Cash may be king but as a long-term motivator it has limited value; employees either get used to what they’re paid or resent the amount lost to tax.
In truth, to properly motivate staff organisations require systems that recognise and reward. The fact that employee recognition is so important should be obvious for all to see; countless firms have boards in the public domain that detail “employee of the month”. And they do this because they’ve understood that workers want not just money, but recognition amongst their peers.
The point of a rewards programme
According to Lauren Sweeney, head of people at Virgin Incentives and Virgin Experience Days, happy employees should be the aim of any HR team as “high staff turnover not only slows business growth and costs businesses money on recruitment and training, it also stunts company culture due to the continual change of personnel.”
And Charles Cotton, senior reward and performance adviser at the CIPD agrees, adding that a reward policy should be strategic and “support an organisation to reach its long-term business goals”. But he thinks it can do more for “an organisation’s objectives and legal obligations as well as the needs of its employees – it can enhance a firm’s reputation as an employer of choice and help it communicate better its employee value proposition”.
It’s important to get the process right. But it’s not about only rewarding the end result; schemes don’t always take into account all of the steps that need to happen to get to the end goal. So, veterinary practices shouldn’t reward on sales turnover because profitability gets missed. Instead, they should reward on speed of service, client (patient) queries resolved and reduction in complaints, for example.
That aside, Lauren quotes a Virgin Incentives whitepaper that surveyed 2,000 workers across the UK. It “found that 22 percent had never received a reward from their employer. No birthday gifts, no extra days off, no Christmas hampers or boxes of chocolates. Nothing.” That, for her, is worrying.
But what seems to gall her most is that, as she says, “rewards don’t have to be expensive, challenging or complicated. They just have to be worthwhile, thoughtful and ultimately make the workplace as attractive as possible.”
Creating a reward and recognition programme
Setting up a recognition programme from scratch requires planning and Lauren says that “you need to define your objectives and consider your reasons for starting a reward and recognition scheme. as this will impact what you offer”. This can include a wide range of business goals, such as reducing turnover, driving sales and changing the culture.
Of course, rewards must be used strategically. Activity won’t rise because of a gift on someone’s birthday. Similarly, loyalty doesn’t follow because of performance-based rewards.
There is no point incentivising or recognising commonality of behaviour across all different functions as they have different contributions to make. In an ideal world, practices should identify key positive traits of each and reward accordingly. Break it down to an “idiot’s guide” and reward that behaviour, step by step, on a smaller basis so that people can continually get into the habit of achieving.
The best way to create a well-rounded and engaging reward and recognition scheme is to find out what employees want. The results might surprise – some might want traditional-style rewards like long service awards, but others might want in-the-moment recognition to keep them motivated day-to-day.
Next comes budget. This determines what is delivered and the partners that are engaged. Lauren says that the simplest way to do this is to divide the budget by the number of people on staff.
Step three is the rewards themselves. Turning to cash bonuses first, Sweeney says that they can sound simple but quickly become expensive. “For example, if you awarded £100 one year as a bonus, then your team is likely to expect the same, or more, the next year. This is unlikely to drive the type of long-lasting positive sentiment employers are after.” Further, cash rewards get spent on trivial purchases. The alternative, non-cash rewards, are, she points out, “easier to manage”. Vouchers and gift cards offer discounts and give all a great deal of flexibility.
It’s important to remember that people become accustomed to rewards, so they need to be shaken up. Many larger organisations pay bonuses based on basic salary. But bonuses are made up of so many different elements that people have no real control over what they actually get. Further, they then want to know why they didn’t get a bonus or have no idea what, specifically, they did to earn it.
The last step is a rollout. Here Lauren says rewards can be dropped on desks, announced at team meetings, sent via email or post, added to the payroll or uploaded to a rewards portal. However, she warns that launching a scheme isn’t the end of the process: “It’s important to check-in with people to get their views of the scheme and how it could be improved. There’s no point going to all the effort of setting up a rewards scheme if your people aren’t going to use it.”
The importance of fairness
Just as well-run organisations often seek employee involvement in certain business decisions, so they should involve staff in rewards and recognition schemes and communicate as such.
And Charles Cotton tells why: “The benefits offered to employees often depend on their grade, location or occupation. However, it’s important that benefits are fair and are perceived as such, otherwise the programme’s purpose is undermined. Employers need to explain the different benefits available and be able to justify them.”
He thinks it helpful if firms have a “definition of fairness” used to make decisions. On top of this, there should checks on whether people doing similar jobs are getting similar rewards and if not, whether there is an explanation for this.
It’s also key to remember that time marches on and that employee needs change; weekends and parties could be replaced by trips to a theme park, and where it used to be a branded handbag it could be now shopping vouchers.
But there is a different school of thought put forward by Charles. He says that “research shows that non-financial rewards can be just as important as pay”. He offers examples – opportunities for personal and career development, flexible working, being involved in decisions that affect how and when people do their work, recognition such as an “employee of the month” award or team-based events.” Improving work-life balance is another option.
Coronavirus has much to answer for, including changes to rewards schemes. Understandably, considering the nature of the business, Virgin is seeing a number of employers exploring virtual experiences and gift cards rather than cash bonuses. Lauren Sweeney refers back to the whitepaper where, she says, it found that 75 percent of respondents felt that gift cards and vouchers made them feel valued or very valued. This was followed by own-choice rewards (71 percent) and team treats (64 percent).
And this line is taken up by Charles Cotton when he points out that “employers have become increasingly aware of the importance of supporting the well-being of their staff, particularly since the onset of the pandemic”. PwC, he says, has given staff a year’s subscription to the Headspace app. Allied to this, employers should “give thought to a ‘tidy up’ of their benefits package to better reflect the world in which we now live”. A public transport season ticket loan may not be coveted in the current climate, but a cycle loan or car plan might.
But the most important thing about a reward isn’t the cost, it’s the choice of rewards on offer. Most would rather receive a £10 e-card for a retailer they’ve chosen than a £50 voucher for a retailer they don’t use.
And to show that rewards don’t need to cost anything is the example of a packaging site in Ireland. It has a reward programme that is the most hotly contested operational rewards programme in the whole business – parking outside the front door for the employee of the month. The appeal of the reward is that it changes every month depending on what the company is pushing for.
And it’s something that does appear to be deployed by practices, according to a search on Google, just not very much. There’s the example of Millennium Veterinary Practice (UK – but not since June 2014), Paws-N-Hooves (US – July 2020) and South Lincs Vet Group via a Facebook page (UK – October 2020).
Communicating with employees
Practices have to advertise or clients won’t beat a path to the door. Likewise, employers need to engage with staff over rewards schemes or they won’t be used. This is why Lauren says it’s “important to clearly communicate the rewards and make the options and points earned visible on a smartphone or via a portal”. Both, she reckons, give employees a personal account where they can redeem their rewards instantly.
But despite the positives, there are a number of other considerations for employers says Charles. In particular, he says that when creating a reward package, “organisations should make sure the different components support, rather than contradict, one another. For example, if you are going to introduce performance-related pay, give managers the skills to assess performance.”
Also, he alerts employers to the possibility that “some employees can be cynical about benefits, viewing it as no more than camouflage for cost-cutting.” So, he too sees value in good communications as this can counter this perception alongside regular feedback from staff on what works and what doesn’t.
It’s about the people
In summary, practices are based on people and with the right programme, employers can both please staff with incentives and improve business performance. But putting in place a rewards programme isn’t simple and takes thought. And sight shouldn’t be lost that rewards may have tax consequences; good advice is essential.
But to Sir Richard Branson, founder of Virgin Group, goes the last word: “I have always believed that the way you treat your employees is the way they will treat your customers, and that people flourish when they are praised.”