Compensation Cafe

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.

3 Ways to Encourage a Happier, Healthier Workforce

Each of us is given one life. What do we seek out of it? Is a meaningful life most important? Or is a happy one? That’s a debate for another post (and one that’s been the subject of much research over the years). Setting that discussion aside, if we were to focus on happiness, what is it that truly makes us happy?

The most comprehensive study on this topic tells us:

"Good relationships keep us happier and healthier. Period."

That’s a direct quote from Robert Waldinger, psychiatrist and current director of the Harvard study of Adult Development, the longest running study on emotional well-being in history. As reported in Inc. magazine, this 80-year Harvard study began during the Great Depression and tracked the same participants, and ultimately their children, to amass data on physical, mental and emotional health over time.

And it’s more than happiness, it’s health, too. Waldinger also said, “The people who were the most satisfied in their relationships at age 50 were the healthiest at age 80."

In the workplace, we can’t control the quality of relationships for our employees. But we can influence the ability for people to form better, deeper and more satisfying relationships with their colleagues.

Here are three tips to create an environment for better relationships at work.

1. Help alleviate unconscious bias.

Part of our human nature is the unconscious biases we carry with us. The biggest challenge with these biases is we are truly unaware of them – until they are called to our attention. The best way to reveal these biases to ourselves and then overcome them is through relationships with others we might hold those biases against. Structure teams to encourage a mix of skills, backgrounds and abilities, not teams of people that “look like me” in terms of education, etc. Collaborating together to achieve an important goal reveals the benefits of “other and different.”

2. Encourage interaction across boundaries.

The nature of work today – informal, somewhat temporary teams focused on a project – already breaks down the silos of geography, team, and department. Further encouraging interaction across those boundaries through virtual social activities or other mechanisms helps deepen and sustain relationships as teams break apart at project end.

3. Foster trust.

No relationship can last without trust. One of the most effective ways to foster trust is through simple expressions of gratitude. Knowing my work is seen, appreciated, and valued by others communicates the trust others have in me. Similarly, being able to share my gratitude and appreciation with others has similar impact.

How do you build relationships in the workplace? What methods do you use to help others build relationships with colleagues?

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 WorkHuman movement 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: Disengaging from Compensation Schemes

Editor's Note: What to do about a reward plan that has outlived its purpose and fit?  Always easier to pile on more than to prune or even dig up and dispose.  Today we feature Jim Brennan's Classic on the importance of facing up to this problem, including some discussion starters on how to go forward.  Enjoy - and add your thoughts/advice!

No reinforcement program or incentive plan works forever; but they seem to last forever, lingering on long past the day when their effectiveness expired.  What can we do about it?  Tradecraft literature concentrates on new ideas while giving short shrift to how you erase old ideas that have lost their luster.  Searches on “disengagement” all show topics about employees becoming psychologically distant rather than how you end ineffective motivational plans.  It is about time that we collected the best suggestions on how to back out of reward programs that are still valued and prized by recipients who don’t want to lose them.

Every experienced compensation professional knows it is extremely difficult to disengage from any system seen as a significant part of the total reward “contract” with employees.  Simple expectation theory teaches us that once people receive a consequence perceived as valuable, they want it to continue infinitely.  One of my Brennan’s Laws is, “Old entitlements never die; they just accrue.” 

Examination of overall remuneration systems at mature enterprises usually reveals multiple overlapping redundant layers of reward programs and incentives that have been added over the years.  An expert house painter will strip off the old paint so they can most effectively lay a new coat on a freshly cleaned and newly prepared surface.  Maybe we compensation people should similarly strip our jumbled batch of simultaneously administered reward programs down to a clean simple basic core foundation before adding anything new.  Cost-justification is vastly simplified if a promising new plan replaces old ones known to be flawed.  At least, we should explore how to maneuver the organization into a position from which it is possible to add something new without stepping all over the existing redundant or ineffective stuff that has accumulated over time.

Old reward programs take on a life of their own.  Once in an annual budget, they are (relatively) easily renewed.  They become taken for granted, both by management and by the employees, readily accepted as a fixed cost.  One would think that the past decades should have given us many opportunities to practice disengagement and to gain experience about which methods work best in what situations.  The fact that you can’t easily find such information is depressingly informative.  Few enterprises make money by recommending that their clients reduce expenses; after all, they want to be paid themselves, and that generally means an increase in expenses, so they tend to jump enthusiastically on the “invest a penny to make a dime” train.  Rarely do you see consultants saying that their client should end a popular but expensive compensation scheme.  By the way, I see “scheme” as the British do, as a neutral synonym for a “plan” rather than meaning a “wicked nefarious plot”.  No, rather than drop programs, consultants are expected to create added  programs that pay out more money on top of the sums already being dispensed; otherwise, the authors of the pre-existing reward plans have to admit they are flawed or no longer appropriate.

Enough of background chatter stating the obvious problem.  Let’s get down to potential solutions.  Naturally, they will not be universally useful.  What works very well in one situation may be completely ineffective in a different environment; but we have to start somewhere.  To prompt more thoughts, here are some initial quick suggestions on how to withdraw from a reward program:

• Buy out pre-existing programs with a one-time cash payment
• Fold old systems into new incarnations
• Wipe the slate clean by cancelling all current incentives as a date certain, then redesigning all
• Incorporate expiration dates into existing plans 
• Forbid the addition of any new program until others have reached their drop-dead dates

What else can you suggest?

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience in most industries.  After corporate HR posts and consulting CEO roles, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review.

Image courtesy of wallstreetsectorselector.com

He Who Dies with the Most Toys Wins

Have you heard that aphorism? I prefer the corollary: “He who dies with the most toys is still dead.” Life isn’t about how much we accumulate or how wealthy we are while we’re here. Life is about the fleeting moments we have in deep connection with others and a practice of gratitude – that’s where the real meaning and happiness lies in a life well lived.

What triggered this outburst of philosophy on a compensation-oriented blog? I’m inspired by Tim Cook’s memo to Apple employees upon the announcement that Apple became the first corporation ever with a $1 trillion valuation. Cook’s memo didn’t trumpet the monetary value of the company, the value returned to shareholders, or even the value returned to individual employees. No, he put the focus squarely on the people of Apple who made such a historic triumph possible.

Here’s his memo in full:

Team,

Today Apple passed a significant milestone. At our closing share price of $207.39, the stock market now values Apple at more than $1 trillion. While we have much to be proud of in this achievement, it’s not the most important measure of our success. Financial returns are simply the result of Apple’s innovation, putting our products and customers first, and always staying true to our values.

It’s you, our team, that makes Apple great and our success is due to your hard work, dedication and passion. I am deeply humbled by what you do, and it’s the privilege of a lifetime to work alongside you. I want to thank you from the bottom of my heart for all the late hours and extra trips, all the times you refuse to settle for anything less than excellence in our work together.

Let’s take this moment to thank our customers, our suppliers and business partners, the Apple developer community, our co-workers and all those who came before us at this remarkable company.

Steve founded Apple on the belief that the power of human creativity can solve even the biggest challenges — and that the people who are crazy enough to think they can change the world are the ones who do. In today’s world, our mission is more important than ever. Our products not only create moments of surprise and delight, they empower people all around the globe to enrich their lives and the lives of others.

Just as Steve always did in moments like this, we should all look forward to Apple’s bright future and the great work we’ll do together.

Tim

Nearly two dozen times in that brief memo, Cook focused on the people behind that success – the people of Apple as well as the people of the greater Apple community. He knows that without the people doing the work, there would be no success.

Wherever you are in this moment, at work, at home, running errands, take a moment to pause, look around you at the people with whom you likely most often interact. Reflect on how they enrich your life. Practice gratitude. Tell them “thank you.” Let them know the difference they make in your life. Celebrate life.

Photo by Karl Magnuson on Unsplash

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 WorkHuman movement 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.

May I Please Have a Raise?

The threat of increasing turnover is growing as employees, especially Millennials, cotton to the tradition of chasing higher salaries by leaving the company. That's why I thought I'd share some findings from Payscale's recent "Raise Anatomy Study." 

You might think this info's nice to know but not really your problem right now. I'd suggest you hold on for a few minutes, because I'm going to translate the findings into easy DIY actions that will help you manage turnover better, never a bad goal to have.

Still smarting from that key employee who left suddenly? There's info here that can help. The report's findings are good enough to make it into the Harvard Business Review. While I am not thrilled with Payscale's sketchy description of their methodology, they reported 160,060 workers provided data, which is certainly a big enough sample to make you listen closely to these findings.

33% of employees who asked for but were denied a raise, were provided no rationale for management's decision. Shocking as this number is, don't think it isn't happening in your backyard. Just imagine how big a dis this is to the asker. No surprise, 70% of these employees reported that they planned to seek a new job in six weeks.

Almost as shocking, 77% of those who asked for a raise and received a rationale for their denial (for example budgetary limits, performance issues) DID NOT BELIEVE THE EXPLANATION. Yes, this is happening in your employee group, too.

Without a better description of the research methodology, we're in the dark about whether the research was limited to those who had been turned down for a raise, which would push the percentages higher. Nor do we have any insight into what types/sizes of organizations the findings came from. Even so, the relative prevalence of not getting an explanation from your manager for being turned down is notable.

So here are some things to think about and do, because these findings are worth attention.

Do you know when someone asks for a raise in your organization? Are you confident that those who should, receive them? If the answers are no or maybe, rethink your process. Your managers could be setting up unnecessarily negative situations in their effort to follow budgetary challenges -- perhaps unnecessarily. Remember, many of your managers went through the recession and could be out of practice when it comes to approving raises.

Do your managers know what to say when asked for a raise? Do they describe a process or just say they'll think about it? Do they know what to say if they decide to turn the individual down? Do they talk the decision over with the employee? If the answer to any of these questions is no, think about creating tip sheets for each of these situations. Managers can use these prompts to guide their own actions. You could also develop a discussion outline managers can use for talking raises over with the employees while building credibility and trust for the decisions made.

Do you have a standard process for evaluating requests for raises? The answer is probably yes but -- given these findings -- a real concern would be whether managers actually follow the process. It would be good to look into these process issues and provide explicit guidelines now before your labor market gets any tighter.

Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.  

Winning through Losing with Character

As the World Cup nears its conclusion, it’s impossible to avoid news coverage of the event – especially from my home base in Europe. Most stories are merely game recaps, nothing unusual or unexpected. And then, one of the classiest acts comes out of a story of loss.

Japan captured the hearts of the world when it lost to Belgium. Its fans didn’t respond by trashing the stadium, but instead by cleaning up the trash in the stadium. The Japan players didn’t just pack up and leave, but took the extra time to clean up their locker room to spotless condition, then leaving a “thank you” note in Russian for their hosts.

What we do when we’re on top is one marker of our character. But how we respond – and the actions we take – when we’re on the bottom is a much stronger indicator of how we may react under pressure or in difficult circumstances.

Japan’s actions at the World Cup offer many lessons to us in business, including:

1. Winning isn’t the marker of success. No individual or team will always be the winner. Whether determining the path for project delivery, identifying the “next big thing” for product development, or modifying long-held processes, one approach will rise to the top while others fall to the bottom and are ignored. Wise “winners,” however, will look to other ideas to build up and strengthen their own approach.
2. Character should be rewarded as much as winning. It takes a good deal of character to set aside personal disappointment and belief to support the “winner” in achieving ultimate success - even saying "thank you" for lessons learned during the process. Those who realign their own dreams and ideas to pitch in and help the overall idea succeed deserve recognition for their contributions as much as the lead “winning” team.
3. Always remember, others are watching. In today’s always-on, always-connected world, someone is always watching. How we behave and take action out of personal disappointment will color how others perceive us and influence the opportunities we are given for future success.

How have you been disappointed in your career, yet rose above to help others win? How did this ultimately influence your own success?

Photo by Tom Grimbert on Unsplash

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 WorkHuman movement 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: Employee Rewards - What Do They Want, Anyway?

Editor's Note:  Reward fails abound; I'm certain most of those reading have encountered one or more head-slapping doozies along the way. Hopefully we learn from them, as Derek Irvine encourages us to do here.

Occasionally, I like to share with you the horrible stories I hear of employee recognition and rewards gone wrong. While my cache of stories is, sadly, fairly limitless, today I’ll share just this one.

If the Employee Has to Wait 30 Years to Be Appreciated, It’s not Rewarding

In a recent issue of Human Resource Executive online, Susan Meisinger related her husband’s story of a potential “early retirement” scenario. After 30 years with his organization, her husband was offered early retirement or the potential of downsizing in the near future. When he chose early retirement, he was surprised to find out the company deemed him a “key employee” and would delay his early retirement by another year. As Susan says in the article:

“My husband's first comment when he discovered the company wanted him to stay: 'Gee, it only took 30 years for them to tell me I'm indispensable.'”

Susan goes on to tell another story of a senior leader calling out her husband in a meeting to publicly thank him – for the first time – for his valuable service.

This is the problem of the annual review writ large and another common failing in organizations – assuming employees know they and their efforts are valued because, after all, they’re still employed.

Think how much more this conscientious employee could potentially have given over the years if just a few words of appreciation had come his way.

What Is Rewarding? Simple Appreciation, Frequently and Specifically Given

What do employees want, then? Cathy Missildine put it quite well in her blog:

“What I hear from the employees is the need to feel valued.  Employees want to hear, ‘I appreciate your hard work and you hanging in here through our tough times.’  As a manager, recognition is easy and doesn't cost a thing.  Yet, we get so busy we forget to acknowledge our rockstars.  I also believe those employees that are trying and are making progress need recognition too. (future rockstars)  So, I am not of the camp that only rockstars need the love.  I am of the camp that if rockstars don't get the love they will go get it from your competition.”

It really is that simple:

1. Tell employees they and their work is noticed, valued and appreciated.
2. Recognize and reward employees for those efforts in ways that matter to the employee, not to you.
3. Do so regularly. Don’t wait for an annual review, a milestone anniversary, or retirement!

What’s the worst rewards or recognition story you’ve heard or experienced yourself?

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.

When "Exceeds Expectations" Is "Meets Expectations"

You think performance management is difficult in your neck of the woods, let me tell you it could get even dicier. Imagine if your organization included jobs like tax attorney, firefighter, radio announcer, oncologist or pilot. All of these incumbents have to be experts when they perform their jobs. In most cases, if your business needs someone in a job category like this, you can't afford for them to "get up to speed" or "attain mastery," they have to walk in the door that way. And you can't afford mediocre performance on their part, either.

So, for a certain subset of jobs, knowledge and skills MUST be at mastery when you hire, and these individuals may be paid that way, too. How do you define what's better than great? But they have a "performance" dimension to their job, don't they?

The answer is yes and that performance dimension typically falls into the realm of competencies. If they work with others, how do they go about it? If they have to keep records, do they do it reliably and well? Plus, of course, the basics, do they keep their license or certifications up to date? These are some options. And yet organizations who manage these individuals struggle much more than most at defining performance expectations and reviewing performance. (Notice that I didn't mention rewards, right?)

For example, if you are a radio announcer, a goal would be to build listenership in certain time slots. But is there a reliable way of doing that? And how much control does the announcer have? I remember working with the host of a major daily morning news program on performance management. He wanted to know how management was going to measure his creativity. I have a feeling that network is still struggling with how to answer his question.

If a tax attorney, firefighter, radio announcer, oncologist or pilot make a mistake, you can name and evaluate it. So here's one of the ways of tackling this problem -- identify serious mistakes these superstars can make and back off into positive actions/competencies they must take to avoid each problem, then track these aspects of their performance.

Here's a tougher question. Anybody out there have success defining the "building" side of performance for jobs like this? We would all benefit from your experience!

Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.  

 

Cafe Classic: Celebrating Success... Who Do You Reward?

Editor's Note: This is the second of two Classic posts on the question of who you reward - and how - when the organization is successful?  In the first, Jacque Vilet shared the story of a Japanese company that architected a unique (and delicate) win-win in order to get this right.  In today's post we feature Derek Irvine's response to Jacque's post and discusses the alternatives (and their implications) of rewarding the few versus the many.  

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:

1. Recognize and reward the top performers only
2. 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 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.