A worker at Catholic Health Initiatives in Denver got right to the point during a focus group on what kinds of rewards motivate employees.
“No T-shirts, no coffee mugs,” he told Brandon Melton, then vice president for human resources. “Don’t patronize me with things I don’t need or want. Give me something of genuine value.”
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The advice hit home, as did others’ suggestions that genuine appreciation was worth more than trinkets. In response, the company set up a sort of employee recognition “tool kit”: thank-you notes, birthday and anniversary cards, and generic gift certificates redeemable for a wide range of items – from movie tickets, to restaurant gift certificates, to a free car wash.
For truly exceptional work, managers could nominate workers for bonuses of as much as $1,500.
The program, started four years ago, was not only a success in-house, but it won a national award, says Melton, now vice president for human resources at Lifespan. In his new job and in advising colleagues, Melton continues to promote the underlying philosophy: show you really care.
Retaining and motivating good employees is crucial to just about any company, but doing it right can be a challenge, experts say. Human resource managers talk about it constantly – it’s on the cover of this month’s HR Magazine – and it’s the subject of a growing amount of research.
For companies spending thousands and even millions of dollars on “performance pay” and bonuses, the stakes are clear. But even less-costly approaches – gift certificates, trinkets, “employee of the month” plaques – are viewed as potentially harmful if workers see them as insincere, condescending or hypocritical.
“Employees can really see through that,” said Bob Lesuer, a principal at Mercer Human Resource Consulting. Yet anything from bonuses to seemingly “corny” celebrations can work, Lesuer added, as long as they fit with the company’s culture and are well-thought out and executed.
“It’s difficult to have one-size-fits-all,” Lesuer said. In some environments, personal recognition is key, he said, while sales staff will probably want money. In other companies, stock options might be the best reward. Whatever an employer’s choice is, however, Lesuer said, it’s important to ensure that rewards are given out fairly, and that they be tied to workers’ actual performance.
If a company pays out bonuses because its stock did really well, for example, workers may not see a direct connection between their efforts and the rewards, Lesuer noted. The same goes with bonuses that are paid to everyone – they come to be seen as an “entitlement.” Conversely, if two workers do a project together, and only one gets the bonus, it can look unfair.
A Hewitt Associates survey of 350 large companies found similar problems last year: 83 percent believed their pay-for-performance programs were only “somewhat successful” or “not successful.” Hewitt linked the problems to companies’ failure to openly discuss goals and the potential rewards they would get, and to clearly differentiate the pay for low and high performers.
Employers are grasping this, and general bonus programs, such as gain-sharing and cash profit-sharing, are both on the decline, at 11 percent and 17 percent, respectively, Mercer’s 2004/2005 U.S. Compensation Planning Survey found. Spot cash rewards for specific projects, on the other hand, were used by 55 percent of firms, up from 48 percent in 1999. Non-cash rewards were most prevalent, at 72 percent of companies, up from 68 percent in 1999.
“Often what people want is recognition,” Lesuer said, so money isn’t always important. The other insight companies are gaining, he said, is that they should look at pay, benefits, performance incentives and other perks as a package of “total rewards.”
That’s also how Lifespan’s Melton talks about it. The company does have “employee of the month” spotlights, but far more important, since last August, it’s had a person devoted entirely to helping improve workers’ “work-life balance,” developing flexible work arrangements such as work-from-home, flex time and compressed workweeks, and helping with family care.
To motivate Lifespan’s lowest-ranked workers – in transportation, food-service, housekeeping, laundry – the company offers educational programs to build up basic skills, and it will also help them advance into professional careers by obtaining an associate’s degree in health care fields.
“Think of how engaged and loyal an employee will be if we’ve helped move them from a $22,000-a-year job to $42,000, with the potential to make even more,” Melton said.
At First Acura in Seekonk – formerly Acura of Newport – vice president and general manager Robert J. DeMagistris said the dealership has a range of bonus-pay programs, but that’s not why it has an unusually low turnover rate in an industry where workers generally don’t last long.
Even the bonus programs reflect that philosophy: The new car sales manager’s bonus isn’t based just on new car sales, but also on how used cars do, and vice-versa. “I want to make sure that my new car manager is working with my used car manager,” DeMagistris said. And in its hiring, the company looks for people looking to make a career there, and encourages them.
“In moving from Newport to Seekonk, I’m proud to say we didn’t lose anybody, and I think that’s a testament to employee satisfaction with the dealership,” he said.
At Blue Cross & Blue Shield of Rhode Island, the company newsletter features a “colleague close-up” every two weeks, and every year there’s an annual “service excellence” ceremony that recognizes outstanding customer service and outstanding community service.
But when things got really bad last year, CEO James E. Purcell (then acting CEO) took a different approach to motivating workers: He started sending out a weekly letter to keep them informed about the company’s situation. He also walked through the offices, meeting employees and thanking them for their good work.
For some companies, nothing beats ownership to motivate workers.
At Rite-Solutions, in Middletown, a high-tech company with major military contracts, all employees are eligible for stock options after a year. Being employee-owned is a central part of the company’s identity, proudly announced even on the phone greeting.
“It really changes the dynamic; it changes the relationship,” said Jim Lavoie, CEO and co-founder.
“It changes from being a transactional relationship with the employee to them appreciating what ownership means.” Even the performance review process is different, he said – it’s no longer about what you did well or badly, but about your accomplishments.
