Neil Conway: Seasonal reward needs careful thought

Conway-Neil-RoyalHolloway-2014

At individual, group and organisational levels, there are good reasons to intensify the use of year-round incentive schemes, such as performance-related pay, merit pay and bonuses, at Christmas, due to increased trade and therefore increased organisational need for labour supply.

Also, employees’ desire for money is heightened at Christmas and the opportunity cost of choosing to work at Christmas is higher, as it is done at the expense of time elsewhere.

The same rules apply when administering incentives. Performance-related pay is most effective where performance goals can be objectively and meaningfully measured, where there is a clear ‘line of sight’ between employee behaviour and the reward, and where employees have reasonable control over factors that affect performance outcomes.

The level of the reward crucially influences the focus on employees’ behaviour and so the organisation must consider whether it wishes to encourage individual, group or organisational performance. Most organisations hedge their bets and combine the use of individual, group and organisation-wide rewards.

Employers should also reflect on the kind of culture they want, perhaps particularly so at Christmas, where fixating on incentives may appear at odds with other popular culture interpretations of Christmas (a time for giving, importance of social relationships, and so on).

From this perspective, organisations should draw attention to the social impact of their employees’ work on customers or the public. Such pro-social impact can be a powerful intrinsic motivator and may be very compelling at Christmas.

Turning to gifts, by which I mean one-off tokens of appreciation where there is no expectation of return, there is some research that supports the desired effects of gifts at work. Small gifts in the short term boost an individual’s mood or morale and gifts may have a longer-term effect by making the recipient feel valued by their employer.

However, gifts may have unintended consequences. The employment relationship is fundamentally an exchange of labour for pay and there is, arguably, no room for gifts at work. Gifts in workplaces are likely to carry additional meanings that imply reciprocation by employees in some way.

Gifts may also raise equity issues, for example to employees who do not receive the gift and employees who view the gift as a derisory gesture compared to the effort they put in.

Interestingly, the logic of gifts is rather opposite to that of incentives: the gift must be discretionary with no expectation of return, unrelated to the organisation’s formal reward system and unrelated to employee past performance.

How the gift is framed and presented to employees is important. A poorly conceived gift presented in front of colleagues could be met with scorn and embarrassment.

A good suggestion would be an expenses-paid party or meal because this allows employees to have some control over the gift they receive, and therefore sidesteps possible issues of inequity and allows the gift to be customised to employee tastes.

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Capitalism’s materialist desire to turn Christmas into a consumer frenzy is ever stronger and organisations will need more workers, and workers will need more money, so the case for incentives at Christmas is strong. Perhaps an overriding value should be to use rewards and gifts as symbols of a cohesive social relationship and hope employees buy it.

Neil Conway, professor of organisational behaviour and HR management, Royal Holloway, University of London