Targeted Rewards Have Greater Value — and Bigger Impact

At Busch Gardens-Tampa, the management staff hands out scratch-off cards that are redeemable for various rewards to employees who do an exceptional job of helping park guests. At Chevron USA, employees recognized on the spot for an accomplishment are brought to the “Treasure Chest,” where they select gifts from items such as coffee mugs, pen sets and movie tickets. At both Ford Motor Company and AT&T, top employees are selected to appear in the company’s commercials and advertisements.

What are these unusual techniques and privileges? They’re all part of a movement in employee motivation that focuses on recognizing workers’ efforts more informally, more personally and, most importantly, more often.

This movement in employee motivation is much different than the more traditional and formal programs of recognition—such as employee-of-the-month designations and annual service awards—that are highly structured and implemented by a time table. Instead, informal recognition programs focus on spontaneous, sincere and personal appreciation of employee efforts. These programs are particularly interesting because they successfully recognize employees and the jobs they do, while usually requiring little or no funding to implement and maintain. There are some good business reasons to take a closer look at informal recognition efforts from an HR standpoint, because these seemingly small thank you’s can enhance a company’s work culture and profit margin and can even help businesses grow.

Informal recognition programs are increasingly popular.
The trend to add informal recognition systems to complement formal programs has emerged as companies struggle with retention. In their efforts, they’ve discovered that employee motivation is highly individualized. As a result, recognition programs need to be as well. Formal programs, although meeting other goals for the company, often don’t accomplish this. Says Bob Nelson, author of 1001 Ways to Reward Employees (Workman Publishing, 1994) and president and founder of the San Diego, California-based Nelson Motivation Inc.: “They’re too impersonal and infrequent—typically once a year or once a quarter. We also know that the same incentive used over and over tends to lose its effectiveness with each use.”

Karen Rubin, president of the San Mateo, California-based human resources management firm Future Work Partners Inc. says that the ensuing success of informal recognition programs can be best understood as a result of a fundamental change in the needs and wants of the workforce. “In the past, formal recognition programs were appreciated, but now, with people constantly changing jobs and with mergers and downsizing, individuals are looking for more personal rewards from their work. They want to be appreciated, and informal recognition programs give that to them.”

The workforce’s need for informal recognition has been well documented in a number of revealing employee surveys. For example, in a recent poll taken by the Menlo Park, California-based outplacement firm Robert Half International, 25 percent of HR executives said a lack of recognition was the most likely factor causing a good employee to quit his or her job. In another recent survey, employees who were asked to rank job-based incentives listed a personal thank you as the incentive they’d most like to receive. Interestingly, a handwritten note of appreciation from the employee’s boss was listed as their second choice and money as an incentive came in at an eye-opening sixteenth. As Nelson says, “If you give employees a choice, the thing they’ll say has the greatest, most significant impact is a personal, spontaneous and sincere thank-you for the job they’ve done.”

Informal recognition lifts morale.
Although employee demand for informal recognition programs is a large part of why the trend has caught on for human resources professionals, an even more important factor has been the many positive results that such programs have produced. Those HR departments that have implemented informal recognition programs have witnessed their companies receiving many valuable benefits with respect to both the hard and soft sides of business. Perhaps the most important of these benefits has been the solution to one of the most intangible, yet troubling problems that HR departments have faced in recent years: low employee morale. With the widespread presence of corporate mergers, acquisitions and downsizings, many of today’s employees feel distraught and pessimistic about their futures and careers. However, this pessimism—which hurts productivity and performance—can be reduced using informal recognition programs. By acknowledging employees’ efforts more personally, more locally and more frequently, informal recognition programs can lift workers’ spirits and improve overall company morale.

A good example of this type of improvement in company morale can be found in the case of San Jose, California-based electrical wholesaler Buckles-Smith. According to training and procedures director Beth Gill, before implementing an informal recognition program, employee morale among Buckles-Smith’s 123 workers was extremely low and productivity was suffering. In particular, the employees at the company’s warehouse facility were struggling to become motivated. Realizing that no real recognition was being done and that the efforts of every employee needed acknowledgment, the Buckles-Smith management team made a commitment to begin doing more personal recognition on a more consistent basis. In addition to saying thank you in person and distributing concert and baseball tickets to employees who did a good job, managers at Buckles-Smith lived up to their new commitment to recognition and began a new program. In this program, managers are given slips of papers called “Buckles Bucks.” Over the course of the month the manager must hand out all of his or her Bucks to employees who, in their view, do a good job. The employees are then able to redeem their bucks for gift certificates or merchandise.

These informal recognition programs have virtually eliminated Buckles-Smith’s employee morale problem and, although the company hasn’t kept any records, Gill says employees are happier and more productive. “Once we realized people need more pats on the back and started giving them that, they’ve really taken pride in their jobs. That has resulted in a feeling of higher employee morale and overall better work. The whole program has helped our business,” she says, and adds, “A smile or a thank-you doesn’t cost any money.”

These same types of results were recently experienced by San Francisco, California-based Sammy’s Pet World. After gaining a reputation as a small, free-spirited and non-conformist pet shop over the last few years, Sammy’s grew and transformed into a more professional, corporate and mainstream store. Although this transformation was designed to have a positive impact on the business, some employees resisted it and fought the change. This conflict, which lead to serious problems with worker commitment and morale, prompted the store’s management team to look for new ways to motivate employees and make them happier. For Sammy’s, the answer was found in the creation of a new informal recognition program and the redevelopment of its existing formal programs.

First, Sammy’s management team restructured its formal, Employee of the Month program. Store manager Trace Brignardello admits that Sammy’s Employee of the Month program was rarely used and lowly regarded by the employees it was designed to motivate. With the revamped program, each month’s winner gets his or her picture displayed in the front of the store and receives a gift certificate for any one of the many different stores within the larger shopping mall. Most importantly, the store’s management now presents the award every month at an employee meeting and by doing so has begun to build a culture that’s committed to recognition and motivation.

In addition to adhering to the new, more personal Employee of the Month program, Sammy’s supervisors and managers have begun using many informal recognition techniques to acknowledge employees’ efforts. Brignardello, for example, has started giving out handwritten notes, animal-shaped balloons, candy bars and sodas to show her appreciation for employees who do exceptional work. And to motivate her employees further, Brignardello also personally thanks each employee at the end of every day for doing a good job.

The use of informal recognition techniques, coupled with the restructuring of the formal Employee of the Month program, has had a number of positive effects on Sammy’s business. In addition to easing the transition to a more professional and corporate-like store, Brignardello claims the recognition techniques have paid off in increased productivity and an overall better working environment. “The employees have responded phenomenally to the recognition program and they really appreciate it,” Brignardello says. “They’re more productive and they realize management really cares about their efforts. That has led to happier people and, we believe, a lot more sales.”

The experiences of Buckles-Smith and Sammy’s show that informal recognition can have immediate positive effects on a company’s business. But Nelson claims the long-term effects of informal recognition programs can be even greater. “Once informal recognition has become part of the company’s culture, employees will feel their efforts are appreciated and they won’t be as quick to quit their jobs. This not only helps companies minimize costly employee turnover, but it also makes recruitment easier because the business will have a reputation as an exceptional place to work,” says Nelson.

Employees might not take sudden informal recognition seriously.
In spite of these positive effects, many companies still aren’t implementing informal recognition programs for a number of reasons. One reason is many employers and managers feel the salary employees are paid should be a sufficient source of motivation and recognition. Many managers may also have a general objection to change and resist the implementation of any new or unique programs. Finally, most employers are simply unsure how to properly start and maintain such a recognition program.

But the failure of an informal recognition program isn’t solely the result of managerial decisions; many employees also have been opposed to informal recognition programs. In fact, Future Work Partners’ Rubin estimates that a full 20 percent of employees are initially against them. She says the reason is this 20 percent are self-motivated and driven individuals who have trouble understanding why the remaining 80 percent of the workforce need a special program to motivate them to do their jobs. This type of attitude, which usually manifests itself in employees making fun of the entire program, can hurt the perception of the program and seriously undermine the effectiveness of even the best recognition techniques.

Such worker and managerial opposition can present significant problems for informal recognition programs. If managers are opposed to the recognition techniques and don’t use them or, more importantly, if employees don’t buy in, the program is useless and it will inevitably fail. According to Rubin, this means that even before the program is ever implemented, it’s useful for HR to take an active role in the creation process and accept the responsibility of educating both employees and managers alike on the benefits and importance of informal recognition. Rubin also believes HR will be more successful if you approach employees and managers separately because each has a different role in the recognition program.

For managers, in particular, Rubin recommends addressing their views on the techniques they’ll be using as part of the informal recognition program. At the same time, Rubin says she believes it’s extremely important for HR to make the management staff understand that, regardless of their personal beliefs, the techniques of the informal recognition program will motivate their employees and, eventually, help the business succeed.

Once this introductory education is complete, Nelson suggests that HR create a strategic game plan for managers and supervisors to follow. By mapping out the program and setting realistic goals, managers and supervisors will remain committed to the program and continue to use it effectively. Nelson says, “Planning before implementation ensures that managers are informed and committed to the program. This strengthens the program and its likeliness to succeed.”

Although addressing the managerial staff prior to implementation is extremely important, it may be even more important to determine employees’ wants and needs before beginning any recognition program. To do this, Rubin recommends that HR surveys or at least discusses with employees what they feel they’re missing from their jobs. By having this type of communication, HR can structure the program to specifically satisfy workers’ needs and, in doing so, make them happier. And, according to Nelson, satisfying employee needs often benefits a company’s bottom line. “The better you know what your people want, the better you know how to motivate them,” Nelson says. “And when you motivate your employees, you get only the best results.”

Employees need more than a paycheck.
Informal recognition programs have been successful for companies that have implemented them. However, like any HR program, informal recognition must be implemented with care and persistence to have a positive effect on business. Much of the challenge in implementing informal recognition programs stems from the fact that those in charge of creating and maintaining the programs must realize today’s employees demand more than a paycheck for the job they do. The old means of motivating employees won’t work in today’s business environment. Informal recognition programs, however, motivate differently and are more representative of what people want. Nelson sums up this movement toward informal recognition best when he says, “You get the best effort from others not by lighting a fire beneath them, but by building a fire within them.”

Workforce, November 1998, Vol. 77, No. 11, pp. 66-71.