(Don't) Show Me the Money

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Employee Engagement
Employee Engagement
Hot Topic: Performance

It's not surprising that noted physiologist Frederick Herzberg's 1975 article "One More Time, How Do You Motivate Workers?" is still the most requested article from the Harvard Business Review.

As Herzberg concludes in his famed "Motivation-Hygiene Theory," salaries frequently cause employee dissatisfaction while recognition typically raises employee satisfaction. So companies are constantly looking for innovative ways to reward employees beyond just their salaries and bonuses.

NetSuite takes a unique approach to recognition. The company gives "Customer Kudos" awards to service employees when they received praise from customers and hosts outings for team building and monthly potluck meals where employees gather and discuss their performance during the past month. James Dantow, vice president of worldwide support for NetSuite, believes that nonfinancial compensation incentives and recognition programs deliver "psychological satisfaction" to employees. Happier, more fulfilled employees, Dantow emphasizes, deliver better customer service, which helps improve customer satisfaction.

NetSuite aligns contact center employee incentives primarily with customer satisfaction. It aligns nonfinancial compensation tools by monitoring employee satisfaction, attrition, schedule adherence, voluntary overtime, and customer satisfaction.

In contrast, American Midland Insurance Group (AMIG) aligns performance-based incentives throughout its entire organization with corporate revenue and profitability objectives at least quarterly. Corporatewide incentives reward specific behaviors that contribute to the achievement of corporate objectives. The sales team receives both cash and noncash incentives, such as trips with their spouses, for meeting revenue and profitability targets that are laid out annually and adjusted at least quarterly. Additionally, all AMIG employees receive a handwritten note from the CEO every five years on the anniversary date of their hiring.

Lis Baldock, senior vice president of human resources and learning for AMIG, says organizations must ensure they are rewarding employees for the right behaviors. One department within AMIG, for example, distributes wooden nickels to employees who contribute good ideas or demonstrate behavior that supports the company's mission, vision, and values, operating principles, and financial targets-all of which are kept updated on an information sheet distributed to all employees and managers. The wooden nickels can be exchanged for apparel, and Baldock reports that the idea has spread to other AMIG departments.

Each department offers numerous other recognition programs, and noncash rewards (gift cards, spa excursions, dinners) that are designed by departmental managers to reward behaviors that support departmental goals (and those departmental goals support overall corporate objectives). Baldock and her team help facilitate the sharing of local incentive programs across different departments. "We emphasize to our managers that they know their people better than anyone else does," Baldock notes. "We say, 'There are corporate recognition programs in place, but it's also a good idea for you guys to develop your own, keeping in mind the unique culture and people within your department.'"

Connecting appropriate rewards to a department's culture requires another connection to be forged and maintained: the link between recognition/noncash rewards and employee satisfaction and higher customer satisfaction. That link requires careful and continual coordination among sales, service, and human resources executives. Not only do they need to discuss with each other what the recognition or noncash bonus should be, but also who it should apply to, when it should be given, and how long the program should remain in effect.

Carlson Marketing Director of Performance Improvement Jennifer Rosenzweig says it's also important for the human resources department to move from an enforcement role to a facilitator's role. Most HR departments concern themselves with employee benefits or the regulatory side of employee-supervisor relationships rather than the structure of innovation. For example, she said they should ask employees questions such as: "How can we include you in the future of the company?"

According to Anderson Performance Improvement Company President Louise Anderson, companies can improve performance by identifying successful behaviors among the top 20 percent of a workforce and then rewarding the remaining 80 percent of the workforce for adopting those behaviors. Since the top 20 percent of performers already exhibit the behaviors necessary to achieve specific performance metrics, their performance can be rewarded with more traditional incentives (those based on achieving specified performance targets).

Anderson emphasizes that companies should give the rewards when the behaviors are exhibited, not when the numeric measures (such as new customer acquisition or customer satisfaction) that the behavior is intended to motivate are tallied at the end of a year or quarter.

Finally, don't let incentive programs drag on. Too many noncash incentive programs linger past their effective date, especially in the contact center, says Witness Systems Principal Global Market Consultant Oscar Alban, who notes that programs that run as little as two-week increments tend to be more effective than programs that run throughout an entire quarter.

Baldock adds that when companies reward employees for everyday tasks the incentives become ineffective. She says, "I've been in some organizations where the fact that you took a shower, showed up to work at eight, and worked until five in the contact center was recognized and rewarded." It doesn't take a psychologist to figure out that approach fails to psych up workers.

EXPERT OPINION
EXPERT OPINION