Strategic Reward and Recognition

Improving employee performance through non-monetary incentives

‘Organizations do not create profit. People do.’

By rewarding and recognizing people you can create incremental profit and add value far beyond the objective valuation of brands and products

How do rewards and recognition fit into your business strategy?

• They form part of the total rewards strategy

• Non-financial rewards complement financial rewards

• Recognition is the first element of the performance management plan

• People work harder for non-cash rewards and recognition than they do for salary and benefits

Why benefits do not deliver performance improvement• Herzberg’s two-factor theory

examined what elements of policy/supervision create satisfaction

• Remuneration/benefits are more likely to create dissatisfaction

• Achievement, recognition and the work itself create the highest levels of satisfaction

• Workers who are more satisfied tend to be more engaged and perform better

Non-cash reward and recognition has a long history of psychological credibility• From Freud’s ‘pleasure principle’

(1910) to Ford’s Motivation Systems Theory (1992) there are many practical applications for organizations

• Mayo’s worker interaction, McClelland’s Achievement Theory and Locke and Latham’s goal-setting experiments are the key to better performance

• But replicating results from theory into practice is the main objective

How do you plan to deliver better non-monetary reward and recognition?

• The performance improvement process (PIP) is a tried and tested tool to plan better employee programmes

• All employee and distributor schemes benefit from this approach

• The key element is communication

Start with clarifying your objectives• Be clear about what you are

trying to achieve• Ensure goals are compatible or

‘salient’ as the theorists say• Don’t try and do too much

with one programme• But how do you produce a

business case that senior management can approve?

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Constructing the ROI• In the previous example a large US corporation justified its

recognition programme by measuring overall engagement• They determined that the higher proportion of employees they had

who were ‘somewhat or completely disengaged’ the more profit they lost on a predictable basis over the year

• Reducing the loss was the measure for success• The same principle applies with any other measure of performance

such as absenteeism, recruitment, key task completion or even leads generation

• The key element of any programme is to set a benchmark for performance and then feedback any measurement on a regular basis

The rewards in any budget are likely to be no more than 60% of the total• You need to allow for set-up

advice, promotion and online site construction

• There will be a cost to monitor participant progress and to send out the rewards

• If they are employees there will be a BIK (benefits in kind) tax to be paid to HMRC

There are many tactical techniques you can use to improve uptake and involvement • With a ‘fast-start’ you can offer

additional credits for performance during the early part of the programme

• This produces more ‘activity’ earlier and tends to create an additional residue of activity at the end

• The black shadow represents extra performance as a result

Non-cash rewards depend on the audience. But cash is never king.• Although more cash is what

people say they want, they actually improve their performance more with non-cash rewards

• Travel, either individual or in groups, is the most sought after reward

• Sports events are the least prized of all non-cash awards

Better communication is what most R&R programmes need • Research shows that better

communication is the key to more effective programmes

• Communication needs to aspire towards empowerment rather than top down

• Ownership of the comms leads to ownership of the tasks…management intervention should be minimal

Are there any examples of well-known organizations using R&R programmes to improve performance and profits? • Motivation is universal…there are many examples from most developed economies to

show that well-constructed programmes deliver real, bottom line results• Volvo Cars UK recorded a 23% increase in sales over three months by chartering the

Orient Express for 50 Volvo dealers• Lucent Technologies gathered 6,000 improvement ideas with a combined business

benefit of $20m• AEG offered independent kitchen appliance retailers a place plus partner on an

incentive to Hong Kong which resulted in a 20% increase in like-for-like sales• LV insurance improved its engagement from 64% to 83% over a four year period with a

formal recognition programme

‘The deepest need in human nature is the craving to be appreciated.’

William James, 19th century sociologist and thinker

Fisher’s grasp of the key issues makes this a perfect primer for anyone wanting to know how to create and manage successful incentive programmes. This book is set to become recommended reading for our Motivation Diploma and we are happy to endorse it. Chris Bestley, Education Consultant, Institute of Promotional Marketing (IPM)  A great reference for any manager who has to run motivation programmes Simon Gilbert, Trade Marketing Manager, Sony Mobile  John Fisher has been an expert strategist and practitioner in the field of staff motivation for more than 25 years. He is also an excellent writer. The result is always an engaging read, combining real education with valuable insights. Martin Lewis, Managing Editor, Meetings & Incentive Travel magazine

Discount Code: SRAR25 (25% off RRP)

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