Employee Compensation is everything that is market based like salary, health insurance benefits, contribution to 401k, other pension contributions etc. Compensation should relate to the position – the job description – and the employee’s performance within that framework. For example, if an employee continues to do a “B” level job year after year, there will come a point when that employee has probably “capped out” their salary level according to market comparisons. Regardless of how well you like the employee’s performance there may come a point when you don’t want to pay someone in that position more than the market will bear.
Employee Reward programs are unique in the sense that they depend on the employee’s, or the employees’, unique working behavior. For instance, profit sharing is only paid when the employees’ combined efforts have resulted in a profit. A “spotlight” award may be paid to an employee for a singular valuable effort or action. These rewards may not be market based (although there is data to indicate what an average “spotlight” reward is), but are incentives to encourage more of a particularly desireable behavior. The amount or kind of rewards given are directly related to management’s need to get employees to focus on specific things as opposed to management’s desire to stay competitive in the marketplace by paying comparable wages.
Whether you are launching a new employee reward program or re-tooling your program for better results, get your management team involved – from senior management to middle management. And maybe some front line folks. You will be better served to talk through the implications of the reward program you have in mind rather than dictate it from on high. This is one of those times that your chances of success are better if you have more people involved on the front end. If you are wedded to a particular program present it with the notion that you will listen to all legitimate criticism of it and change it if there is another program your management team is more willing to support.
If possible structure the overall recognition program to touch your employees on three levels
1. Individual level: the employee should be able to receive recognition or reward for their personal efforts regardless of what else goes on in their department or in the company.
2. Team Level: the specific team or department that the employee works with should be eligible for recognition regardless of what any one individual has done (or not done) or what the company has done.
3. Company-wide level: Given a premise that your employees are doing the best they can with what they have, if the company succeeds as a whole then recognition should be shared with all. The fact that an individual or a team failed to meet their goals does not eliminate the possibility that the individual or team may have contributed to the company success overall. How so? Perhaps by helping someone out on another team, thereby helping that team achieve their goals. You’ll never really know all the possible contributions your people made.
If you have been operating under a simple compensation program and are now considering an employee reward system to increase focus on catching your people doing something right, be sure to get your leadership team involved in the program from the very beginning, discussing the concept. Each department manager should have an opportunity to voice the pros and cons of implementing a particular reward system because these managers may be responsible for tracking results, initiating the giving of the reward and living with the result afterward. Let’s look at these one at a time:
1. Any reward system has to be based on performance. Even if employees are recognizing each other, the reason for the recognition must be defined, must be valid, and must coincide with the company’s greater goals. For example: let’s say that an employee leaves their machine to assist another employee who is having difficulty. Is it a good idea for an employee to leave a machine unattended? Or is it better that the employee is willing to reach out another. Tracking the results may require determining which behavior exhibited by an employee is the kind of behavior the company wants to reward.
2. Giving the reward puts a burden somewhere within the organization. If rewards are given co-worker to co-worker, the boss is not required to give the reward but may have to be sure the system is working – that the right rewards are being given co-worker to co-worker. If the reward is to come from the boss, the boss has to track results and then make the time and effort to present the reward. This may be anything from a written note to a plaque presented at the annual company dinner. Either way it requires some effort.
3. The giving of any reward is done to influence future behavior as well as recognize a prior accomplishment. Therefore, management must follow up to see if the granting of the reward or the giving of recognition had the desired effect. Not all reward systems work the same way in every work environment. You will literally have to use a significant amount of pre-launch discussion and post-implementation de-briefing to determine if the reward system provides the results expected. In almost all cases, a degree of fine-tuning and clarification will be required to custom fit the people to the program. Don’t be upset if you don’t always get the reaction you thought you’d get. Recognize what took place, talk about it and decide whether to fix it or move on to another kind of program.
Don’t let a disappointing reward program deter you from coming up with another program. The purpose of these efforts is to recognize valuable behavior. You will hit on a program that both you and your people appreciate; one that makes them smile.
Monitor your expectations. Be prepared to “experiment” with a reward program to see if it works. I caution you about starting out with the idea that this reward program will work the first time for all time. That’s a pretty high expectation. Sometimes it may be better to launch a recognition for a short period of time, see if it works, then make it a more permanent part of your company.
Reward programs that are around for a long time can sometimes get pretty boring and predictable. A challenge of any reward program is maintaining its freshness, its sense of excitement. So don’t get hitched to an idea for any longer than it works for you. Monitor its effect on behavior. Maintain it if it’s working, change it went it stops.