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Match Employee Awards to Specific Organizational Objectives for Optimal Success

Published by: The Forum for People Performance Management and Measurement

Tactical Tips from Awards Selection: Insights From Managers

The Forum for People Performance Management and Measurement
A Research Unit Affiliated with the Medill Integrated Marketing Communications Graduate Program at Northwestern University

Overview

Results from the study Awards Selection: Insights from Managers, conducted by the Forum for People Performance Management and Measurement, sheds light on the efficacy of 12 distinct motivational tactics used by HR and marketing managers across many industries to achieve 10 specific organizational objectives. The Forum is generating a better understanding of how organizations can and should implement award/motivational programs and the extent to which these programs can achieve a broad range of organizational objectives. In the comprehensive Awards Selection study, it was found that both non-cash and cash awards are widely used to motivate employees. Overall, managers expressed a preference for non-cash reward and recognition programs with “employee recognition” reported as the leading non-cash tactic. Study respondents reported different levels of effectiveness for cash and non-cash awards depending on the specific business situations they were facing. Furthermore, a recipient’s job function, an organization’s size and culture, and whether objectives are short- or long-term are among the variables that affect the outcome of motivational tactics, indicating a strong need for resolute managerial attention to their application to insure optimal results.

This white paper provides a benchmark to determine how your company fares when compared to others in the area of employee rewards. It explores:

  1. which types of motivational tactics are used most often;
  2. organizational areas in which non-cash and cash tactics are most effective;
  3. how companies measure the success of reward/recognition programs;
  4. best tactics for achieving specific organizational objectives.

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Methodology

The study was conducted using a survey approach with 235 self-identified managers who reported being “users of reward and recognition services.” Respondents were queried at four national industry events: 1) The 2005 National Association of Employee Recognition Conference; 2) The 2005 Motivation Show; 3) The Integrated Marketing Summit 2005; and 4) the 2005 Fall Promo Expo. These conferences are attended by individuals who have experience across a wide range of cash and non-cash reward and recognition programs. Furthermore, a large percentage of attendees at the Promo Expo and Integrated Marketing Summit are involved in marketing and sales. The 22-question survey was titled Cash and Non-Cash Employee Motivation Programs and respondents were told: “The primary goal of this survey is to assess the value of cash and non-cash reward/recognition programs for motivating employees. Please think in terms of what works for motivating your own employees and not those types of programs targeted toward consumers.”

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Most Used Reward/Recognition Tactics to Motivate Employees

Managers report employee recognition as the most used motivational tactic—it works for most situations within most corporate cultures. As the chart below indicates, employee recognition is the most prevalent motivational tactic, with gift certificates the second most popular. Special events, the third most cited tactic, encompasses organized recognition programs such as award ceremonies, group parties/outings, and any of a variety of special activities to reward employees for their efforts. Clearly and comfortingly, although somewhat unexpected, face-to-face contact is a strong force in bringing about changes in employee behavior.

Motivational Tactics Used

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Cash or Non-Cash? Survey Concludes Non-Cash for Most Objectives

Managers prefer non-cash motivation solutions to achieve most business objectives. Non-cash programs are seen as being considerably more effective for activities designed to positively impact internal operations and those designed to improve customer relations. Non-cash programs are viewed as more effective for 9 of the 10 organizational objectives studied including reinforcing organizational values/culture; creating positive internal communications/buzz; improving teamwork; increasing customer satisfaction; motivating specific behaviors/tasks; increasing retention/loyalty; improving product quality; increasing profitability/ROI; and improving customer acquisition/referrals. When it comes to motivating employees to increase sales, cash/variable pay works best.

Superiority of Cash vs. Non-Cash for Different Organizational Objectives
Organizational Objective
Cash Superior
Cash Better
Equal
Non-Cash Better
Non-Cash Superior
Mean Score
Reinforcing Organizational Values/Culture
2.2
7.9
29.8
36.4
23.7
3.71
Creating Positive Internal Communications/Buzz
5.2
13.0
27.0
26.5
28.3
3.60
Improving Teamwork
1.8
13.7
30.0
33.0
21.6
3.59
Increasing Customer Satisfaction
2.6
14.8
37.1
27.5
17.9
3.43
Motivating Specific Behaviors/Tasks
7.4
17.3
24.7
29.9
20.8
3.39
Increasing Retention/Loyalty
7.5
17.1
27.2
32.9
15.4
3.32
Improving Product Quality
2.7
21.2
42.0
23.0
11.1
3.19
Increasing Profitability/ROI
3.7
20.1
47.0
24.2
5.0
3.07
Improving Customer Acquisition/Referral
7.7
25.0
42.3
15.9
9.1
2.94
Increasing Sales
16.2
34.7
31.1
11.3
6.8
2.58

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Measuring the Success of Reward/Recognition Programs

How do companies gauge the success of their employee reward/recognition programs? It is clear that managers use a variety of tools, with employee surveys the most frequently used measurement technique. While it is difficult to measure a direct correlation between reward/recognition programs and profits, ROI was selected by almost 31% of respondents—definitely a step in the right direction.

Measurement Tools

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Best Tactics for Specific Objectives

One of the most useful, actionable findings from the study was the identification of which tactics are best for specific organizational goals. The 12 reward categories were condensed into five umbrella categories as noted below. The numbers provide a guideline for managers to choose the best motivational tactic for their specific challenge.

Best Tactic for Achieving Specific Objectives
*Top Two For Each Category Are Bolded
 
Objective
Cash/
Variable Pay
Travel
Merchandise/ Gift Certificates
Recognition Communications Events
Benefit Packages
Positive Internal Communications/Buzz
11.8
6.1
13.6
64.0
4.4
Reinforcing Organizational Values/Culture
10.0
3.2
16.3
60.6
10.0
Improving Teamwork
9.6
7.0
21.1
57.5
4.8
Increasing Customer Satisfaction
19.7
3.1
24.2
50.2
2.7
Motivating Specific Behaviors/Tasks
27.5
2.6
21.0
45.4
3.5
Improving Product Quality
28.7
4.2
22.2
39.4
5.6
Increasing Profitability/ROI
31.5
7.0
17.4
39.0
5.2
Improving Customer Acquisition/Referral
26.9
4.2
31.1
36.3
1.4
Increasing Retention/Loyalty
22.9
3.6
14.8
34.5
24.2
Increasing Sales
53.7
13.8
11.5
16.5
4.6

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Conclusion

Human beings are programmed to seek approval from their very first days of life—for example, the coos of delight babies can elicit when they first smile are some of their first rewards. The need for a pat on the back, that word or smile of acceptance from our friends, teachers or parents is very important to each one of us, because it tells us that what we have done is right and worthy of notice. The need for approval is very powerful within each one of us. It is such a fundamental need, in fact, it is surprising the business world has not become more adept at channeling it to achieve more successful solutions. And while you might intuit that cash must be the most powerful motivator to drive behavior, if you really dig down it makes perfect sense that recognition could have more sway. After all, recognition is the “grown-up” form of approval. Yes, money drives business but the value of rewards and recognition in the workplace cannot be overstated. The Awards Selection study brings us one step closer to understanding the power of recognition. Recognition and other non-cash awards tend to be better, the study showed, for less tangible, morale-improving outcomes such as creating positive internal “buzz” and improving teamwork. On the other hand, cash tends to work best for short-term, tangible results like increasing sales. Companies are beginning to truly comprehend that organizational objectives can benefit from rewards and recognition, and that different employee behaviors are affected by different targeted award tactics. Broad, generalized programs, while still being used, appear to be giving way to a more refined approach that reflects specific goals managers and organizations hope to achieve. So, for example, if your group or entire business has a snowballing morale problem, there might be great value in designing and implementing an awards program centered on specific events that reinforce and organization’s culture and values rather than giving the aggrieved individuals a spot bonus or extra day off—both of which will likely be forgotten in the blink of an eye.

Awards Selection: Preliminary Insights From Managers was prepared by Dr. Jimmy Peltier, University of Wisconsin-Whitewater, Dr. Don Schultz, Northwestern University, and Dr. Martin Block, Northwestern University. The Forum for People Performance Management and Measurement is a research unit affiliated with the Medill Integrated Marketing Communications (IMC) graduate program at Northwestern University. It is funded by associations and corporations interested in the issue of People Performance Management and Measurement. . A central objective of the Forum is to develop and disseminate knowledge about communications, engagement and management so that businesses can achieve their objectives through better designed and managed people-based initiatives both inside and outside an organization.

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