Vol 49, No 3
Responsibility, respect, relationships, recognition and rewards work well together to motivate workers.
Typically sometime during the first quarter—after considering prior-year earnings and employee impact on business performance—many companies announce pay adjustments, including bonuses and contributions to investment savings plans. It’s a time when anxieties build for all parties. Managers are usually pressed to complete performance appraisals, while employees prepare psychologically for the much-dreaded performance reviews.
But, no matter when reward time rolls around, unless the “goodies” are part of a well-designed total recognition and reward strategy, much of the value of the investment will be lost. In reality, the review-and-reward ritual—whenever it occurs—is one that is largely overrated and oftentimes detrimental to morale in the short term and to business performance in the long term.
Let’s Talk ‘Turkey’
Compensation pundits frequently suggest that the “right” reward system will drive performance by motivating workers to achieve new levels of performance, or, they posit, it will “attract, retain and motivate” employees to do their best and to stay with the organization until the inevitable time of separation. To be certain, managers should reward their people, but rewards are not the silver bullet or miracle drug that drives organizational behavior. Reward is only one of the five R’s, in addition to responsibility, respect, relationships and recognition, that together constitute an effective strategy for motivating.
To illustrate: One manager decided to give Thanksgiving turkeys to his employees as “thanks” for their hard work and as incentive to keep up the good work through the end of the year. People were surprised and genuinely appreciative. So he repeated the gesture the following year, only to find some workers were unhappy because the birds were no larger than before.
By the time year three rolled around, turkeys had become a morale problem. Eventually, the manager replaced the program with bonuses. Predictably, bonuses, like turkeys, became expected payment, and their impact on performance was imperceptible. Small wonder any number of large corporations have abandoned holiday bonus plans, turning instead to performance-based reward strategies.
In a world of employment at will and continuous downsizing, it should be no surprise that workers have taken on the mantel of free agent, focusing on their careers, skill sets and marketability both inside and outside the walls of traditional organizations. That said then, what motivates this modern-day worker or drives performance? The good news and the bad news is that it’s not all about money. It’s about “new age currency.”
Few organizations typically design jobs with the employee in mind. In fact, job descriptions usually look like extensive to-do lists with a catch-all phrase at the end, such as “...and other tasks as directed by management.” The underlying message is, “Do whatever I tell you.” Not a very inspiring message for today’s workforce. And, certainly not one that integrates well with an effective recognition and reward strategy. Designing jobs should be more about profiling work processes and desired outcomes, with employees involved as co-designers.
Let’s face it. Work is a creative process, an expression of self. People generally want to feel that what they do adds value—whether providing a service or producing some tangible product. When work processes are designed collaboratively, responsibility is automatically built into the process. That’s what empowerment is really all about, i.e., having accountability and responsibility.
Henry Ford was known for his straightforward approach to partnering with employees in designing jobs. He reportedly would take a difficult production job to the “laziest” (substitute “most resourceful”) worker on the line to see how many shortcuts would be taken. To be sure, workers involved in this way felt valued and took full ownership for the production process once it hit their station.
So, what can managers do? Work with your HR department to see that jobs are properly profiled for your people and stated outcomes are relevant to the business. Done well, the profile should serve as a template for planning and managing performance, as well as a report card for review purposes. On the job, talk to your employees regularly about ways to increase alignment between what they do and where the company is headed. Eliminate tasks and activities that are unessential to your primary mission and keep looking for ways to add value. After all, that’s why you’re the manager.
Respect is one of the most critical dimensions of organizational life. Jeffrey Pfeffer, Ph.D., a professor at the Stanford Graduate School of Business, maintains that organizations with “pro-people practices” tend to perform up to 40 percent better over time. Such organizations include Southwest Airlines, Men’s Wearhouse and Toyota Motor Manufacturing. “Respectful” organizations build cultures of continuous learning, teamwork and concern for all key stakeholders—employees, customers, communities, suppliers and investors.
Performance review systems for respectful organizations are aimed at building confidence and competence, unlike other systems that are challenged to hold down increases and root out some percentage of the workforce. Information—the lifeblood of every knowledgeable organization—flows freely throughout the system, as people are valued and respected for the intellectual capital they contribute. And, prudent risk-taking is encouraged in the interest of building excellent organizations. Further, employees in such constructive organizations are respected and managed holistically. Feelings, ideas and actions are valued and attended to. People are appreciated not only for what they know and do but also for the emotional intelligence they bring to the organization.
Even if your organization isn’t into “pro-people” practices, you can be with the people you lead. For example, when preparing performance reviews, take time to educate and communicate as well as evaluate. Identify ways to succeed. Use language that is constructive and prescriptive. In managing your area, engage your people in developing “operating principles” or a “vision” expressing how everyone will work with one another and with employees throughout the system, how customers are to be served, and how communications are to flow.
Build on the concept of teamwork—respecting differences, solving problems collaboratively, supporting one another and performing as a team. Avoid negative energy, such as gossiping, harassing, triangulating relationships, etc. Engage instead in positive energy by setting norms and performing beyond expectations. You may be part of a larger organization that has its “major league” rules, but how you manage your team is largely up to you. After all, you are the coach.
Think back to your childhood school days and some of the styles of your teachers. Remember the strict disciplinarian who taught by fear and intimidation? Not much focus on the “joy of learning” with that teacher. Then there was the “feel good” teacher who pasted smiley faces and stars on your papers to encourage you to do your best and praise you when you did. According to Alfie Kohn, author of Punished by Rewards (Houghton Mifflin Co., 1999), that strategy distracts from the joy of both learning and working.
On the other hand, the constructive strategy of an effective teacher focuses all attention on the process of discovery and personal development. Students are taught to think for themselves and to strive continuously for rewards of enlightenment and mastery. Similarly, the strategy of the effective leader is one of facilitation and education. Doing great work builds competence and self-esteem, wins customers and enhances organizational reputation as a whole.
Because motivation is an inside job—something individuals choose to unleash under the right circumstances—the effective leader must focus on creating environments that motivate workers. Coaching, teaching, supporting and guiding—all are strategies that have the best chance of producing the right outcomes.
And above all, being authentic, honest and ethical is absolutely critical. Indeed, the No. 1 attribute of leaders most valued by employees is honesty. Without trust employees will not take risk, get motivated or run the gauntlet.
The quality of relationships with co-employees is equally important. Being part of a team, working with great people, and having fun—that spice of creativity—enhances products and services. Many people who love their jobs choose to stay with managers and teams they’ve grown to know and respect—even though they might earn more someplace else.
It’s not so much about getting credit as it is about being appreciated. Too many organizations waste valuable time, energy and resources on gestures of questionable value, such as parking spaces for employees of the month, meals for two at an upscale restaurant and so on.
Sure, everyone is doing it. It may even be expected. But what about recognition that comes in the form of assignments to join a special project or to lead a study team or to scope out a new system for the department or company? If the response in your organization to such invitations is, “Thanks, I’d love to,” then you’re building the right kind of organization. If, on the other hand, it’s “Pay me, and I’ll do it,” then your department or company is far from reaching its full potential.
Too much effort and money are spent in corporate America on building systems of extrinsic reward (prizes, incentives contests) while not enough goes into creating intrinsic rewards (genuine opportunities to contribute, become more knowledgeable and develop professionally). Of course, recognition also comes in the form of promotions and public accolades. In organizations where the emphasis is on achieving as a team, internal politics and aggressive competition are appropriately low, while crediting others with a job well done is the standard. For any number of employees, the psychic income of being openly and regularly appreciated goes a long way toward enhancing worker retention and commitment.
While rewards are important, they are fifth in importance with respect to the five R’s. If people are paid fairly and competitively and they are informed as to how the system works, pay is a “satisfier,” to quote Frederick Herzberg, but not a motivator. To provide optimum return on investment, however, rewards must be an integral part of an overall recognition and reward strategy—linking business goals and objectives with the other four R’s.
Beginning with job profiles, rewards must be aligned to compensable factors centering on responsibility, for example, “satisfying customers,” “building quality products” and, as an example for managers, “increasing workforce competence.” Outcomes such as these can be quantified. Goals can be set that are mutually agreed on by managers and employees. Job profiling also provides tools for hiring, training and organization development, as your HR professional knows. You can be a resource for HR by identifying the right goals, attributes and competencies for your people. When it comes to the work and what it takes to be successful, you’re the expert.
Other reward elements, such as employee stock ownership plans, 401(k)s and the like, should be clearly linked to company performance. You can help HR by providing important operational and financial objectives for your area. Moreover, such dimensions as respect can be measured and compensable in terms of building self-esteem, enhancing company reputation, exemplifying company values, etc. Effective relationships can be equated to teamwork, strategic leadership (for managers) and customer relations. And both intrinsic and extrinsic rewards can then be awarded and allocated for recognition purposes.
Finally, when it comes to planning, managing and evaluating performance for your people, you can ensure their objectives are relevant and that organizational members receive periodic updates on how their efforts are making a difference.
In an age where loyalty is dead and at-will employment reigns, free agent workers are looking for currency that involves more than just pay. Indeed, they are building their own enterprises—I Am Inc.—and developing skill sets to compete in an ever-changing world. To be leading edge, effective managers must be willing to exchange the old currency for new age currency, one minted in the five denominations of responsibility, respect, relationships, recognition and rewards. And, while it may not look like greenbacks, pesos or euros, rest assured you can bank on the results.
R. Brayton Bowen is the author of Recognizing and Rewarding Employees (McGraw-Hill, 2000) and leads The Howland Group, a strategy consulting and change management firm based in Louisville, Ky. A best practice editor and contributing author to BUSINESS: The Ultimate Resource (Bloomsbury Publishing and Perseus Books, 2002), he currently serves as executive advisor for the McKendree College Center for Business Excellence. He can be reached at Brayton@howlandgroup.com.