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THE BOTTOM LINE

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DIFFERENT STROKES

Based on research conducted over the past five years, global professional services firm Towers Perrin has discovered that the qualities that initially attract people to a firm are considerably different from the qualities that make them stay. In a 2005 study, they found that the top driver of employee attraction to an employer in the U.S. was “competitive base pay,” while the top driver of employee retention was that the organization nurtured employees who were motivated and had “the skills needed for the organization to succeed.”

SOURCE: “Talent Management in the 21st Century” by Sandra O’Neal and Julie Gebauer, WorldatWork Journal (First Quarter, 2006).

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When you are assessing the need for a rewards system, be sure to look at it in the context of your existing benefits package. It may be that adding or improving benefits could constitute part of your rewards system. Pay special attention to nonmonetary possibilities—time off, improved working conditions, educational opportunities. Sometimes these are perceived to be even more valuable than monetary rewards.

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POWER POINTS

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REWARDING EXCELLENCE

A rewards system needs to be carefully thought out to be effective.

Be consistent in rewarding employees throughout the organization.

Solicit employee input.

Give rewards as surprises to keep feelings of entitlement at bay.

Avoid repeatedly rewarding only the top performers, which can de-motivate modest achievers.

Offer an improved benefits package as part of your rewards system.

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The Real Value of a Rewards System

For most companies, the payback of a rewards system is simple: Employees who are recognized and rewarded feel valued by the company. This sense of being important to the group inspires job satisfaction and pride, which in turn—at least potentially—leads to sustained motivation. Even if an employee occasionally gets off track, the sense of being someone who matters to the organization is often enough to sustain a positive attitude.

On the other hand, a rewards system can backfire if it is constructed without the feedback and involvement of the employees. The whole plan to institute a rewards system may seem insincere, and employees may feel that the program is meant to recognize only the efforts of a select few. It can inadvertently send the message that the company respects just a handful of individuals and that every employee is not equally valued.

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CASE FILE

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REWARDING INNOVATION

Innovation is the highest priority at 3M, and a whole rewards system has been set up to encourage it. When a new venture is undertaken, the salaries and titles of everyone involved reward the work they put into it. A person who is a “first-line engineer” at the start of work on a new product, for example, becomes a “product engineer” when it is brought to market, then a “product line engineering manager” when sales hit $5 million, and so on, continually motivating people to strive for success.

SOURCE: In Search of Excellence by Tom Peters and Robert H. Waterman, Jr. (Harper Collins, 1982).

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But when a rewards system is well designed and inspired by genuine appreciation for a company’s employees, when it clearly represents the organization’s goals, when it has a good balance of recognition and rewards, and when it applies broadly across all employees and is based on fair and objective criteria, then the return on the company’s investment in the program can be immense—a workforce that is more highly motivated, more satisfied, and more productive.

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Outside the Box

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PERFORMANCE INCENTIVES

If you establish a rewards system based on performance incentives, make sure the ground rules don’t encourage abuse of the system.

For example, if you reward employees for reaching a new sales goal, make sure they are not doing so at the expense of the level of quality provided to existing customers.

While many performance incentive programs are well intentioned,