Reaping the reward: Getting business benefits from happier staff

Appropriate recognition and rewards can improve staff morale and generate better business results, argues Chester Elton, co-author of The Carrot Principle. Thomas Hoffman asks him how to do it


What type of recognition works best? Lavish rewards like a weekend at a spa or a simple "thank you" made in a presentation in front of someone's peers?

The answer is both. You can't just have one big ceremony at the end of the year where you recognise a top performer and send them on an all-expenses paid trip with their spouse. That's where companies often fail. Many companies have a big blowout affair once a year, but they don't have anything underneath that. You need to have both. You need to encourage effort, the day to day recognition, the verbal praise, the handwritten thank you note. You need specificity, it needs to be value based, and it needs to be sincere.

When you hit major goals like higher revenue growth or customer satisfaction ratings, then you can have the year-end recognition. If you've saved a company £10m, a simple thank you isn't enough.

Who are the leaders in this area and what innovative steps have they taken to reward employees?

We tend to look for the spectacular. Frankly, where you're going to get your best results are in the blocking and tackling. For instance, one company we worked with, express transport and delivery firm DHL, has trained its managers on how to do day to day recognition, how to write thank you notes. The recognition that works best is recognition that gets back to the basics: rewarding people who get back to the core values of the company, like singling out an employee at a team meeting who has done an exceptional job.

What are the most common mistakes that managers make when it comes to recognising employee achievement?

One of the most common mistakes is that you don't need a plan, that you can just ad hoc it. Another common mistake is that very general praise works: "attaboy" or "great job". Specificity has a great impact. "Tom, thanks for getting that article in on time." It's a big difference from: "Tom, love that wacky tie." Consistency breeds trust.

How should recognition vary from top-performing employees to so-so staff who have occasionally shown glimmers of greatness?

Another key mistake that managers make is that top performers get enough recognition. The fact is that top performers crave recognition. They collect those awards. They cherish them. Sporadic achievers require a lot of day to day coaching, and when their results pop up... then you recognise their results.

Should managers recognise a poor performer?

If you recognise a poor performer, you devalue the recognition of top performers. You encourage and coach the poor performers, and you might write them a note like: "Today was a really good day. Let's try to string three of four of those days together. Here's a pair of movie tickets for you and your husband." You don't pull them up in front of the team and say, "Susan made it to work on time all week. Let's give her the chairman's award."

From the research and interviews you've conducted, do you have a sense of whether there are certain types of recognition awards that tend to stick more with IT professionals as a category of staff? Or do recognition programmes have to be tailored to the individual, regardless of their role?

Recognition has to be very individual. We worked with a lot of IT folks at DHL and being timely with recognition is very important to IT people. In their world, they want to be recognised immediately. Three or four days down the road is a different universe, they've moved on to a different project or set of problems. Immediacy is very important to IT professionals, especially younger workers.

Let's say you're an incoming chief information officer at company that historically hasn't done much to recognise employees’ contributions. If you introduce a recognition programme, won’t it be met with scepticism? How should this be handled?

When you first come in as a leader, you're always met with scepticism. When the CIO rolls out the plan, nothing works more emphatically than when you communicate this effectively. And when you roll it out, make it clear that it's a new initiative and that you will make mistakes with this new programme but that it will be fun. Be consistent in the execution.

If you're the CIO, make sure people see you presenting awards. And make sure you begin presenting awards within a few weeks of announcing the programme. Over time, the scepticism dissipates.

One of the recommendations in your book is to reward an employee by allowing a spouse to come on a business trip at the company's expense and allow them an extra day for sightseeing. Some chief finance officers would cringe at the very thought of this. What kind of returns can such goodwill generate?

If you recognise me in the workplace, that's great. When you engage my family, you're showing that you appreciate the time spent away from my family and the sacrifices they're making for me. Every time I miss a school play or a birthday when I have to go to Beijing, it's a strain on my family. The returns on these types of awards are just amazing.

A few years ago I had to make some presentations in Kuala Lumpur, and my company paid for me to bring my family. I spent eight days with my family in Kuala Lumpur. You can't believe the goodwill that bought me at home.

Let's say you're an IT executive with some staff who work remotely. Should remote workers be treated differently from headquarters employees in terms of rewards and recognition?

No, absolutely not. The way you execute it might be a little different. I would highly recommend that you send something to their home.

How can recognition programmes be used to encourage employees to work towards team-oriented goals? Any examples you can point to?

Just have a team award and specify what this is. At food company Rich Products, a team of eight was sent with their spouses on the corporate jet to go anywhere in the world. They all picked an island off the coast of Portugal to go for a week. That also built some esprit de corps.

What one thing can managers do better in terms of rewarding and recognising individual contributors?

Make it personal. So often managers say they're going to give everybody Starbucks cards or give everybody ice hockey tickets. But they do that because they love ice hockey themselves. Learn what's important to the individual contributor. Make it personal. Like a paid day off that doesn't count towards vacation.

Some people love being in the spotlight. Other people are terrified. Make it personal: get to know them, whether it's by taking them to lunch or conducting a survey. So many people are bad managers not because they want to be but because they lack the training to be good managers.

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