With the dawn of the New Year approaching quickly, it is common for most people to reflect on the events of the past year and look ahead to improving the New Year. For many, this means deciding on what personal improvement to commit to, but for managers, this time of year is also about resolving to make the workplace a better place to be next year. One easy and cost effective resolution is to implement arecognition or incentive program.
Do you remember going grocery shopping with your parents when you were a small child? It seems like quite the task for parents to manage, yet they do and have done it for generations using their own ingenuity. When I was young, my mother would promise that if I was well behaved then I could pick out a pastry when we finished. Not only did I get the Danish of my choice, but in order to minimize the time it took me to get my reward, I would take my mother’s coupons and bring her the items that she needed as if it were a fun scavenger hunt instead of a weekly chore. This may seem like such a simple incentive for a child, but it truly demonstrates the impact rewards can have on the business world as well.
Rewards can be integrated into any business model to achieve a plethora of goals. A reward program should be aligned to the organization’s overall business strategy. In other words, if a company fills a niche in the market then it should reward for innovative ideas and outstanding effort. A company that is in a highly competitive market may want the reward program to help stabilize employee retention and reward ideas that lead to overall cost reduction.
In general, there are two types of programs that businesses use-recognition and incentive programs. Recognition awards are used as reinforcement, in other words, managers will recognize an individual in front of a group to reinforce model behavior. On the other hand, incentive rewards are used as tools for change, that is, a manager would set desired goals for individuals and when they are reached the participant is rewarded.
Recognition programs have various objectives and goals. These types of programs will award recipients for their years of service, recognize outstanding effort, recognize valid referrals, recognize continued loyalty and encourage good teamwork. This in turn helps businesses with a recognition program to increase workforce motivation and morale, improve customer and employee retention, improve customer service ratings, increase worker productivity and reduce employee absenteeism, among many others.
One of my clients in the hospital industry, came to us because they were challenged with recruitment and retention issues. After implementing a recognition program their nursing staff turnover rate dropped to 4% compared with the industry average of 15%. The company CEO was quoted in a 2004 interview with HR magazine as saying that he credited the low turnover “to the organization’s commitment to motivating and recognizing its 1400 employees on a constant basis.” Please click here to read the article.
Incentive programs will generally focus on several areas of improvement and take place on an ongoing basis. The target audience will generally participate in the incentive program as opposed to just being a recipient. In addition to the same benefits a recognition program can have, incentive programs can also help to cultivate a safety culture, reward employees for completing optional training, increase sales and company referrals and help to correct or change problematic behavior.
A client of mine in the mining industry established a safety incentive program two years ago in an effort to lower its costs attributed to on-the-job accidents. They found that each accident cost around $50,000 due to lost time. The incentive program included safety posters that gave pointers on safe work behavior and were posted in employee locker rooms and break rooms. In addition, employees were sent email notifications when they earned points so that they could track their results online. As a result of the program over two years, lost time accidents were reduced by 47% over the previous years. The estimated cost reduction was $5 million for lost time accidents alone. Overall, the company saw a decrease in absenteeism and a favorable increase in productivity and profitability.
There is a reason that parents continue to reward children in grocery stores; it works. Rewards programs can help to motivate ordinary people to consistently work harder. In regards to the business world, recognition and incentive programs can be a key competitive advantage to one company’s success over a competitor. Setting up a rewards program is a New Year’s resolution that will definitely help to improve your workplace in 2008.
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