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Research Bulletin | 2011

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Introduction

Organizations spend more than $46 billion per year on employee

rewards and recognition programs.1 Traditionally, these programs

are managed under the umbrella of “total rewards” within the HR

organization; they are also used by functional leaders in sales and

customer service to incent high levels of performance in customer-

facing roles.

In this research bulletin, we discuss some of the limitations of the

traditional approach to rewards and recognition – as well as one of

the pioneering new solution providers in this marketplace, Achievers

(formerly I Love Rewards).

The Role of Rewards Programs in Business Today

Employee rewards and recognition programs are widely used in

organizations around the world. Traditional programs include:

• Serviceandtenureawards(e.g.,the20-yearanniversarywatch);

• Achievementawards(e.g.,bonuses,prizesandgiftsformeeting

business targets);

• Behaviorandculturalrecognition(e.g.,qualityawardsand

process improvement awards); and,

• Awiderangeofspecialprogramswhichcompaniesusetodrive

strategic behaviors and leadership.

1 Source: Incentive Marketing Association, http://www.incentivemarketing.org/.

September 8, 2011 Volume 6, Issue 44

A New Generation of Employee Rewards and Recognition Solutions: The Achievers Offering

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About the Authors

Josh Bersin,Principal Analyst

Stacia Sherman Garr,Senior Analyst

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A New Generation of Employee Rewards and Recognition Solutions Josh Bersin and Stacia Sherman Garr | Page 2


These programs have grown up under the theory that all people,

regardless of level and role, want to be recognized and thanked for the

work they do. By clearly recognizing achievement (whether it be tenure,

performance, behavior or leadership), organizations not only improve

the engagement of the reward “earner,” but they also reinforce the

values that matter most to the company.

Today, the need to recognize and reinforce achievement is greater

than ever. Organizations are highly geographically dispersed, with

many employees now working from multiple office, home or remote

locations. As a result, many people do not have ongoing direct, face-

to-face recognition from their managers. Nearly 35 percent of the U.S.

workforce now operates on a contingent basis (working part-time or

on contract) and most rewards programs do not reach this audience.

Much research has shown that younger workers (the Gen-Y2 age group)

grew up in “recognition-rich” families and feel a need for continuous

feedback more than ever.3

Our research in the areas of performance management, training

and leadership development further reinforces the value of regular

feedback and recognition. Our new research on High-Impact

Performance Management4 shows a very strong correlation between

employee coaching and business results. Organizations, whose

managers are highly effective at coaching and providing feedback,

outperform their peers by a two-to-one ratio in business results, such as

productivity, retention and financial performance.5

2 “Generation-Y” (also known as “Millennials”) are those individuals who were born between 1981 and 2000, and are culturally thought to be confident, impatient, socially conscious, family-centric (or “tribal-oriented”) and technology-savvy.

3 “Gen Y Wants More Feedback and Access to Managers,”Compensation & Benefits Review, March / April 2007. This article provides the key finding of a report by Hudson about the needs of U.S. workers from their bosses. The research found that 24 percent of the Generation-X and -Y workers prefer to have feedback from their boss at least once a week, while only one-fifth of baby boomers and 11 percent of traditionalists favor a quarterlyfeedback.ThestudyalsoshowsthatGeneration-Yemployeeslikemorefrequentsocial interaction with their managers, as compared with their older counterparts.

4 For more information, High-Impact Performance Management: Part 1 – Designing a Strategy for Effectiveness, Bersin & Associates / Stacia Sherman Garr, August 2011. Available to research members at www.bersin.com/library or for purchase at www.bersin.com/hipm.

5 The 2011 High-Impact Performance Management research is being published as five topic-specific industry studies, starting in August 2011 and continuing into 2012.

Our new research

on High-Impact

Performance

Management

shows

organizations,

whose managers

are highly effective

at coaching

and providing

feedback,

outperform their

peers by a two-

to-one ratio in

measures, like

productivity,

retention

and financial

performance.

KEY POINT

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http://www.bersin.com/hipm


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Psychological research from the Journal of Compensation and Benefits6

points out that individuals at all levels are driven by three basic needs:

1. The need to achieve;

2. The need for power over their jobs; and,

3. The desire for influence.

When done right, recognition programs send a loud and clear

message to employees that they are valued, by giving them a sense of

achievement and thanks.

Research shows that a well-designed recognition system can have

tremendous impact on employee engagement7 which, in turns,

drives results. Gallup’s research on employee engagement shows that

organizations with highly engaged teams outperform their competitors

by 26 percent in gross margin and 85 percent in sales growth.8

The Limitations of Traditional Rewards Programs

Despite the strong understanding that “people thrive on recognition,”

traditional rewards programs, many of which were designed before the

advent of social technologies and highly networked organizations, fall

short in many ways.

First, they do not reach enough people. Most reward systems are

packaged and budgeted into a “total rewards” program, and are

designed in a top-down approach which only reaches 10 percent to 15

percent of all employees. Typically rationed, they are administered by

managers and they often do not reward the contributions of front-line

workers, who truly need recognition on a regular basis.

6 Source: “High Value, Low Cost and Often Forgotten: Why Recognition Deserves a Fresh Look,”Journal of Compensation and Benefits / Rachel O’Connor, Joe Schmidt, Tracy Bosch, Mark Royal, September/October 2010.

7 “Employee engagement” refers to an employee’s job satisfaction, loyalty and inclination to expend discretionary effort toward organizational goals. Companies typically measure engagement through an annual employee survey.

8 Source: www.gallup.com.

Most reward

systems are

packaged and

budgeted into a

“total rewards”

program, and

designed in a top-

down approach

which only reaches

10 percent to

15 percent of all

employees.

KEY POINT

http://www.gallup.com


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The Hay Group, a leading consultancy in global compensation9 found

that top-down, high-performer10 rewards programs (the predominant

model) are often viewed as limited and typically “… enable employees

to carry on and suffer in silence.” They simply do not reach enough

people in a consistent fashion.

Because these programs are rationed, they are viewed as a “contest.”

Employees who work hard and deliver results, but may not be politically

or socially engaged enough to receive recognition, feel like “losers” when

they do not receive an award for their personal level of commitment.

Second, they are not flexible enough. The reward structures and prizes

available are often generic and do not truly motivate people. The

catalogofprizesisoftenlimited;employeesfrequentlyfeelthatthe

rewards they receive are not things they want or need in their lives

(i.e., mugs, t-shirts, pens, paperweights, and various other (prizes).

The result is that the company spends money on products that have

little or no impact on employee engagement. According to research

by the Hay Group, these top-down programs are missing a process for

“employee enablement” – which allows the reward system to be highly

personalized to “… empower employees to engage and improve their

own careers.” As one HR executive from the Netherlands stated,

“A one-size-fits-all rewards program simply does not

work in today’s workforce. The trend is to go ‘one

size fits me.’”

Third, rewards and recognition are often poorly targeted and may

not reinforce important business priorities. While all companies

wanttodrivesalesperformance,customerserviceandquality,most

rewards programs cannot be tailored to meet the needs of a particular

workgroup. Suppose one business unit wants to reward its employees

for innovation and out-of-the-box thinking, while another wants to

reward its people for cost-reduction and efficiency. Can the generic

HR-driven rewards program flex enough to let these different business-

unit leaders drive these behaviors? In some cases, spot bonus programs

and adaptable rewards programs enable such flexibility – but these

9 Source: The Changing Face of Rewards, Hay Group, 2010.

10 A “high performer” is an employee who is a key contributor, demonstrates high performance,iscapableofalateralmove,maybequalifiedforabroaderrolewithinthesame profession; and, has reached the potential to move “upward” in a management capacity.

Reward structures

and prizes available

are often generic

and do not truly

motivate people.

KEY POINT

While all

companies want

to drive sales

performance,

customer service

andquality,most

rewards programs

cannot be tailored

to meet the needs

of a particular

workgroup.

KEY POINT


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programsrequiremanagerstobeparticularlycreativeandmanyleaders

will fail to take advantage of these options.

Fourth, many programs limit employee-to-employee recognition.

Nearly all traditional rewards programs are ultimately administered

by supervisors and managers. While this model reinforces the role of

leaders as coaches, it fails to recognize that today’s organizations are

highly empowered and teams operate more independently than ever.

Our research on High-Impact Learning Culture11 shows clearly that high-

performing organizations drive decision-making down to operational

levels, empowering line workers and supervisors to make important

decisions at the workgroup level. Recognition and reward should

similarly be distributed, so that anyone in the organization can publicly

thank anyone for a job well done.

Finally, they lack transparency. Most top-down rewards programs are

slightly mysterious in nature. When an individual is recognized for his /

her achievements and results, people naturally want to know what that

person did to achieve that result and how they can strive to reach that

level of performance. Without a clear understanding of why and how

a reward or recognition was given, much of the value of the rewards

program is lost.

Case in Point: By Josh Bersin

Sales organizations are widely known for recognizing top sales

leaders in public at sales recognition events. I personally was a

part of this culture at IBM in the 1980s.

While the culture of recognition for results at IBM was strong,

the transparency and linkage to values was often weak. So

every month when an individual was given a reward for closing

a big deal or achieving a major financial result, people in the

office would comment that “he / she was lucky” or “why does

that person always seem to win all the awards.” Rather than

motivate people to mirror the behavior of that individual and

11 For more information, High-Impact Learning Culture: The 40 Best Practices for Creating an Empowered Enterprise, Bersin & Associates / David Mallon, June 2010. Available to research members at www.bersin.com/library or for purchase at www.bersin.com/hilc.

Nearly all

traditional

rewards programs

are ultimately

administered by

supervisors and

managers – which

fails to recognize

that today’s

organizations are

highly empowered

and teams

operate more

independently

than ever.

KEY POINT


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create positive motivation for others, the program focused on

rewarding achievement without creating an open, transparent

process to socialize the company’s values and desired behaviors.

It is no wonder that the Journal of Compensation and Benefits

found in its research in 2010 that fewer than 40 percent of HR

managers believe their rewards drive measurable impact on

engagement. This research also found that the old-fashioned

total rewards program is often viewed as a “program” or a

“task,” and not as part of a program to build and transform

organizational culture. e

The Rewards Marketplace

The rewards and recognition marketplace is very large, with an

overwhelming number and variety of solution providers. Companies

typically fall into one of three categories.

1. Traditional Rewards Providers – Are companies which provide

various awards services, including retailers, custom awards

manufacturers, product companies and reward network companies.

Many of these providers are product and catalog companies which

sell customized merchandise, but have little or no expertise in

program design, or with helping organizations link rewards to

company strategies and initiatives.

2. Incentive12 Award Consultants – Are companies that provide

incentive consulting, incentive management systems and

compensation benchmarking. This includes the large HR consulting

firms, like Hay, Mercer and AonHewitt, as well as hundreds of

niche consultants.

12 “Incentives” refers to compensation and rewards which are specifically tied to specific measurableobjectives,suchassalesquotaattainment.

Case in Point: By Josh Bersin (cont’d)

Fewer than 40

percent of HR

managers believe

their rewards drive

measurable impact

on engagement.

KEY POINT


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3. Next-Generation Rewards Companies – Are companies like

Achievers (previously I Love Rewards) which provide technology-

enabled rewards solutions based on SaaS13 platforms and social

networking technologies. This new breed of solution provider offers

a peer-to-peer rewards platform, relationships with many product

and service providers, and some expertise in this growing market.

Achievers: Delivering the New, Modern Approach to Recognition and Rewards

Achievers is one of the fastest-growing solution providers within the

category of next-generation rewards companies. Pioneered through

the use of Internet-based systems and social networking technology,

Achievers delivers a peer-to-peer, points-based recognition system that

uses SaaS technology to enable an organization to rapidly deploy a

next-generation rewards solution.

The Achievers solution relies on many of the features of modern social

networking systems, as follows.

• Everyone Is Involved – Employees typically receive an allocation of

points each week, and are empowered to distribute these points to

peers, subordinates or leaders, based on the company’s cultural or

competency-based categories. Any employee can reward any other

employee and the points are regularly distributed to people at

all levels.

• The Process Is Totally Transparent – Recognition is freely

communicated and available to see – both in a newsfeed, and by

viewing recognition by category, employee, organization and other

dimensions. This creates a “free market” of recognition and enables

companies to identify high performers through the “wisdom

of crowds.”

13 “Software as a Service” (or SaaS) refers to the business of selling software over the Internet as a web service. In this business model, the software vendor charges an annual “rental” fee and can predict recurring revenues far more reliably than with the licensed software model. As SaaS becomes proven and the delivery strategies more refined, most analysts agree that more and more enterprise software will be sold in this way.


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• The Process Is Fun – The system embodies gaming features, such

as leader boards and award levels, which enable employees to

celebrate the leaders and create a highly engaging experience.

Organizations like Eli Lilly14 and Deloitte Canada15 tell us that the

system creates widespread adoption (up to 90 percent of employees

use the system) within the first few months.

• People Give Different Levels of Recognition – Similar to Facebook

or other websites, employees can recognize each other at different

levels, depending on the significance of the activity that was

performed. A small task done well might deserve a public thank you

on a colleague’s profile, while a substantial task may result in the

awarding of a large number of points redeemable for a reward.

• Recipients Can Choose Whatever Rewards They Wish – Achievers

has a broad distribution of awards partners, enabling employees

to redeem their points for a wide variety of gifts, services and

experiences (e.g., a trip or a donation to charity) that reflect their

preferences. Further, these rewards are from well-known brands and

also include merchants within an employee’s community, regardless

of location around the world.

• The Platform Is Accessible and Relevant Everywhere – Achievers

is a global solution that can be accessed anywhere in the world.

Meaningful and locally fulfilled rewards are provided globally, and

transcend cultural likes and dislikes.

• HR Knows Where the Rewards Are Going and Can Assess Impact –

Achievers has a complete reporting engine that provides real-

time analytics to make better data-based decisions, with access

to information which proves ROI (i.e., an HR manager can look

at patterns of recognition and easily correlate highly recognized

employees to their business performance).

14 For more information, Recognizing Employees: Lilly Canada Increases Employee Engagement with a Dynamic Rewards Program, Bersin & Associates / Katherine Jones, July 2011. Available to research members at www.bersin.com/library.

15 For more information, Creating a Recognition Culture: Deloitte Canada “Stands up” to Support Its Talent Management Initiative with a Reward and Recognition Program, Bersin & Associates / Katherine Jones, August 2011. Available to research members at www.bersin.com/library.




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• The Entire Organization Is Supported – Achievers offers a

multilingual support organization, available 24 / seven, to enable

employees to go directly to Achievers instead of involving HR.

The company also offers a client success manager who can help

HR understand best practices, as well as gain access to tips and

resources for effective engagement and recognition.

Case in Point: Deloitte Canada’s Experience – An Explosion in Growth16

Deloitte Canada, a 9,000-plus employee accounting and

consulting organization, had a traditional top-down

compensation plan in place. In 2009, the company experienced

a high degree of employee disengagement. The economic

slowdown, coupled with the long working hours of many of the

company’s staff, created an environment in which employees

felt overworked and under-recognized. The rewards system in

place was poorly understood and not widely used.

To address this issue, the company embarked on a companywide

talent management review. The decision was made to centralize

the recognition system and create a series of branded,

companywide recognition programs using the Achievers

Internet-based solution. Three reward types were created:

• Stand up – A mechanism to recognize anyone, anytime

through a simple, electronic thank you note;

• Take a Bow – Which allows anyone to recognize above-

and-beyond contributions via a point-based system

through which people can collect and redeem points to buy

something special from an online catalogue; and,

16 For more information, Creating a Recognition Culture: Deloitte Canada “Stands up” to Support Its Talent Management Initiative with a Reward and Recognition Program, Bersin & Associates / Katherine Jones, August 2011.

At Deloitte Canada,

50 percent of

the employees

signed up for the

new recognition

program within the

first day.

KEY POINT


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• Green Dot Awards – Which is only available to partners

and associate partners, and enables significant recognition

among higher-level contributors.

The program was adopted and sponsored by the CEO; in late

2010, the complete Stand up program was rolled out, along

with significant training for all managers. The company hoped

for 50 percent adoption within the first month.

The results have been overwhelming. Fifty percent of the

employees signed up within the first day, demonstrating the

tremendous pent-up demand for recognition and feedback

within the organization. Clearly, this type of program taps into

the enormous reservoir of goodwill and “thank you” energy in

the organization. Today, the program is regularly used by more

than 70 percent of the employees and the program has already

identified hundreds of high performers who were previously

unrewarded within the organization. e

Case in Point: ConAgra Drives Employee Engagement

Such peer-to-peer recognition programs greatly improve

employee engagement. ConAgra Foods is a FORTUNE 500

company with 2010 revenue of more than $12 billion and

more than 24,000 employees. The company had a traditional

recognition program which was considered ineffective by 75

percent of its employees. The leadership team redesigned the

program with four goals:

• Createacultureofrecognition;

• Meettheneedsofadiverseworkforcewhichismotivated

by different types of rewards and recognition;

• CustomizetheprogramtoalignwithConAgra’soperating

principles; and,

Case in Point: Deloitte Canada’s Experience – An Explosion in Growth (cont’d)

One year after

implementing the

new program,

ConAgra saw an

88 percent increase

in employee

engagement

scores and found

that 82 percent

of employees

now believed the

recognition system

directly aligned

with the company’s

business objectives.

KEY POINT


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• Maketheprogramveryeasytouseandmanage.

Like Deloitte, ConAgra implemented a points-based system

using the Achievers tool. After the first year, the company

saw an 88 percent increase in employee engagement scores

and found that 82 percent of employees now believed the

recognition system directly aligned with the company’s

business objectives. e

The Achievers Solution

Achievers (formerly I Love Rewards), founded in 2002, is one of the

fastest-growing companies in this market. The company directly

competes with several well-established vendors, such as Globoforce,

Incentive Logic, Maritz, O.C. Tanner and Rideau. While it is not the

biggest vendor in this market, Achievers is growing very rapidly (with

more than 100 percent year-to-year revenue growth in 2010) and has

a 99 percent customer retention rate. The provider works on a pay-for-

Case in Point: ConAgra Drives Employee Engagement (cont’d)

Figure 1: ConAgra Recognition Portal

Source: ConAgra Foods and Achievers, 2011.


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performance business model and solely makes money through points

awarded to a client’s employees. Included in the purchase of points are

all of the rewards, a custom-branded recognition portal, and 24 / seven

support for employees and HR.

The Achievers solution includes not only its proprietary social network-

enabled platform that empowers employees to easily thank each

other, but also supports a variety of methods for distributing points.

Employees may receive regular points (the amount of which can vary

based on position level within the company) every week to give away,

budgets may be managed by supervisors, and there can be various levels

of approvals based on size, role and other factors. The system is highly

configurable, depending on the organization’s desired “openness”

with rewards.

This provider also works with a wide variety of reward partners

around the world that offer well-known branded products, trips and

experiences (e.g., dinner or skydiving), as well as opportunities to

give money to charity. Importantly, the system is built on a mobile

platform, which eliminates awkward applications (apps) or portals for

those accessing the system through a mobile device – making it easier

for remote and field employees to participate more easily. This also

means that the Achievers system can be more readily integrated into a

company’s existing internal portal. Further, Achievers provides advisory

services to help organizations implement a modern peer-to-peer

rewards system.

Final Thoughts

Though the marketplace is highly competitive, Achievers has deep

pockets (it has received more than $38 million in private equity

investments) and is considered one of the leaders in this fast-growing

market. Bersin & Associates sees rewards and recognition programs

as a vital tool for delivering timely recognition for achievement and

peer-to-peer feedback. When linked to the company’s performance

management program, such tools can greatly reinforce corporate values

and business objectives.

Bersin & Associates

sees rewards

programs as a vital

tool for delivering

timely recognition

for achievement

and peer-to-

peer feedback.

When linked to

the company’s

performance

management

program, such

tools can greatly

reinforce corporate

values and business

objectives.

A N A LY S I S


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Appendix I: Screenshots of the Achievers Platform-Based Rewards and Recognition Solution

Figure 2: The Achievers Transparent Rewards Portal

Source: Achievers, 2011.


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Figure 3: The Achievers Employee Social Networking Profile



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Figure 4: Corporate Values of Cultural Competencies Used in Rewards



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Figure 5: Wide Range of Rewards Available in the Achievers System



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