One-off incentive awards can have mixed results for overall staff motivation, says Jennifer Paterson
Many reward budgets have been cut during the economic downturn, so employers have had to be creative in finding ways to show key staff they are appreciated. With pay freezes in place and a ban on bonuses, some organisations have opted to give key workers one-off incentive awards in an effort to keep them motivated.
In many cases, these are handed out behind closed doors. Such awards can include retail and experience vouchers, gifts such as a bottle of champagne or even share awards.
Last year, benefits provider Grass Roots Group introduced a special award for the member of its staff deemed to consistently go the extra mile, after hearing about similar schemes from clients. Its ‘envy experience’ award was presented at the winner’s departmental team meeting in front of colleagues.
This type of public presentation can be valuable for motivating employees. Francis Goss, head of commercial operations - reward services at Grass Roots, says: “It is important staff understand why someone has been given an award, and all, bar the cynics, will respond well to the company’s efforts to create recognition for certain individuals, especially in tough times.”
John Sylvester, executive director of P&MM Motivation, adds: “The fact that an employee’s peer group and manager are aware of the award is generally more motivating than the value of the reward itself.”
However, handing out awards behind closed doors can harm staff motivation. Cary Cooper, professor of organisational psychology and health at Lancaster University Management School, explains: “Being secretive could cause problems if others hear about it and feel their work has not been valued. This is a major problem, particularly if they feel the recipient is undeserving.”
Secret rewards lead to demotivation
For ad-hoc awards to be truly effective, they should be clearly communicated as achievable by all staff. Steve Baker, director of sales and marketing at Projectlink Motivation, says: “To keep the issue of rewards a secret is likely to lead to the demotivation of staff who have not been rewarded.”
Duncan Brown, director of HR business development at the Institute for Employment Studies, adds: “How can someone be recognised fully if nobody else knows about it?”
But there are some situations where a secretive reward is appropriate, says Anna Marie Detert, head of human capital at Buck Consultants. For example, an organisation could offer a disgruntled employee the opportunity to work abroad for a short period.
“The employer is not going to tell other staff about this because it is specific to that employee’s situation,” she explains. “I think it is appropriate to be secretive about it, but this is more a way to engage and retain high potential and talent.”
Detert says that if other staff found out about such an offer, it would be unlikely to cause a stir. “It is sending a signal that the employee is highly valued and that is the message [employers] want to send.”
Colin Hodgson, sales director of capital incentives and motivation at Accor Services, adds: “The challenge is, the competition and the rules associated with it have to be fair.”
Awards can be viewed negatively
Employers should also take care to ensure one-off awards do not demotivate winning staff if they cannot be sure they will get the same reward again for the same performance. If awards come to be viewed negatively, this could taint their perceived value.
“What drives people is feeling valued, being treated with respect, given autonomy and being involved in significant decision-making,” says Lancaster University’s Cooper. “Sometimes awards reflect some of these, but often they do not.”
Perhaps the fairest way to offer one-off awards is to ensure the rules are clear and consistent. Baker says: “Providing all staff are given the resources and training to improve performance, and a strategy is employed that rewards all who achieve the required performance, there is nothing wrong with top performers being rewarded more than others.”
Rewarding high performers is a way of calibrating the performance of the rest of the team, says Detert. “When there are high potentials on the team, people do not actually mind if that high potential is rewarded more because they recognise they are actually performing better than everyone else.”
However, if one-off awards are made to select employees towards the beginning of the financial year, employers must consider how to treat this group if pay rises and bonuses are reinstated at a later date. Baker says: “Rewards should always be kept separate from pay rises and bonuses”.
There is also a chance one-off awards will disrupt the reward package if an employer holds back an annual bonus because of such an award. “That is the problem with short-term incentives,” says Detert. “An employer is not going to over-reward people.”
Case study: All aboard for Swissport award
Swissport Cargo Services has seen a rise in productivity since handing out a one-off incentive to each of its 450 UK employees.
After a year of pay freezes and a decline in overtime hours, staff were given £100 retail vouchers. Danica Barton, HR adviser, says: “Feedback has been positive and it even helped in this year’s pay talks because they see we provide stuff where we can.”
The award was initially communicated via consultation with the union. Vouchers were then sent out to staff with a letter explaining what they were for. But despite its popularity and contribution to staff productivity, the reward is likely to remain a one-off. Barton adds: “We would consider it if we were in a position not to offer a pay rise again.”
The incentive was given to all employees because Swissport Cargo considers itself an open company. Barton explains: “These things always come back to haunt you. People always find out and it is a big demotivator, so we do not have one-off bonuses to individuals that are kept quiet.”
Case study: Segro builds up individuals
Commercial property investment and development company Segro spontaneously hands out Red Letter Day experience vouchers worth £250 to individual employees to recognise good work and thank them for a job well done.
But the incentives are not one-offs, says Mark Pearce, the company’s UK HR director. “There is no limit to the number of times an employee can receive a recognition reward.”
Segro introduced the awards five years ago after an employee engagement survey revealed that 69% of its 300 employees felt that their contributions were not recognised.
“This is in addition to the normal bonuses and salary reviews,” says Pearce. “It is very much about the manager acknowledging and recognising the performance of the individual and making sure they feel valued.”
The vouchers are not kept secret, but are not presented in any formal way. “Our approach is very much discretionary,” says Pearce. “We have tried to avoid coming up with lengthy guidelines and policy. Instead, the focus has been on encouraging line managers to recognise exceptional performance.”