Are staff reward schemes the first thing to be chopped in a downturn?
In a white paper, The “Evidence-Based” Case for Incentives, The incentive research foundation makes the case that reports of the death of staff incentives are greatly exaggerated. The report puts the case strongly that incentives, when applied properly, do drive performance improvement:
“Incentives, properly designed, implemented and continually evaluated, can and do provide measureable benefits. The study, Incentives, Motivation and Workplace Performance: Research and Best Practices (2002) found that individual incentives resulted in a 27% improvement in performance and that team incentives improved by 45%.”
However, I’m sure HR departments up and down the country will be looking at their 2009-2010 budgets and wondering if they are really getting an adequate Return on Investment from their staff reward and recognition schemes. In many cases, they will then face the problem that they have no defined objectives or quantifiable measures of success in place in order to begin answering that question.
Unlike sales incentives or direct productivity incentives, staff reward schemes are a somewhat more nebulous affair, much harder to measure and judge the success. To some extent they are offer an intangible feel-good factor that may be an emotional factor in determining an employee’s likelihood of staying, or inspiring their performance at work.
In a recession, while there may be more people seeking work, and replacing staff who leave may be easier, the cost of recruiting and training new staff is still great. Thus there is still great value in any measure that can reduce staff churn. But are staff rewards effective at this?
Quantifiable measures of success can only really be evaluated over a long period, and are statistically only relevant in a large organisation. Which leaves qualitative studies: surveying staff to understand their satisfaction levels, and whether the rewards and other flexible benefits in place make a difference to whether they would stay or not. If the overriding answer is no, then perhaps the reward schemes currently running are not cost-effective.
Our belief is that incentive schemes that reward staff for doing what they should be doing anyway are ineffective and a poor use of budget. Effective motivation activity needs to have a defined objective, and a means of measuring success. Our experience is that incentives work best to address a particular behaviour, and are ideally suited for actions that lie outside of an employees job remit, such as recycling or energy consumption. These are behaviours that can have a dramatic impact on the company’s bottom line, and can help organisation and departments pull together to achieve a common goal.
If reward and recognition schemes such as employee of the month, long-service, star performer are judged to be effective motivators and aid staff retention, they by all means keep them, but if the schemes are in place as a legacy of bygone days, organisations should be brave enough to replace them with more focused incentive activity.
