand Mirror," by The Italian Voice

Cafe Classic: A Lack of Company Enthusiasm Doesn't Mean a Lack of Job Passion

Editor's Note:  Classic wisdom on the reality of people's passion and enthusiasm for their work via Dan Walter - and why sometimes our most important responsibility is simply to not mess it up.

I was at a sold-out sporting event recently. The sport, as it turns out, doesn’t matter. Neither does the team. Heck, even the players are unimportant. I learned something great from a woman selling burgers and beer. I was reminded that you don’t need to love your company or its mission to be an incredibly valuable employee. I was also reminded, once again, that our lowest paid staff members are not simply interchangeable parts. Every one of them can make just as big an impact as our highest paid “stars”.

I left my seat during the action to grab a quick bite to eat. All the lines at the closest food stand were about the same length accept one, which was about 50% longer. I jumped into one of the short lines and watched as the longer line moved faster while every person walked away smiling or laughing. I had to change lines.

When I got to the counter a cheerful woman, with smile so genuine it made me smile back, asked what I would like. I ordered my beer and burger and she said something like, “Honey, you’ve gotta get the garlic fries with that.” She then turned around, sang out my order, complimented the person in the next line while she grabbed a drink for the counterperson on her other side.

I asked her if she was tired and she responded that as long as people were in line she didn’t have time for being tired.  As it turned out, they were shutting down in ten minutes, as the game would end in about twenty. As we waited for my order, I asked if they got seats for the end of the game. She laughed and told me that she had never watched even part of a game. She didn’t like the sport, didn’t know the players and always left before finding out whether the team won or lost.

Yet, she loved the organization and valued the job she held for the past fifteen years. She looked forward to work every day and made sure that, “those people who pay so much for tickets got their money’s worth when they ordered their food from her.” She meant it.  I believed it. Then I walked away with a smile and watched my team win the game.

I am sure away from the game you would have little idea who she worked for. It’s unlikely she comes across as a fan or wears any team clothing other than her work uniform. Here’s the amazing thing. I can’t remember what team was visiting, but I do remember that wonderful employee at the food counter. I am certain there are tons of people like her in jobs everywhere. I know I have met many over the years. It’s unlikely that any compensation program I can design or communicate will ever create another version of her. I can only work to make sure that I never screw up and ruin an attitude like that.

Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture. Dan is also a leading expert on equity compensation issues and has written several industry resources including the one-of-a-kind Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.

Mistakes Can Boost Your Career

Can you recall an instance at work where you made a mistake, an error in judgment, a bad decision?  An "oh cripes!" moment that you would have liked to have had back again?  Perhaps it was a rash decision, a lapse in sound thinking, or simply poor planning that caused you to take a wrong step.  And if you were unlucky, that error was noticed far and wide.

You remember how you felt then, don't you?  You were likely embarrassed, surprised or even angry.  Certainly, you felt awkward that you had messed up and that people had noticed.  To cap it off, in that memory of yours the wrong people had noticed, hadn't they? 

Bet you won't do that again!

Perhaps not, but that doesn't mean you shouldn't stick out your neck again.  Turtles don't make for good leaders.

Because when we make a mistake and learn from it, when we use a negative experience to help us prepare for the next opportunity, we grow as professionals - as individuals and as leaders.  That painful lesson will be more deeply embedded in our consciousness because we did screw up, made a bad decision or used poor judgment.  It's human nature for us to remember our foibles, and because of that to hopefully not repeat those circumstances where we had burned our fingers.

If we were risk-averse and played it safe throughout our career, if we avoided decisions, kept our head down, didn't stretch ourselves, we would likely never fly high.  We would also never be noticed by the higher-ups and our career would never quite get us where we wanted to go.

No pain, no gain?

If you use your mistakes as a learning experience, what would you learn if you never make a mistake?  Chances are your ego would swell with self-importance and what had been healthy self-confidence would have morphed into supreme over-confidence.  You would start reading your own press releases, and on that pathway lies a steep cliff.  It's only a matter of distance.

I remember my father telling me, "at least try."  That's good advice for managers too.

So take a calculated risk.  I'm not talking about a roll of the dice, but a decision or an action plan based on your knowledge and experience.  Use your professional judgment and put a stake in the ground.  Stand up for something.  Learn from the experience.  And if you stumble, pick yourself up again and get back in the fray.  Just don't make the same mistake twice.

While most companies talk about the advantages of risk-taking, many don't walk the talk.  Instead, some organizations simply get rid of those who had the misfortune to make a mistake.  In such an environment there is always someone out there trying to trip you up (passive resistance, nay-sayers, the overly critical, etc.), or to take advantage when you stumble (enter the political animal).  All of which sends a powerful message that risks are only entertained when in fact they aren't risks at all.

On the other hand, creativity and innovation will be fostered in an environment that nurtures decision-making, that encourages measured risks as a method of stretching oneself.  Instead of killing the risk-taker when they stumble such organizations seek to stretch the capabilities of their employees by encouraging them to do more than they thought themselves capable. 

Remember, it's only a risk if there's a chance of failure.  Employees who are not afraid of making decisions, of standing up for themselves, of taking a risk for the good of the organization - they should be valued, not criticized or otherwise penalized.

In an atmosphere free of threats and quicksand the leader can emerge and thrive - to the betterment of the company and the employees. 

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.

Creative Commons image, "2008 Spa-Fr . . . .," by Dave Jenson

This Valentine’s Give Them Pizza and Say Thanks

It’s Valentine’s Day. Every year we dedicate this day, with tons of candy and flowers, to showing people that we love them. Maybe we should be using pizza.

We love our employees. We all have a statement somewhere claiming they are our greatest asset. We pay people just to attract other people. We study and design programs to keep them motivated. We plan years ahead just to retain them. And we are constantly on the prowl to find new and better ways to engage them. A new study, from Dan Ariely, of “Predictably Irrational” fame suggests that very short-term cash incentives may not be doing what we think they are doing.  They may be doing the opposite.

Ariely’s new book is “Payoff: The Hidden Logic That Shapes Our Motivations.” He recently discussed one of the studies covered in the book. Researchers created four cohorts of employees at a company that makes computer chips. One group was offered money, a second compliments, a third pizza and the last was a control group that wasn’t told about the study.

As you may have guessed, the Pizza Group killed it! They outperformed the control by 6.7%. There is no mention of the type of pizza, but we assume that Hawaiian-style was not offered. The Complimented Group outperformed by 6.6%. Not shabby for simply being nice to people. The Money group outperformed the control, but by only 4.9%. It was only $30 bucks, but unless that pizza was by Wolfgang Puck, the money was the most expensive incentive of the three and resulted in the lowest improvement.

By now you should be calling the local pizza parlor and ordering a few pies, but wait, there’s more! The Money group basically collapsed. Within a week they were actually underperforming the Pizza and Compliment groups. Again, there is no mention if the Money group had to smell that delicious pizza or watch their peers getting glorious accolades, but let’s just assume they had to experience both (it’s more fun that way).

One takeaway is that people love pizza. Duh! Another is that people like to hear that they are valued. Again, DUH! Lastly, we now know that some people aren’t inspired by $30. As a test of this last theory please give your significant other a twenty and two fives instead of a card and flowers. Let me know in the comments how that works out for you.

Of course, we can all agree that this was a pretty lame incentive plan design. The metrics and leveraging were all wrong. The communication was nowhere near what a great compensation professional would have done. The measurement periods were too short and on and on. But we can probably also agree that many of our own incentive programs may be no more effective or impactful than a slice and a high five.

It’s Valentine’s Day don’t forget the flowers and card or pizza and thanks, cash is a fairly touchy way to show your love.

The link to the Inc. article that inspired this post can be found here.

Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture. Dan is a leading expert on equity compensation issues. Dan has written several industry resources including an issue brief on Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.

Cafe Classic: Happy Holidays & an Evidence-Based New Year!

Editor's Note: Although Big Data, Analytics and now Artificial Intelligence have arrived, and evidence-based management (seeking and using evidence to make better-informed decisions) is mainstream practice, there are still many of us (in HR and even in the field of rewards) who aren't where we should be in embracing this new reality.  In today's Classic, we draw on one of the big thinkers in the rewards field, Robert Greene, and his thoughts on what is stopping us from getting where we need to be.

In his article Evidence-Based Rewards Management in WorldatWork's Journal, Robert Greene talks about the importance of moving our profession to a more evidence-based approach.  He also highlights a number of the obstacles we face in getting there.  I highlight and discuss a few of these below.

One obstacle:  Understanding data analysis

To create and use evidence in our work, we must have a basic understanding of quantitative data analysis.  The problem, as Greene notes, is that many universities do not require this as part of their coursework, even at the graduate level.  Even worse, as someone who serves as a regular instructor in professional certification coursework, Greene observes that not only do many practitioners lack quantitative skills, few of us feel any need to acquire them.  This conclusion is bolstered by the results of an informal study we featured here about what HR professionals want to do in their jobs, conducted by fellow blogger Sharlyn Lauby.  Compensation and benefits (the most quantitative fields of HR) clearly come out as the least favorite.  Sharlyn's take on the study results was that HR pros don't mind spending time on the essence of rewards (but may prefer to avoid the deep dive).  Doesn't sound like a crowd eager to embrace analytics, does it?

Now I'm no expert in quantitative analysis and my skills would also benefit from an upgrade, but my second favorite class in graduate school was a course called Multiple Linear Regression.  I'm not kidding; hear me out.  I took it because, at the time, I was enmeshed in selling and implementing a regression-based job evaluation tool (Multicomp anyone?).  I was floored by how much I enjoyed it.  You dump data into a regression model and out come -- if you know how to look for them -- stories and insights.  It's like CSI, only you're investigating people and pay.  All that I'm saying is give predictive analytics and multiple regression a chance.

Another obstacle: Accessing and understanding research

Greene notes another underutilized opportunity -- accessing the evidence available to us through the thousands of research studies that have been done in the field of organizational behavior.  He asserts that there is a problematic gap between research and practices in compensation and discusses some of the reasons for this.  Many of us don't read the journals where the most rigorous research findings are published. (When was the last time you picked up a copy of Academy of Management Journal?  Same here.)  Further, academics have reward structures that drive them to conduct and publish research that is focused on theory and heavy on quantitative analysis -- attributes that make the research less accessible and helpful to those of use trying to make pay work in the real world.  So instead, compensation and HR pros tend to draw their "evidence" from popular books and articles that often fail in their claim to be truly "research based."

Evidence abounds that evidence-based management is our future.  We can either board the train or end up underneath while it roars by.

Ann Bares is the Founder and Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting and survey administration services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys reading in her spare time. Follow her on Twitter at @annbares.

Creative Commons image "Data Mining" by Jim Kaskade

Cafe Classic: Choosing the Right Currency for Compensation & Rewards

Editor's Note: Cash is king, goes the old saying.  Is it really true?  Derek Irvine goes after this Classic assumption head on.  

If you polled your employees and asked them, “What kind of rewards would you prefer?”, how do you think they’d respond? The vast majority of the time, the answer is: “Cash.” Of course we all want more cash. But what employees say they want for rewards, what actually works best to motivate employees, and what employees enjoy as rewards are entirely different things.

Cash-based rewards can be touchy subject, I know. Cash does have a place in a Total Rewards plan, when used judiciously. But the bottom-line we must all remember is this:

Cash is the currency of compensation. Recognition and rewards requires an entirely different currency.

A blog I read yesterday illustrated this point well. Commenting on a “survey” of preferred rewards by sales pros, the blog author Ley Borlo shared a couple of examples of sales rep reactions to questions about incentives programs. From these comments, there are two clear lessons here.

Compensation and Recognition Rewards Are Different

“The next example was for ‘Jim, who says that about 60% of his income comes from sales spiffs. Now, that's going right to operating my home, paying my mortgage and just doing the family thing.’ Sounds like a compensation program to me.”

Ley’s right. If majority of your income derives from your spiffs, then it’s not a rewards program. It’s compensation. This is an excellent illustration of why recognition needs its own currency, distinct from cash. Sure, commission is a common compensation structure for sales reps, but it’s clearly defined as compensation – not rewards. (And some companies are moving away from the commissions model, with good results.)

A Vast Selection of Rewards Works Better than One Incentive Goal

“The consumer electronics rep didn’t like the award program because he already had and iPad and didn’t need a second one.  But that isn’t a reason to use cash; it is a reason for the company who ran the program to use more options as rewards.  Single item programs never work very well for that reason.”

Again, Ley’s right. That’s why offering a wide range of rewards is critical. Employees must be able to choose from a vast selection of rewards that are personally meaningful and culturally relevant for them – especially in global organizations. Offering hundreds of rewards options to US-based employees and only a dozen options to China-based employees is lazy at best and insulting to the employee at worst.

More to the point is being sure the recipient of recognition is the one choosing their reward, not the giver (whether that be a peer or a manager). Case in point – just last week my team shared amongst ourselves some reward practices we’ve uncovered in our analysis projects. One in particular stuck out to me. Managers always selected the reward for the recipient, and they could only choose from two reward options – chocolates or wine.

What if the recipient is a diabetic teetotaler, or merely allergic to wine (or chocolate)? What if the person is on a diet? Now the well-intended reward is received as a useless slap in the face.

Let the Recipient Choose

While an extreme example, it highlights the importance of letting the recipient choose their own reward. I’ve shared before stories of why manager “goodie drawers” are a bad idea (giving a gift card to a steakhouse to a vegan employee; giving tickets to a local theatre production to an employee with kids for whom the securing and paying for childcare makes the night out not worth it; giving an iPod to a deaf employee).

The bottom line: Cash has a place in Total Rewards, but not when the intent is to frequently recognize and reward employees for demonstrating desired behaviors on an ongoing basis.

What kind of reward systems does your organization use?

As Globoforce’s Vice President of Client Strategy and 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. He is a leader in the WorkHumanmovement and the co-author of "The Power of Thanks" and 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.

Cafe Classic: Thanksgiving * Share the Gratitude

Editor's Note: Great lessons for this U.S. holiday dedicated to gratitude - from our the Irish member of our team. Thank YOU, Derek!

I have the honor and privilege of posting today, this last day before the American Thanksgiving Day holiday. I point this out as an American holiday as I am Irish. But I must admit, I've adopted many of the practices of this day as I appreciate greatly, indeed, the principles behind it.

The members of my team and a good many of my colleagues are American. I've asked them what they think of Thanksgiving. Answers ranged from comments on the good food, to opportunities to see family (and the sometimes outrageously funny stories around that), to football and naps.

But the one comment that has stuck with me is this: "Thanksgiving is my favorite holiday of the year. It hasn't been commercialized like Christmas or Easter. There is no real societal pressure like on Valentine's Day. It's simply a day to gather with those you love and be grateful for what you have, both material and non-material."

In that spirit of simple giving of thanks, I'd like to share with you what I am grateful for this Thanksgiving and invite you to do the same in comments:

I am grateful for my family and friends! I have a wonderful group of people who not only love me, but hold me accountable to proper work/life balance. That said...

I am grateful for my work! The last few years have been very difficult, indeed, for many people around the world. I am not just grateful to have a job, but that the work I do helps organizations around the world change their cultures into positive ones of recognition and appreciation, thereby creating much happier and engaging environments for their own employees to work within.

I am grateful for my colleagues! The most important factor that makes my work so enjoyable is the people I get the privilege of working with every day. To a person, they are smart, talented and generally fun to be around.

I am grateful for the Compensation Cafe! This site has given me the opportunity to share my thoughts on employee recognition and rewards, sure, but more importantly it's given me the opportunity to learn from the best compensation professionals in the world!

I am grateful for you! Readers of Compensation Cafe have taught me just as much with their thoughtful comments over the years, both to my own posts as well as the posts of my Cafe colleagues. Thank you for caring so deeply about your profession that you spend your valuable adding your insights and expertise.

Share your gratitude! As you wrap up your work today, consider pausing on your way out the door to tell your colleagues, co-workers and team members why you are grateful for them.

What are you thankful for?

As Globoforce’s Vice President of Client Strategy and 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. He is a leader in the WorkHumanmovement and the co-author of "The Power of Thanks" and 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.

Cafe Classic: 3 Goblins of Employee Recognition

Editor's Note:  With Halloween fast approaching, today's Classic features Derek Irvine and his exposition of the ghosts that haunt - and can really mess with - your employee recognition efforts. Boo! 

On this day of ghouls, goblins and other frightening beasties, let’s look at three of the most common goblins of employee recognition I hope never grace your organization’s doorstep.

1) Fake Praise Goblin

This goblin looks good at first, enticing you with superficial pretty words and phrases. But when you dig a little deeper, you discover nothing but poor intentions. Fake praise takes many forms, including the compliment sandwich that often sounds something like: “Great job on the MacGuffin project, but you could have done better with the primary deliverable. You do good work, so I’m confident you’ll do better next time.” Such fake praise only confuses the recipient, who is left wondering if they did a good job or not.

Other fake praise goblins include casual, passing “Thanks!” with no specifics around what you’re thanking the person for and praise followed by an “ask.”

Strip off the mask – Don’t let this goblin ruin your company culture and positive work environment. Make sure the praise you give is specific and detailed so the recipient understands fully why they’re being recognized and what they should do more of in the future. Keep your praise separate from requests or constructive criticism so employees can enjoy the celebration of their achievement without the cloud of more deliverables or expectations to come.

2) Limited Participation Goblin

Too often, I hear about organizations permitting recognition and reward programs for certain segments of employees (e.g., sales, corporate office only) or worse, launching a pilot program at headquarters and promising to eventually roll out the new recognition program to all employees everywhere. To those on the “inside team” this isn’t a goblin at all! They get to participate, recognizing and rewarding each other for their good work. For those on the outside, however, they are left feeling like second-class citizens. Worse yet is telling most employees you don’t trust them enough to recognize each other, and that’s a manager privilege only.

Strip off the mask – If your goal is to create a culture of recognition and appreciation across your organization, then empower all employees (regardless of location, level or group) to recognize and reward each other from day one. Tell everyone the goal is to “catch someone doing something good” and turn them loose. You’ll be surprised how quickly this goblin turns into a gem.

3) Inappropriate Rewards Goblin

I’ve written several posts on Compensation Café and elsewhere on this particular goblin, relating stories of iPods given to deaf employees, forced dancing as a reward, self-congratulations, and rewards so bad you have to tie employees down to give it to them.

Strip off the mask – Always remember, just because you think something is a great reward doesn’t mean others will see it the same way. If you’re going to offer a truly strategic employee recognition and rewards program, then let the employees choose the rewards for themselves. That way, you’ll never have to worry about giving a vegan a gift card to a steakhouse.

What other goblins of employee recognition gone wrong have you seen or experienced?

As Globoforce’s Vice President of Client Strategy and 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. He is a leader in the WorkHumanmovement and the co-author of "The Power of Thanks" and 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.

Cafe Classic: Cash or Cachet?

Editor's Note:  In today's Classic, Dan Walter encourages us all to think beyond cash in discerning how we can use our reward programs to create the influence and impact we seek.  Cachet, anyone?

Archimedes was quoted as saying, “Give me a lever and I can move the world.” I am sure that he was probably referring to the world of total rewards and compensation. Properly leveraging total rewards is a delicate act. You must use the right instruments and amounts. An even more difficult aspect is determining the optimal balance point. Often, more depends on perception than actual differentiation.

We’ll start with the obvious. Cash is great. Let’s face it, we could all use more of it and would be happy if someone gave it to us. Unfortunately, every company has a limited amount of cash to spread around.  Even in the best years companies do not have an endless supply of money. In our current era where 3% is considered a good merit increase and broad-based LTI incentives seem to be losing ground, we all need to find better ways to stay competitive in the battle for talent.

You may be able to find more value in non-cash compensation instruments, if you are willing to build their cachet before you start giving them to employees.

Luckily, cachet can be more important than cash. With proper planning and communication you can create a cachet for nearly any compensation or reward element. Without building this critical perception element, it’s difficult to get true value out of any non-cash component of a pay package.

Recognition and reward programs of the kind often discussed by Derek Irvine at this blog, are very useful tools for communicating “social status” at a company. Unfortunately, these instruments cannot always be appropriately sized for higher-paid staff members. And, these programs do not help if there are already issues with keeping your staff at competitive total compensation levels. When common recognition programs won’t work and merit increases no longer catch employees’ attention, what should you do?

Instead of offering differentiated merit increases, I have seen companies offering flatter raises to everyone. They then boost the total compensation of high-performing staff members by granting awards from well-communicated “special” LTI programs. These programs are communicated long in advance of awards being given. The goal is to build a perception of a unique status that is similar to that held by job titles in certain organizations. Unlike inflationary job titles that are hard to take away and can result in more costs that planned (read Chuck Czimar’s great post), special awards are just that…special.

These awards can be given for meeting pre-specified criteria or they might be given based on unplanned discretion or links to other performance factors. The trick is communicating the cachet of the program in advance. It must be clear that the program is for the “above and beyond.”  If the awards are given in equity, they may result in the same, or less, total compensation accounting expense as cash. That expense can be spread across multiple years. In effect, you are giving the same amount, or more, to the employees, but it can cost your company less.

Like anything in the world of compensation these types of programs must be designed, communicated and administered carefully. But, if you need to move the world when nothing else will, they just might provide the lever you need. Cachet, instead of cash, may be the best solution to Archimedes dilemma.

Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture and is considered a leading expert on equity compensation issues. Dan has written several industry resources including an issue brief on Performance-Based Equity Compensation than Dan refers to as informative written Ambien. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.