specialreport: rewards & incentives 45.6% 200.6%€¦ · photos courtesy mgm mirage las vegas...
TRANSCRIPT
Employees at Dow Chemical didn’t lack op-portunities for recognition. For years, corporateleaders at the multinational corporation, whichcounts some 45,000 employees in 62 countries,had managed hundreds of programs highlightingexceptional work.
Still, satisfaction proved anemic, and the scat-tershot approach made usage and other resultsdifficult to track, says Sylvia Kronwald, programmanager for Dow’s global recognition program.In 2005, Dow officials wiped the slate clean, hir-ing international recognition provider Globoforceto provide an approach that was centrally con-trolled but could be locally tailored to the inter-ests of employees from Italy to Indonesia.
Since then, nominations increased from morethan 107,000 in 2005 to 133,000-plus in 2006,Kronwald says. More than 75 percent of Dowemployees have been nominated; 95 percent ofthem have received awards ranging from e-cardsto gift certificates. Kronwald declined to detailDow’s investment, but she believes the money iswell spent. “If a colleague, someone the employ-ee works with, recognizes them officially, thathelps with motivation and teamwork,” she says.
As the recognition industry matures into itssecond decade, multinational companies aremoving away from regional programs and ex-panding to the global stage, recognition profes-sionals say. Motivating across time zones, though,
Motivating the worldIn today’s far-flung economy, companies need to manage recognition globally while tailoring rewards for local markets.
Awards that are in line with business goals are the most likely to ensure a substantial payoff, but organizations expect-
ing immediate results may be disappointed. Stories by Charlotte Huff • Infographic by Gonzalo Hernández
Source: Russell Investment Group analysis, 2006
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45.6% Cumulative stockreturn from 1998 to2005 for S&P 500companies.
INC
EN
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ES
SN
AP
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OT
200.6% Cumulative stock return from1998 to 2005 for companieslisted in Fortune’s “Best 100Companies to Work For.”
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Source: Kenexa, “Employee Positiveness Perceptions in Multinational Organizations,” February 2007
CROSS-CULTURAL JOB PERCEPTIONSMultinational corporations may present a seamless face to the public. But a Kenexa Research Instituteanalysis published in February reveals that employee perceptions of the internal job experience canvary substantially among different nationalities. The analysis, based on more than 29 million survey re-sponses from U.S. and European multinationals, revealed the breakdown shown above in employeesreporting a positive perception of their internal job experience.
Most positive
Least positive
UNITEDSTATES - 67%
WORLDWIDEAVERAGE - 64%
INDONESIA - 77%PERU - 74%
COLOMBIA - 74%
COSTA RICA - 73%PHILIPPINES - 72%
JAPAN - 45%
POLAND - 50%
FINLAND - 53%
FRANCE - 54%HUNGARY - 55%
Sylvia Kronwald,Dow Chemical
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still requires tight adherence to core recognition principalsto make such investments worthwhile, they say.
Rewards should be closely aligned with the company’sstrategic goals and return on investment should be ana-lyzed. Additionally, gift cards or other rewards should not beconsidered a substitute for less tangible rewards, such asmanagerial support and interaction.
In short, companies must learn to manage recognitionglobally, but customize such efforts locally, says Christi Gib-
son, executive directorof Recognition Profes-sionals International,located near Chicago.“What works in an-other country may notwork here,” she says.“And what works heremay not work there.”The nonprofit profes-sional group, founded
in 1998 as the National Association for Employee Recogni-tion, changed its name this year to reflect that 10 percentof its 850-plus membership is internationally based.
If done well, effective recognition can develop an interna-tional cadre of engaged employees who help drive the com-pany’s long-term goals, says Bruce Bolger, executive directorof the Forum for People Performance Management andMeasurement, which is affiliated with Northwestern Univer-sity’s Medill School of Journalism. The potential payoff can
be substantial, says Bolger, pointing to a 2006 analysis by theRussell Investment Group, which compared stock perform-ance for companies listed in Fortune’s “Best 100 Companiesto Work For” with the S&P 500. Its findings: From 1998 to2005, the cumulative returns were 200.6 percent for the“Best 100” list, compared with 45.6 percent for the S&P.
But cultivating engaged employees doesn’t happen over-night, Bolger cautions. “Corporations today tend to preferinitiatives that can get them a result in a year or less,” hesays. “The major obstacle related to the implementationof people performance strategies is that it’s a longer-terminvestment.”
PREVENTING JOB HOPPING
Today’s employees may be less inclined to put down cor-porate roots than even a few years ago, if the latest “World atWork” survey by staffing company Randstad is any indication.
In 2003, just one-third of employees were scouting outjob alternatives. By early 2007, more than half—54 per-cent—were poised to go elsewhere, according to the surveyresults, which involved 3,139 employers and employees.
Companies may not be taking sufficient steps to retainemployees. Genia Spencer, Randstad USA’s managing di-rector of operations and human resources, says more em-ployers—60 percent versus 55 percent—reported searchingfor new talent to fill anticipated vacancies than those whowere grooming people from within.
“Are we creating our own self-fulfilling prophecy?” Spen-cer asks. “We expect for [employees] to leave, so we put our
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Corporations tend to opt for
initiatives that can produce
results in a year or less.
“The major obstacle related
to the implementation
of people performance
strategies is that it’s a
longer-term investment.”
––BBRRUUCCEE BBOOLLGGEERR, Forum for People
Performance Management and Measurement
Companies must look at
managing recognition from
a global perspective, but
customize such efforts
locally. “What works in
another country may not
work here. And what works
here may not work there.”
––CCHHRRIISSTTII GGIIBBSSOONN,
Recognition Professionals International
More employers search
for new talent, than groom
people from within. “We
expect for [employees]
to leave, so we put our
resources into planning for
them to leave, versus finding
reasons for people to stay.”
––GGEENNIIAA SSPPEENNCCEERR,
Randstad USA
“That personal touch—the
personal thank-you, whether
through a phone call or a quick
e-mail—is so important.”
––SSYYLLVVIIAA KKRROONNWWAALLDD, Dow Chemical
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REWARDS AND ROI:A ‘FUZZY SCIENCE’?AT MGM GRAND, the customers lining rows of slot machines aren’t
the only ones who can anticipate a windfall. So can the 9,500 employ-
ees who staff the sprawling casino on the Las Vegas Strip.
MGM officials offer an array of recognition programs, some of
which can be delivered spontaneously to encourage employees to
provide top-tier customer service, says Bette Gaines-Snyder, director
of slot and employee events at MGM.
Las Vegas doesn’t lack for deluxe rooms and flashy shows to com-
pete with MGM’s own plush offerings, she says. And so, “we tell [em-
ployees] that they are the reason that customers come back to MGM
Grand,” she says. “We say, ‘You are the brand—you
are the ones that can make the difference.’ ”
To date, recognition has resulted in some tangible
financial payoffs, according to MGM officials. From
2004 to 2005, slot club enrollments per employee in-
creased from 1,052 to 1,582, according to a white pa-
per they recently submitted to Recognition Profes-
sionals International. Wedding chapel revenue per salesperson
increased 13 percent; revenue per employee in a fine dining restau-
rant increased 34 percent.
Christi Gibson, RPI’s executive director, cites MGM results as gold-
plated evidence that recognition can drive results, if the right behav-
iors are encouraged. But not everyone is equally convinced that
cause-and-effect relationship can be drawn with any level of certainty.
Even recognition enthusiasts insist that other factors may influence
results, whether it’s employee retention or heftier sales.
Employee retention, for example, can be shaped by other forces,
such as the overall economy and managerial competence, says Danny
Hackett, program manager for the Living FAST Recognition Program
at Reuters. From January 2005 to December 2006, the media compa-
ny invested about $2.6 million in employee rewards to help encour-
age specific employee behaviors, including service and a team focus.
Those dollars, Hackett believes, boosted employee performance.
But he’s reluctant to isolate a specific return on investment. Measur-
ing ROI on recognition programs, he says, is “at best a fuzzy science.”
Gibson counters that such doubts will fade as corporate leaders be-
come more adroit at identifying
the precise behaviors they desire.
“You have to recognize the correct
items,” she says. “You can’t just
throw money or gifts at people.”
MGM Grand, which earlier this
year received RPI’s “best overall”
award for best-practice recipients,
gives thousands of awards each
year, Gaines-Snyder says. Each quarter, about 1,000 employees re-
ceive distinction—called Maximum Vegas Performance Commenda-
tions—for fulfilling six core values and 16 service standards, such as
timely service and creating a memorable first impression, she says.
Award recipients are entered into a drawing; dinners and show pack-
ages are among the prizes.
Another award, the Gold Key, is delivered by a convention organizer
who can recognize any employee on the spot (with a key) for exempla-
ry service. Additional recognition occurs in the daily pre-shift meet-
ings, when employees gather to be briefed on the day’s activities.
Officials at the Scooter Store, in New Braunfels, Texas, take a similar
customized approach when they launch quarterly challenges. Each one
promotes certain employee behaviors, says Burton De La Garza, events
and celebrations manager. During a first-quarter challenge this year,
the performance of 75 call center employees was tracked and posted
daily based on five specific measures, includ-
ing the number of incoming calls answered,
call availability and generating referrals.
“You have to take this down to the indi-
vidual level; you have to make it tangible to
that individual,” De La Garza says. “What
are the behaviors that will produce more re-
sults? If you’re rewarding and recognizing
the wrong things, what’s the point?”
Officials at the Scooter Store, a privately held company with about
1,100 employees, say the number of potential sales leads increased
substantially during the three-month challenge. But they declined to
release numbers to back that up, calling the information proprietary.
MGM officials have no such qualms. In their white paper submitted
to RPI, they pointed out that the casino’s annual revenue increased
from $714 million in 2003 to more than $1 billion in 2005. Employee
recognition efforts, they wrote, “played a key role.”
—C.H.
Gaines-Snyder
PH
OT
OS
CO
UR
TE
SY
MG
M M
IRA
GE
Las Vegas MGM Grand officials credit the company’semployee recognition program for a 13 percent in-crease in wedding chapel revenue per salesperson, a34 percent increase in revenue per employee at afine dining restaurant, and a marked increase in slotclub enrollments per employee from 2004 to 2005.
“What are the behaviors that will
produce more results? If you’re
rewarding and recognizing the
wrong things, what’s the point?”––BBUURRTTOONN DDEE LLAA GGAARRZZAA, the Scooter Store
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resources into planning for them to leave,versus finding reasons for people to stay.”
Job angst isn’t confined to U.S.-basedemployees. According to analysis by KenexaResearch Institute published this year, pos-itive employee perceptions toward their jobexperience in U.S. and European multina-tionals varied substantially among national-ities. Indonesians were most likely to reporta positive job experience, at 77 percent,compared with 45 percent by Japanese, ac-cording to the institute’s analysis of more
than 29 million survey responses frommultinational companies. The overall aver-age was 64 percent; U.S. employee percep-tions were 67 percent.
In some Asian countries, where skilledemployees were once satisfied with landinga job, the bar is quickly moving higher, saysKurt Hosna, international solutions man-ager for St. Louis-based Maritz Motivation.Employees in bustling tech centers maymove to a nearby building—changing com-panies in the process—every six to 12months for salary differences of 5 percentto 10 percent, he says.
To meet that challenge, corporate lead-ers have been moving to a more globallyconsistent recognition approach to attractand retain talent, Hosna says. In 2006,Maritz unveiled its global rewards product.
“Companies want to treat their work-force as one workforce,” he says. “They sayit’s really key that employees outside theUnited States don’t feel like they have asubstandard program compared to the U.S.program.”
ALIGNING STRATEGYAND REWARDS
Before 2003, Reuters recognized exem-plary work, but the media giant’s approachwasn’t doing much to cement employee loy-alty or effectiveness, says Danny Hackett, aReuters program manager. The programstended to be one-time efforts rather than
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RISK OF CREATING‘SOFT’ EMPLOYEESAFTER COMPLETING A three-month challenge, 75 call center employees at the Scooter
Store took off most of an April afternoon for a Hawaiian-themed celebration featuring
food and an auction.
During the prior weeks, the employees had earned so-called Magnum dollars—named
after department’s manager, who wore a “Magnum, P.I.”-style mustache. That afternoon
they cashed in, “buying” such rewards as T-shirts, front-row parking spaces, massages,
executive chairs and noise-canceling headsets. Nearly everyone walked away with some-
thing, says Burton De La Garza, events and celebrations manager.
“I could buy one big-screen TV and give it to one person,” De La Garza says. “Or I
could give everyone in that organization something tangible that they could have. Our
company believes in giving something to as many people as you can.”
De La Garza echoes those who argue that recognition can never be excessive if tied to
exemplary work. But some recognition professionals and psychologists question if gen-
erational dynamics are pos-
ing new challenges, as
younger employees enter
the workforce after years of
accumulating soccer tro-
phies and extra credit. The
dilemma for managers: how
to recognize those craving
kudos without creating “soft”
employees?
“So many people in busi-
ness are having a difficult
time dealing with the expec-
tations of the younger gen-
eration,” says Jean Twenge,
a psychologist and author of the book Generation Me, based on her own research into
generational differences. Managers speak of younger employees with outsized expecta-
tions, anticipating a management position within a few years, or those who crumble at a
whiff of criticism, she says.
“Companies have to worry rightly about retention because retraining employees is ex-
pensive,” says Twenge, an associate professor of psychology at San Diego State Univer-
sity. “But they can’t spend all their money giving pats on the back. There has to be some
kind of balance here.”
To be effective, managers must learn how to credit exceptional work without devalu-
ing the recognition power they wield, says Ken Siegel, a Los Angeles-based psycholo-
gist and president of the Impact Group, which works with Fortune 500 companies. To
that end, Siegel recommends that managers make sure any rewards aren’t in excess of
the employee’s accomplishment. And recognition shouldn’t become predictable, in ei-
ther timing or approach, because that saps the meaning, he says.
Above all, set clear expectations. At times, that might require “a little tough love,”
says Bob Nelson, author of 1001 Ways to Reward Employees. “When the [employee]
complains about not being recognized, you can have a little discussion over what it
would take to recognize them,” he says.
Siegel and Nelson, though, are skeptical that most employees are showered in praise.
According to a 2006 Maritz poll involving 1,003 adults, only 43 percent agreed that
they were consistently recognized in meaningful ways.
Baby boomer managers might be exposing their own psychological baggage when
they kvetch about the alleged neediness of younger workers, Siegel says.
“It’s almost an envy-based attack,” he says. “It’s the same praise and recognition that
they would have liked to have had heaped on them.”
—C.H.
“[Companies] say it’s really
key that employees outside
the United States don’t feel
like they have a substandard
program compared to the
U.S. program.”––KKUURRTT HHOOSSNNAA,
Maritz Motivation
“[Companies] can’t
spend all their money
giving pats on the
back. There has to be
some kind of balance
here.”––JJEEAANN TTWWEENNGGEE, psychologist
and author of the book Generation Me
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part of a larger strategy or program, he says.Of equal concern, employees perceived
that the initiatives were largely confined tosales, and the same people always seemedto garner kudos, Hackett says. “That was avery negative perception to have.”
Reuters revamped its approach with aneye toward aligning recognition with themultinational company’s business strategy.
The Living FAST Recognition Programwas born. FAST stands for Fast, Account-able, Service and Team-focused—behav-iors the company wanted its 16,000 em-ployees to embody.
“The main focus was to get people invig-orated and believing in the value of ourFAST values,” says Hackett, the manager ofthe program developed by Globoforce.
From January 2005 to December 2006,Reuters invested about $2.6 million inawards. In the process, employees have be-come more focused, Hackett says. “Do peo-ple now know what it means to go aboveand beyond? Absolutely,” he says.
Although specifics differ among prod-ucts, global recognition programs generallyallow corporations to centrally administerthe distribution of employee points orawards, but with a local twist. Typically avariety of languages are available. Cost-of-living differences also can be incorporated.Both Globoforce and Maritz adjust awardsbased on a country’s purchasing power.Otherwise, a $200 award in some parts ofthe world might be enough to launch a newbusiness, says Derek Irvine, vice presidentof global marketing and client strategy atGloboforce.
With such fierce competition, humanresource directors must be savvy shoppers,says Bob Nelson, author of 1001 Ways toReward Employees and president of NelsonMotivation Inc., a San Diego-based man-agement training firm.
Be sure to delve into details, such ashow the data is tracked, to make sure a par-
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30 Workƒorce MANAGEMENT | w w w . w o r k f o r c e . c o m s e p t e m b e r 2 4 , 2 0 0 7
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Ask if the company pays for
rewards as they are compiled
or only once an employee
redeems them. “That one
statement could save you
millions of dollars.”––BBOOBB NNEELLSSOONN,
Nelson Motivation Inc.
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ticular vendor meets the company’s strate-gic needs, Nelson says. Figure out howmuch flexibility and customization is avail-able on the local level. Also, ask if the com-pany pays for rewards as they are compiledor only once an employee redeems them.“That one statement could save you mil-lions of dollars,” he says.
As you define your global recognition ap-proach, don’t fall into the trap of relyingsolely on gift cards or other tangible rewardsto nurture cross-cultural loyalty and com-mitment, Nelson says. Dow’s Kronwaldagrees. Informal daily recognition is crucial,she says. “That personal touch—the person-al thank-you, whether through a phone callor a quick e-mail—is so important.”
ADDRESSINGCULTURAL DIFFERENCES
Complex cultural differences can poten-tially undercut the most well-intentionedrecognition effort, says Spencer of Rand-stad USA. “Different cultures have differ-ent motivators,” she says. In some cultures,respect is the No. 1 driver, she says. “Infact, giving [an employee] a gift card couldbe extremely insulting because it could besaying that you are bribing them to do whatthey already do.”
That’s why local tailoring of rewards—both their selection and presentation—isso crucial, experts say. Team recognitionoften carries more weight in Japan, whilepublic recognition of individuals is preferredin other locations, such as Bangalore, Hack-ett says.
Reward preferences also can differ sig-nificantly, says Globoforce’s Irvine. In India,a big reward might be tickets to a newly re-leased movie. Employees in Great Britain orGermany might prefer a reward related tohome improvement. In France, food- andwine-related treats carry significant appeal.
Regardless of whether companies con-tract out such efforts or oversee them inter-nally, the challenges of motivating cross-culturally are further accelerating thedemands placed on busy recognition pro-
fessionals, Gib-son says.
“I’m hearingmore from differ-ent CEOs that
they have their own [recognition] sectionnow,” she says. “Eventually we’re going tobe seeing vice presidents of recognition.”
In the end, multinational companies aresimply trying to persuade employees to mir-ror the behaviors and values corporate lead-
ers already tout to the outside world, saysBolger, of Northwestern University’s per-formance management forum.
Dow Chemical, he says, provides a greatwindow into how that effort can unfold. In2006, the company unveiled its “HumanElement” marketing campaign, which offi-cials described as emblematic of the com-pany’s commitment to solving human prob-lems around the world.
“You create an expectation now withDow that they are really focused on humanbeings,” Bolger says. “So if a scandal comesout about how they are treating their em-ployees or their customers, they are reallyon the line.” wƒm
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� Workforce.comA CEO’s thoughts on thepower of recognition:workforce.com/power
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