Today’s organizations have a problem. They realize that an effective compensation and benefits program is an essential element in attracting and retaining the talented staff they need. However, this goal is getting more difficult to achieve because of cost constraints. Double-digit increases in health care costs have only put more strain on the compensation and benefits budget. Companies are being forced to find more creative, and cost-effective ways to reward their employees.
More and more organizations are turning to active employee recognition as part of the solution.
That’s the good news. The bad news is that many recognition efforts fall short of what the organization hopes to achieve. For example, some organizations, eager to demonstrate that they understand the importance of recognition, create recognition programs that seem to be a hodgepodge of elements without any coherent strategy linked to the organization’s objectives. If this is allowed to occur, recognition efforts may not only fail to create the environment that the organization is seeking, they may be downright counterproductive as well.
Having observed many successful and less than successful efforts to recognize employees, it appears to me that there are at least five key elements of a successful approach to recognition.
Step 1: Don’t treat recognition as a “program”
Effective recognition in an organization should be a daily event central to the culture of the organization. It is not a “program.” Programs come and go. They are temporary creations. Recognition is a permanent feature of how the organization operates.
Step 2: Establish clear objectives
Employees should understand why the organization has adopted the approach toward recognition that it has, and how it contributes to the organization’s overall success. The objectives of the recognition approach should be more than a vague “it will help us attract and retain employees.” There are many specific elements that could be included: creating a positive work environment; improving morale and loyalty, and so forth. Often it includes a notion that the organization wants to have a daily on-going mechanism for showing appreciation, rather than just an annual event at performance evaluation time.
Step 3: Find out what employees value
The most effective ways to actually recognize employees vary from organization to organization. Management should not assume that it knows what employees value and appreciate. Ask employees for their input. The asking itself is a form of recognition.
Step 4: Include both financial and non-financial recognition
Daily, ongoing recognition can include both financial and non-financial components. Financial components might include spot awards, gift certificates and things of this nature, while non-financial might include feedback from managers or peers, being asked to participate in important company initiatives, and so forth.
The key point is that recognition is a powerful force that does not need big dollar signs to be effective.
Step 5: Don’t demand a lot of approval levels for recognition
Special recognition, even financial, should not be subject to a complicated, bureaucratic approval process. Explain to managers what the organization is trying to do, and let them make the call. Sure, there may have to be some financial parameters; most managers and employees understand and accept this. But allow a certain amount of freedom. Freedom indicates a trust level, and trust might be the most effective recognition of all.
