Keeping our clients’ wealth plans on track means, among other things, ensuring clients are well invested.
Our investment in our team members ensures our clients are also very well served.
To that end, we wanted to share some research we’ve done about employee reward and recognition programs.
How and why they succeed or fail
Employee reward and recognition programs, though vitally important to workforce motivation and productivity, are frequently misconceived, ineptly introduced and badly managed. Yes, employee recognition programs and employee incentives are highly effective, but only when executed properly, just like Wealth Management.
According to a recent report by Bersin & Associates1 – part of San Franciso based Bersin, Deloitte Consulting LLP, a company that delivers research supported strategies designed to help leaders drive exceptional business performance:
“A solid reward program can boost performance, improve morale, and reduce employee turnover by 31% or more. An ineffective or inconsistent program is barely better than nothing at all.”
So what are the right and the wrong ways to motivate employees?
Harvard Business School study: 4 key drivers of performance
In 2008, three professors from the Harvard Business School initiated a study2 designed to examine employees at 300 different Fortune 500 companies. The purpose of the study was to determine which psychological factors impact employee motivation and morale. The study discovered that employees are guided by 4 basic emotional needs or drives:
- The drive to acquire is the need to obtain resources, including money and more intangible assets like social status.
- The drive to bond is the desire to form connections with individuals and groups. In the workplace this includes a desire to form relationships with both peers and managers.
- The drive to comprehend is the human need to learn and develop new skill-sets.
- The drive to defend is the desire to protect against external threats and promote justice and fairness.
In a review of the study, Awardco3 – an organization dedicated to inspiring human connection through rewarding recognition – observed:
“The Harvard researchers determined that these 4 drives are responsible for the majority of employee motivation, as measured by employee engagement, employee satisfaction, employee commitment, and employees’ intentions to quit their jobs or stay with a company long term.”
60% of employee motivation
A company’s ability to meet these 4 fundamental drives accounts for at least 60% of employee motivation. And the study revealed something else. In a succinct conclusion, the authors of the study stated:
“Our research shows that individual managers influence overall motivation as much as any organizational policy does. This means that no corporate policy can compensate for poor management.
The relationships managers build with their employees, their understanding, empathy, guidance, and mentorship, is equally as important as company policies that strive to fulfill the 4 fundamental drivers of employee motivation.
One cannot succeed without the other: good policies and good management are symbiotic.”
According to Bersin & Associates there is a wrong and a right way to go about implementing reward and recognition programs.
The wrong way to reward your employees
Programs nobody knows about
Most large companies have some form of recognition program, but 58% of employees surveyed had no idea the programs existed. Translated this means that if your employees aren’t aware of your program and it’s not part of their daily operations, then you’re basically throwing your money away.
Programs rewarding the wrong things
87% of current reward programs are designed to recognize ‘years of service’ or tenure. State the experts at Bersin: “Rewarding tenure is a waste of time. Rewarding tenure sends a negative message: we only care about the people who have been here longest, regardless of their actual performance.”
Programs rewarding the wrong people
Discretionary employee rewards – ‘Employee of the Month’ is a frequent example – typically leads to confusion over exactly what is being rewarded (what are the parameters of ‘best’ employee?). Such rewards also inspire bitterness and negativity from those who are overlooked. Concludes Bersin: “Discretionary awards are generally inconsistent and reward brown-nosing over quantifiable, measurable performance.”
The right way to reward your employees
Programs that are regular and specific
The research shows that the most important aspects of recognition programs are specific feedback and regular, fair recognition. States Bersin: “Rewarding your employees once a year isn’t enough – recognition should happen on a daily, weekly, and monthly basis. Your reward program should be a huge part of your corporate culture and your daily operations.”
Programs that are quantifiable and goal-oriented
According to Bersin, an ideal incentive program offers rewards for doing the right thing and rewards for hitting quantifiable goals. Says Bersin: “Make sure that at least some of your rewards are tied to specific numerical sales goals, cost cuts, and revenue increases.”
Programs that utilize peer input
Bersin believes that “managers shouldn’t be the only ones in charge of recognition. Involve your employees in the process as much as possible. They see things you don’t see and know things you don’t know.” This is a huge insight. Giving employees a stake in reward and recognition programs pays off big time – in terms of perceived fairness and increased employee motivation.
Conclusion: insights from EffortlessHR
EffortlessHR4 is a Tucson based human resources platform with a longstanding commitment to understanding the financial and psychological drivers of employee incentive programs.
They offer a cautionary analysis of company reward and recognition initiatives, particularly with respect to their potential downside.
“Evidence shows that employee incentive programs can be a great way to keep workers motivated and to ensure that they are successfully engaged with the company and their job.
However, it is essential that companies take the time to fully consider their options before instituting such an incentive or reward program.
If not implemented properly or with enough thought, there is a high chance that the employee incentive program could actually end up backfiring and producing the opposite results.”
Accordingly, EffortlesslyHR advise that reward and recognition programs should:
- Be open to all. They must be transparent and inclusive.
- Be frequent. Smaller and often is better than big and sporadic.
- Avoid over-the-top awards. They lead to jealousy and negativity.
We found all of this data to be informative and useful towards putting a plan in place. But honestly, while we recognize the necessity, we’re happier working on wealth plans.
Please feel free to share.
1 https://www.award.co/the-dos-and-donts-of-effective-employee-incentive-programs
2 https://www.award.co/harvard-business-school-study-shows-that-employees-respond-to-4-psychological-drives
3 https://www.award.co/
4 https://www.effortlesshr.com/blog/employee-incentive-programs-the-dos-and-donts/
