Workplace Recognition and Incentive Programs

Capturing Intellectual and Emotional Commitment of Employees

Posted on March 17, 2011 by Motivo Staff in Uncategorized

A new study on the future of incentives and recognition by the Incentive Research Foundation (IRF) underscored the need to capture the intellectual and emotional commitment of employees. It further identified that a key component to accomplishing this is through personalized incentives based on personal performance, skill mastery and innovation. The study found that today’s more highly educated workforce responds better to more non-cash incentives that have been individualized and that celebrate their innovation, creativity and those activities that promote a workplace focused on excellence.

“While salary remains the primary pact between employer and employee, this study underscores that personalization of rewards is key to individual effort and motivation,” said Jeff Broudy, chairman of the IRF board of trustees. “Customized non-cash incentive programs based on job code, skills and previous performance are highly effective in helping a company meet specific goals and objectives.”

Today, more than ever, proper design of recognition and incentive programs is critical to their success. If you want to drive business outcomes and avoid program problems you must consider the complexities of motivating today’s savvy employee. Building an effective rewards strategy takes an understanding of what drives the individual and how to align those drives with the organizational goals and objectives.

“The study found that not all people are equally motivated by extrinsic factors,” said Van Dyke. “Put another way, money is not all employees seek. As work force composition shifts to more knowledge workers, we find rewards that celebrate the mastery of a skill and the personal innovations exhibited along the way are very effective.”

Compensation and recognition are not synonymous. To be effective rewards must be distinguished from compensation. Cash has no separability as an award. People mentally segregate some sources and uses of funds, and aggregate others. A type of mental accounting process occurs. For example, most people mentally separate investment income and home (real estate) appreciation from salary; however, because salary and a cash bonus are both earned as part of the job, they are likely to be mentally combined with the rest of the participant’s employment income. Cash bonuses lack separability, because they go into a base salary mental account. Thus, the value of the cash bonus as an award for performance “above and beyond” does not stand out anymore. Non-cash incentives are usually consumed less frequently; they are separated into smaller, more specific mental accounts and not aggregated with other compensation. Therefore, create a situation where individuals will separate the award from compensation. This makes the award unique and the performance “stand out”.