Examples of Effective Formal Recognition Systems on behavioral performance management focuses on social recognition as an effective contingent reinforcer that supervisors/managers can use as a style in interpersonal relations. Research has clearly demonstrated that this improves employee performance. In this chapter on the role rewards play in the organizational context, formal recognition programs implemented by organizations are the primary focus, along with money and benefits. Formal recognition is a vital part of the reward system that makes up the environmental component of the social cognitive framework for understanding and effectively managing organizational behavior.
Today there are a wide number of formal recognition systems that are being effectively used by organizations nationwide. Many of these are the result of continual modification, as organizations have altered and refined their reward systems to meet the changing needs of their workforce. However, all effective programs seem to have two things in common. First, they are designed to reward effective employee performance behavior and enhance employees’ satisfaction and commitment. In other words, effective recognition systems lead to improved employee performance and retention. Second, they are designed to meet the specific and changing needs of the employees. Simply put, a recognition system that worked in the past or in one enterprise may have little value in another. This is why many firms have gone through a trial-and-error approach before they have settled into a unique system that works best today for their employees. Thus, recognition programs often vary widely from company to company—and many of them are highly creative. For example, one expert on implementing recognition systems offers the following creative, but practical, suggestions:
1. Select a pad of Post-it Notes in a color that nobody uses and make it your “praising pad.” Acknowledge your employees for work well done by writing your kudos on your praising pad.
2. Hire a caterer to bring in lunch once a week. Besides showing your respect and appreciation, this encourages mingling and the sharing of information, knowledge, ideas, and innovative solutions.
3. To get a team motivated during an important project, have them design a simple logo for the assignment. This will give the team not only a sense of camaraderie and cohesion, but also group identification and focus.
These tidbits represent useful suggestions, but many companies have gone much further by designing formal recognition systems that align their overall objectives (increased productivity, reduced cost, better-quality products and customer service, and even higher profitability) and employee performance behaviors. For example, at Dierbergs Family Market, a supermarket chain in Missouri, the firm has created what it calls the “Extra Step” program. This formal recognition program is designed to reward employees who are proactive in meeting customer needs. The objective of the program is twofold: make the company a place where employees love to work and keep customers coming back. In achieving this, the company rewards workers who go out of their way to do things for customers. For example, in one case, a customer left some of her purchases at one of the stores during a snowstorm. The store manager did not want any of the employees going out in the inclement weather, so he called a cab and paid the driver to deliver the packages she had left behind. In another case, an employee on his way to work recognized a good customer trying to change a flat tire. He went over, introduced himself as working for Dierbergs, and changed the tire for the customer.
These “extra steps” are rewarded by Dierbergs in a number of ways, including gift certificates, movie passes, and even lunch with the chief executive officer. They also help the company achieve its objectives of increased revenues through word-of-mouth advertising (the best form, at no cost) and repeat business, customer satisfaction, and employee productivity and retention. Customer feedback has been overwhelmingly complimentary, and the firm’s turnover rate has rapidly declined, in an industry where labor turnover is extremely high. For its efforts, Dierbergs was given an Award for Best Business Practices for Motivating and Retaining Employees.
Dierbergs is not alone. A growing number of firms are finding that well-structured and implemented employee recognition reward systems yield very positive cost-benefit results. In particular, formal recognition systems have become important in the hotel and restaurant industry, where annual turnover rates of 100 percent are typical. Firms that have implemented recognition systems have experienced dramatic improvement in retention of their best employees. For example, at the Hotel Sofitel Minneapolis the director of human resources has reported that thanks to the organization’s recognition system, annual turnover has declined significantly. One of the most successful plans in its system is called the Sofitel Service Champions. This program is inexpensive to monitor and all employees participate. It works this way: When employees do something noteworthy, they are given a little slip of paper by a customer or a manager. This resembles a French franc (that goes with the Hotel’s French theme), and when an employee gets three of these francs, he or she receives a $35 gift certificate that can be redeemed at one of the hotel’s restaurants. Seven francs can be exchanged for dinner at one of the restaurants or a $35 gift certificate redeemable at any area store or restaurant. Ten francs entitles the person to a day off with pay or a $50 gift certificate that can be used in any store or restaurant in the area.
Another successful component in the Sofitel recognition system is the Team Member of the Month program. These members are chosen from one of the department teams within the hotel (e.g., housekeeping, receiving, room service, accounting, front office, etc). Each department director fills out a nomination form with the name of the team member who is believed to have done something outstanding that month. If chosen, the employee receives a $50 check, a special luncheon honoring the recipient in the employee cafeteria, a picture taken with the general manager and the direct report manager, which is placed in a display case, and a specially designated parking spot. If a person is nominated but does not win, the individual still remains eligible for the next three months. All monthly winners and nominees are tracked throughout the year and are eligible for the Team Member of the Year Award. This winner is given either $500 or a trip to one of the other Sofitel Hotels in North America.
A key success factor in such public recognition plans is that it is viewed as being fair, and those not recognized agree that recipients are deserving. At Sofitel the recognition programs are continually changed based on input from the employees. One of the additions to the recognition system at Sofitel is a recognition program called Department Appreciation Days. Each month, one department is chosen to be recognized by another. The recognition is typically something small and inexpensive, such as a jar of cookies, and has proven to be very popular with the personnel and departments and has led to constructive, friendly competition to win this award.
Other organizations use similar approaches to recognizing and praising their people. (See the accompanying OB in Action: Some Easy Ways to Recognize Employees.) For example, at the Fremont Hotel & Casino in Las Vegas, a large portion of the human resource budget is set aside for recognition programs. One of these is called “Personality with a Hustle” and is designed to encourage employees to do everything they can to proactively help customers stay and play at the Fremont. Personnel who do so can end up being nominated as employee of the month. Winners are given $100, dinner for two at any of the company’s restaurants, two tickets to a show, a special parking spot, and an Employee of the Month jacket. They are also eligible to win the Employee of the Year Award, which entitles them to an extra week’s vacation, an all-expense-paid trip to Hawaii with $250 spending money, and a dinner for two with the company’s chief executive officer.
In addition to these representative types of recognition systems, there are many other innovative, fun recognition awards in today’s firms. At First Chicago, for example, there are Felix and Oscar awards (based on the characters in The Odd Couple) given to employees with the neatest and messiest work areas. At Chevron USA in San Francisco, an employee who is recognized for an outstanding accomplishment is immediately brought to a large treasure chest and is allowed to choose an item from the box: a coffee mug, pen-and-pencil set, gift certificate, or movie tickets. At Goodmeasure, a management consulting firm in Cambridge, Massachusetts, a person who does something outstanding is given an “Atta Person” award. At Mary Kay Cosmetics, pink Cadillacs, mink coats, and diamond rings are given to their leading sellers. At Hewlett-Packard, marketers send pistachio nuts to salespeople who excel or who close an important sale. Salespeople at Octocom Systems in Chelmsford, Massachusetts, receive a place setting of china each month for meeting their quota. In a different, and for the long run perhaps questionable, approach, at Microage Computer in Tempe, Arizona, employees who come to work late are fined, and this money is passed out to people who arrive on time. The Commander of the Tactical Air Command of the U.S. Air Force rewards individuals whose suggestions are implemented with bronze, silver, and gold buttons to wear on their uniforms.
In some cases, recognition awards are delivered on the spot for a job well done. For example, at Kimley-Horn, a big engineering firm in North Carolina, at any time, for any reason, without permission, any employee can award a $55 recognition check ($50 plus $5 for tax payment) paid by the company to any other employee. As the HR director notes, “Any employee who does something exceptional receives recognition from peers within minutes.” In a recent year, 6,174 such awards ($339,570) were made with very little oversight and virtually no abuses. In another example, at Tricon, a spin-off of PepsiCo that has become the world’s largest restaurant company in units and second behind McDonald’s in sales, the chief executive officer gave a Pizza Hut general manager a foam cheesehead for achieving a crew turnover rate of 56 percent in an industry where 200 percent is the norm. Commenting on the event, the CEO noted, “I wondered why anyone would be moved by getting a cheesehead, but I’ve seen people cry. People love recognition.” Yet, as pointed out at the beginning of this section, this powerful reward is still being underutilized, as seen by the results of a survey in which 96 percent of the respondents said that they had an unfulfilled need to be recognized for their work contributions. As the now deceased head of the Gallup Organization Don Clifton used to say, “I’ve never met an employee who was suffering from too much recognition.” A more visible and much more costly form of organizational reward system involves the benefits that are provided to employees.
OB in Action: Some Easy Ways to Recognize Employees
Employees never seem to tire of recognition. In psychological terms, they do not seem to become satiated, or filled up with recognition as they do, say, with food or even money. For some, in fact, the more recognition they get, the more they want. Fortunately, it is not difficult to recognize people, and there are many ways in which it can be done. Some of the easiest and representative ways are the following:
1. Practice giving concentrated, focused recognition by calling deserving employees into your office and thanking them for doing an outstanding job. During this interaction, focus is only on the detailed recognition and nothing else, so that the effect is not diluted by the discussion of other matters.
2. Buy a trophy and give it to the most deserving employee in the unit or department. Inscribe the individual’s name on the trophy, but leave room for additional names. To help ensure fairness and acceptance, at the end of a month, have this recipient choose the next member of the unit to be recognized and explain why this individual was chosen.
3. Recognize an employee who is located in another locale and does not get a chance to visit the home office very often. Deal with this “out of sight, out of mind” problem by faxing, e-mailing, or leaving a voice mail for the person that says “thank you for a job well done.”
4. Write a note that recognizes an individual’s contributions during the last pay period and attach this note to the person’s paycheck.
5. When you get a raise or a promotion, acknowledge the role that was played by your support staff by taking all of them out to lunch. In sports, a smart quarterback who receives all the attention for a win will always recognize especially his line in front of him and may even take these “unsung heroes” out for dinner or buy them something.
6. Take a picture of someone who is being congratulated by his or her manager. Give a copy of the photo to the employee and put another copy in a prominent location for everyone to see.
7. Have a senior manager come by and attend one of your team meetings during which you recognize people for their accomplishments.
8. Invite your work team or department to your house on a Saturday evening to celebrate their completion of a project or attainment of a particularly important work milestone.
9. Recognize the outstanding skill or expertise of an individual by assigning the person an employee to mentor, thus demonstrating both your trust and your respect.
10. The next time you hear a positive remark made about someone, repeat it to that person as soon as possible.
11. Stay alert to the types of praise and recognition that employees seem to like the best and use these as often as possible.
12. Catch people doing things right—and let them know!