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A New Generation of Employee Rewards and Recognition Solutions Josh Bersin and Stacia Sherman Garr | Page 2
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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.
A New Generation of Employee Rewards and Recognition Solutions Josh Bersin and Stacia Sherman Garr | Page 3
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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.
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.
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.
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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.
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