Reward systems part 1
Can you please everyone?
Think of any reward system that you know and the chances are there will be at least one winner of the award.
This means that there will be many losers by definition.
This is the biggest problem of the majority of reward systems they highlight a winner and condemn many to the loser position.
Whilst the person receiving the award may benefit from increased motivation the performance of many can be severely affected.
It is by no means certain that the person receiving an award is indeed motivated. Everyone is different.
Maybe the individual feels embarrassed by all of the attention?
Do people begin to ask the winner to carry out prime projects at the expense of others?
The sort of behaviour can help to harbour animosities in the rest of the staff.
The problem with most reward systems is that they are rather ‘mechanical’ in their approach.
They tend to be based upon ‘accounting’ methods by counting some aspect of business, for example, sales so that there is a well defined winner (and of cause many losers).
Definitions
The word ‘reward’ for most covers a wide range of ‘awards’ for individual performance.
These may be more properly defined as:
Reward
A dictionary definition is:
‘Something given or received in return for a deed or service rendered’.
This tends to be monetary or something that has worth that can be exchanged for money.
By their very nature monetary ‘prizes’ are not tailored to the winner they are rather generic and come under the category of ‘one size fits all’. Due to this they are not really motivating and bare no relationship to the underlying behaviours that you are trying to develop.
They are purely results driven.
You win you get the money.
This tends to produce many undesirable behaviours in some, encouraging manipulation and cheating.
These sort of rewards are usually delayed until the year end.
This usually means that the underlying behaviours that may have driven the award have been forgotten.
Hence, there would not have been any immediate reinforcement to maintain them.
Recognition
A dictionary definition is:
‘A token of thanks or acknowledgement’.
This is not monetary or its equivalent.
It tends to be something you can put on a shelf or display on the wall.
They include items such as trophies, plaques, pen and pencil set (for desktop display etc), certificates, letters of commendation.
In the same manner as rewards, they are a delayed item after the qualifying behaviour and are not given at regular intervals.
This caused the same problems as for a reward.
Incentive
This has often been used to cover both reward or recognition.
A dictionary definition is:
A motivating influence; stimulus.
An additional payment made to employees as a means of increasing production.
Limitations
The biggest problem with many reward systems is that they are limited to a few individuals.
The simplest answer to this is to increase the winners to top 5, or top 10 etc.
In fact, this never solves the basic problem of the remaining many losers who become de-motivated.
Another problem is the possible need to make them bigger and bigger in order to maintain the same level of performance response.
Types
Employee of the month
This is very popular. Particularly in areas where ‘performance’ can be easily measured by attaching a numerical value to it.
Usually no one knows exactly why the award has been given; the criteria are often (if not always) very vague.
Who decides on the winner? Is it an individual or a committee?
As with many of these awards they are delayed and not relevant to the behaviours that determined them.
If you are in doubt about the requirements of a reward just ask someone.
If anyone can answer the question, then quite frankly, they should be getting the award!
The very nature of the Employee of the Month award means that you are only reinforcing good behaviour 12 times a year.
This is not enough to really motivate people and maintain performance levels.
The behaviour that lead to the award may change. An extreme situation could see the recipient’s behaviour plummet after a panel has settled on this individual, which may make a mockery of it.
Any system that rewards a few winners based upon competition is poor if it leaves any losers.
The very existence of a numerical value suggests a calculation.
How many decimal places do you go to in order to identify an absolute winner?
If the winner and loser are split by 0.01 clearly their actual performance difference is irrelevant.
What if you have no numerical system for assessing the award?
What do you do?
The solution is often to award a ‘best’ or ‘superior’ or ‘top’ performer.
This is no better.
In many organisations personnel will know who is going to win any way if it is based purely on performance.
So on this basis the same person may win every year.
This would be seen as a negative result, so the reward is ‘distributed’ to the next worthiest.
Everybody has a go, which devalues the award.
Many reward systems can create bitter infighting.
The aim is to be better than the competition and not each other.
Faced with hitting a target to get an award people will become insular and withhold important information which they believe is important to their individual success.
You should aim to be better than a company within your sphere when benchmarking.
You should be trying to bridge the gap to your superiors and widen it for those on a par with you.
The aim is to try to widen the group of winners from a few to everyone. Impossible? No.
In order to achieve this scenario you will need to bide by a few simple rules.
- Your reward system must be within the bounds of everyone to achieve it. The number of winners should have no limit.
- The exact criteria for getting the reward must be known in advance by all participants.
- The person giving the reward must also benefit in this success no matter how many winners there are.
Competition
Some of the problems here are similar to the ‘reward’ system. Instead of monetary incentives you might get high value items.
These could be holidays, televisions, boats, cars etc.
They motivate the winners and reduce the performance of the losers.
There would be more benefit if the rest of the workforce could be motivated to higher levels of performance.
These break several rules that would improve the situation.
- Reduce the award value and make them more relevant
- Make the award at more frequent intervals
- Many prizes keep people interested especially if it is entertaining
- Set the criteria to include all participants
Negative
These are gained from poor performances.
A plaque on someone’s desk showing the ‘worst’ or bottom’ performer is not going to do much for morale.
Suggestions
These systems have many perceived problems, mostly by management.
Managers seem to instigate these approaches on the basis that either they will receive only a few suggestions or that they will be able to claim that 80 or 90% are worthless, and hence, will not be pursued.
One problem is trying to ascertain the value of a suggestion.
There is a cost involved in the processing and implementation of every suggestion.
There may be a be benefit from the implementation of each suggestion.
The relative merit of the suggestion system will depend upon the number of suggestions received.
Let us say you encourage 1000 suggestions per year.
Each one derives £10 of benefit making a total of £10,000 increased profit.
On the face of it many managers would disregard a mere £10 benefit and ignore man of the suggestions.
Let us say that instead of 1000 suggestions you have 500,000 the profit then rises to £500,000.
This sum can’t be ignored.
There is also the psychological aspect to consider.
If you devalue suggestions by continually only pursuing the apparently high value items motivation for producing them will dry up. Who is to say that if an individual provides 100 suggestions that one of those might not be tremendous.
Traditionally, Japanese companies will provide many more suggestions than their western counterparts.
An individual in Japan may submit 30 typically compared to less than 0.2 for its western equivalent.
A lot of suggestions can mean a lot of extra profit.
If you are serious about implementing ideas it will take time and effort but make sure they are well reinforced to encourage plenty.
Group v individual
When the group as a whole is rewarded it is not a direct reflection of individual performance.
In the case of the higher performers this can have a negative affect.
The higher performers will often work better outside of the group situation.
Bonuses
These tend to be an annual event.
As such they are future based and have a heavy degree of uncertainty attached to them.
In general, these are not motivational unless the monetary sum involved is very large.
The future aspect of the bonus puts into a similar bracket to many others.
The bonus is uncertain, and as such, not as strong a motivator as a more immediate consequence.
Some of these issues can be overcome with more frequent assessment of the level of performance.
Sharing
These systems are based upon a formula that distributes money to a group of people.
The formula is usually based upon either cost savings or productivity improvements.
Naturally, this bares no relation to individual performance which would improve this method of reward.
Typically, sharing is based upon salary levels or service length etc.
Special items
These are only limited by your imagination. You can build up a catalogue of special treats so that You have a number to choose from that will be appreciated by a wide number of people.
Having quite a few means the system will not get stale by repeating the same reward.
For example:
- Cinema, theatre or concert tickets
- Lunch, dinner or vouchers for a meal
- A year or 6 month subscription to a favourite magazine
- A special object, for example, an engraved medallion, glassware etc