CLC Rewards&Recognition
CLC Rewards&Recognition
MARCH 2006
www.clc.executiveboard.com
Companies Use Reward and Recognition to Create a Positive Work Environment and Drive Performance The WorldatWork and NAER survey found that companies use reward and recognition programs to achieve strategic goals; of the 65% of companies with formally documented programs, 97% directly align their reward and recognition program with the organizations business strategy. Additionally, the study identified the following driving forces for implementing and maintaining reward 5,6,7,8,9 and recognition programs:
Figure 1: Key Goals of Reward and Recognition Programs
Support culture change Encourage loyalty Increase retention Support organization's mission Increase employee morale Reinforce desired behaviors
24% 40% 51% 66% 71% 75% 75% 76% 80% 0% 50% 100%
Motivate high performance Create a culture of recognition Create a positive work environment
Improving Employee Morale A study conducted by IOMA in 2004 found that 91% of companies cite boosting employee morale as the main objective of their reward and recognition program
Effective Reward and Recognition Programs Produce a Positive Return on Investment Reward and recognition programs can be a cost-effective and valuable tool to increase employee morale, productivity, revenue, and profits as well as lower turnover, absenteeism, and stress. In fact, as detailed below, studies have found that effective reward and 10,11,12,13 recognition programs have the following benefits:
INCREASED RETURN TO SHAREHOLDERS A 2005 Watson Wyatt Worldwide study found that companies with an effective recognition program realized a median return to shareholders that is nearly double that of companies without such programs.
BOOSTS EMPLOYEE PERFORMANCE A recent study conducted by the Society for Incentive and Travel Executives found that properly constructed rewards and incentive programs can boost employee performance by up to 44%.
2006 Corporate Executive Board. All Rights Reserved. Catalog Number: CLC15AEYS5
Key Finding 2: Although reward and recognition programs have the potential to produce positive returns to shareholders, research demonstrates that such benefits will only be achieved through an effective program that reinforces an organizations goals and values in a well publicized, thoughtful program affecting a large number of employees. Recently published literature reveals that there are several key components of any effective reward and recognition program. Multiple authors argue that programs missing any one of these key components will, at best, fail to engage employees, and at worst alienate employees. In fact, according to Bob Nelson, the author of 1001 Ways to Reward Employees, some forms of awards can hurt organizations by promoting a culture of entitlement. Additional research reveals that programs that are impersonal or reward too few people may alienate employees. These key 14,15,16 components and case examples of their influence are detailed below:
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SSMART REWARDS Jim Brintnall, author of What Make a Good Recognition Reward?, uses the acronym SSMART to advise employers how to design an effective program. The acronym is detailed below:17 Supports Organizational Goals and Values Sincere and Simple Meaningful Adaptable Relevant Timely
SITUATION
AFLAC wanted to reinforce the importance of the company culture, which is based on the founders philosophy, treat people as you would like to be treated. AFLAC believes that embedding this motto in their company culture will encourage employees to treat one another well and result in better business results.
ACTION
AFLAC designed their reward and recognition program to emphasize the importance of treating one another like family. The program includes the following components: Employee Birthday PartiesAll employees are recognized on their birthday with a card and a gift selected through a vendor. Employee Appreciation WeekEmployee recognition week includes family-friendly events such as free, family-oriented movie screenings, or AFLAC celebrations at an amusement park, nature facility, or petting zoo. Ongoing RecognitionThroughout the year, employees who introduce innovative ideas or go above-and-beyond expectations are recognized with stock options, time off, or other gifts.
RESULT
AFLAC measures success through employee satisfaction surveys, and the company implements improvements based on employee feedback. Although no specific results are available, the company notes improvements in employee and customer satisfaction.
SITUATION
Boeing sought to create a new rewards program that would keep employees motivated and interested.
ACTION
Boeing launched Pride @ Boeing, a system that administers a variety of innovative prizes quickly. To enable awards to be given on the spot, the company allows individual contributors to nominate and reward their peers with a variety of gifts valued at approximately $10. Boeings spot awards include customized candy bars branded with slogans such as, We cant spell s{-}ccess with out u and Thanks a million. Other awards include movie tickets, personal fans, calculators, and vouchers for a 10-minute massage.
RESULT
Although no specific figures are available, Boeing has experienced an increase in participation levels and employee satisfaction.
The Corporate Leadership Council (CLC) has worked to ensure the accuracy of the information it provides to its members. This project relies upon data obtained from many sources, however, and the CLC cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the CLC is not engaged in rendering legal, accounting, or other professional services. Its projects should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from any errors or omissions in their reports, whether caused by Corporate Executive Board or its sources.
Henneman, Todd, "State of the Sector Recognition & Rewards: What's the Payoff?," Workforce Management (10 October 2005). (Obtained through http://www.workforce.com/archive/feature/24/19/11/index.php). [Accessed 6 March 2006]. 2 Society for Human Resource Management, "The Fundamentals of Employee Recognition," SHRM White Paper (May 2005). (Obtained through www.shrm.org). [Accessed 6 March 2006]. (Due to copyright restrictions, a copy of this article cannot be provided.) 3 Society for Human Resource Management, "SHRM Survey: Reward and Incentive Programs Boost Morale, RetentionWhen Effectively Communicated," www.shrm.org (April 2005). [Accessed 6 March 2006]. (Due to copyright restrictions, a copy of this article cannot be provided.) 4 Author Unknown, "Exclusive IOMA Survey: Merit & Bonus Pay Results Suggest the Time is Ripe for Rewards, Recognition," IOMA (1 October 2004). (Obtained through Factiva). 5 Garvey, Charlotte, "Employees Appreciate Recognition Programs," Career Journal (27 September 2004). (Obtained through http://www.careerjournal.com/hrcenter/shrm/features/20040927-shrm.html). [Accessed 6 March 2006]. 6 Henneman, Todd, "State of the Sector Recognition & Rewards: What's the Payoff?" 7 Society for Human Resource Management, "The Fundamentals of Employee Recognition." 8 Society for Human Resource Management, "SHRM Survey: Reward and Incentive Programs Boost Morale, RetentionWhen Effectively Communicated." 9 Author Unknown, "Exclusive IOMA Survey: Merit & Bonus Pay Results Suggest the Time is Ripe for Rewards, Recognition." 10 Henneman, Todd, "State of the Sector Recognition & Rewards: What's the Payoff?" 11 Society for Human Resource Management, "The Fundamentals of Employee Recognition." 12 Garvey, Charlotte, "Employees Appreciate Recognition Programs. 13 Juergens, Jennifer, "Recognize, Reward, Retain: The Three R's of Performance Management," Pharmaceutical Executive (1 May 2005). (Obtained through Lexis-Nexis). 14 Society for Human Resource Management, "The Fundamentals of Employee Recognition." 15 Henneman, Todd, "State of the Sector Recognition & Rewards: What's the Payoff?" 16 Chang, Julia, "Recognition Revamp," Potentials (1 September 2004). (Obtained through Lexis-Nexis). 17 Society for Human Resource Management, "The Fundamentals of Employee Recognition." 18 Henneman, Todd, "Recognition Do's and Don'ts," Workforce Management (10 October 2005). (Obtained through http://www.workforce.com/archive/feature/24/19/11/241915.php). [Accessed 9 March 2006]. 19 Society for Human Resource Management, "The Fundamentals of Employee Recognition." 20 Henneman, Todd, "State of the Sector Recognition & Rewards: What's the Payoff?" 21 Gostick, Adrian, "A Hero's Welcome: Improving Culture with Noncash Awards and Recognition." 22 Garvey, Charlotte, "Employees Appreciate Recognition Programs. 23 Author Unknown, "What are Some Innovative Ways to Recognize Employee's Contributions?," Workforce Management (Date Unknown). (Obtained through http://www.workforcetools.com/archive/article/23/94/60.php). [Accessed 9 March 2006]. 24 Henneman, Todd, "Recognition Do's and Don'ts." 25 Galea, Christine, "Reward Your B Players," Sales and Marketing Management (May 2005). (Obtained through EBSCO). 26 Juergens, Jennifer, "Recognize, Reward, Retain: The Three R's of Performance Management." 27 Society for Human Resource Management, "The Fundamentals of Employee Recognition." 28 Gostick, Adrian, "A Hero's Welcome: Improving Culture with Noncash Awards and Recognition," Workspan (July 2003). (Obtained through http://www.octanner.com/pages/aboutus/news/hero_welcome.pdf). [Accessed 9 March 2006]. 29 Gostick, Adrian, "A Hero's Welcome: Improving Culture with Noncash Awards and Recognition." 30 Juergens, Jennifer, "Recognize, Reward, Retain: The Three R's of Performance Management." 31 Cilmi, Amy Parr, "Managers: The Critical Link in a Successful Rewards and Recognition Program."
Society for Human Resource Management, "The Fundamentals of Employee Recognition." Gostick, Adrian, "A Hero's Welcome: Improving Culture with Noncash Awards and Recognition." Cilmi, Amy Parr, "Managers: The Critical Link in a Successful Rewards and Recognition Program," Workspan (November 2005). (Obtained through WorldatWork). 35 Henneman, Todd, "Recognition Do's and Don'ts." 36 Society for Human Resource Management, "The Fundamentals of Employee Recognition." 37 Galea, Christine, "Reward Your B Players." 38 Cilmi, Amy Parr, "Managers: The Critical Link in a Successful Rewards and Recognition Program." 39 Chang, Julia, "Recognition Revamp." 40 Gostick, Adrian, "A Hero's Welcome: Improving Culture with Noncash Awards and Recognition." 41 Henneman, Todd, "Recognition Do's and Don'ts." 42 Odell, Patricia, "Running a Successful Recognition Program," Premedia Insight (8 December 2004). (Obtained through Factiva). 43 Juergens, Jennifer, "Recognize, Reward, Retain: The Three R's of Performance Management." 44 Garvey, Charlotte, "Employees Appreciate Recognition Programs." 45 Author Unknown, "What are Some Innovative Ways to Recognize Employee's Contributions?" 46 Juergens, Jennifer, "Recognize, Reward, Retain: The Three R's of Performance Management." 47 Author Unknown, "What are Some Innovative Ways to Recognize Employee's Contributions?" 48 Henneman, Todd, "Recognition Do's and Don'ts." 49 Garvey, Charlotte, "Employees Appreciate Recognition Programs." 50 Juergens, Jennifer, "Recognize, Reward, Retain: The Three R's of Performance Management." 51 Henneman, Todd, "State of the Sector Recognition & Rewards: What's the Payoff?" 52 White, Erin, "Praise from Peers Goes a Long Way," CareerJournal.com (22 December 2005). (Obtained through http://www.careerjournal.com/hrcenter/articles/20051222-white.html). [Accessed 10 March 2006]. 53 Society for Human Resource Management, "The Fundamentals of Employee Recognition." 54 Juergens, Jennifer, "Recognize, Reward, Retain: The Three R's of Performance Management." 55 Garvey, Charlotte, "Employees Appreciate Recognition Programs. 56 Author Unknown, "What are Some Innovative Ways to Recognize Employee's Contributions?"
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