No. 9202
Put Your Recognition Program Online
Online recognition lets you reward people anywhere in the world, and do it promptly and fairly. Communication is so fast and easy that recipients of travel awards often swap tales on the company Web site when they return from a trip.
OVERVIEW
With managers overseeing larger and more diverse workforces, and so many people working from home or in far-flung facilities, recognition of employees' efforts can be difficult and time consuming. Online recognition programs, however, make the job easier. More and more incentive companies offer online recognition tools and strategies that ensure immediate recognition coverage via email and the Internet – with significant savings over traditional programs.
Online recognition programs also offer the ability to change motivational messages and rewards easily and inexpensively, keeping them different and exciting. And they provide a cost-effective way to track the progress of a program, collect data, and analyze it. Thanks to such efficiencies, even small companies can afford a recognition program.
It's another instance of technological solutions emerging to deal with issues that arise with rapid economic change. With employee turnover costs rising and recruiting, training, and administrative expenses going up along with them, it's not surprising that companies are looking for creative ways to inspire workers and recognize their efforts.
RESEARCH
In a 2005 survey by the National Association for Employee Recognition (NAER) and WorldatWork, a not-for-profit association of compensation, benefits, and human resources professionals, 89 percent of companies surveyed said that they use recognition programs as part of their human resources strategy and 95 percent of those feel that it links directly to their overall goals as an organization. The benefits of recognition reported by companies participating in the survey include: creating a move positive work environment (81 percent); motivating higher performance (75 percent); reinforcing desired behaviors (71 percent); creating a culture of recognition (70 percent); increasing morale (65 percent); supporting organizational mission/values (62 percent); and increasing employee retention (49 percent). The survey also indicates that a growing number of companies are using the internet for program communication, award ordering, award nomination, program administration, and reporting and tracking. In fact, the 2005 Online Incentive Survey, conducted by the Online Incentive Council of the Incentive Marketing Association reports that 66 percent of companies that have used an Internet-based incentive program of any kind implemented online recognition programs.
Why is recognition important? A recent Gallup survey focusing on “quality workplaces,” found that recognition and praise was one of the top factors contributing to the success of companies with high levels of employee retention, customer satisfaction, and profitability. According to Gallup, the new knowledge-based worker depends on praise and recognition as the means of defining what is valued by the organization. And a 2005 survey by Robert Half International found that nearly half of all workers expect to change jobs in the next 1-3 years. The survey report suggests that employers who are not using all the tools available to retain employees may soon experience an exodus of top performers and a corresponding rise in turnover costs.
AN ENVIRONMENT OF INSTANT RECOGNITION
Companies that don't teach their supervisors the importance of systematically acknowledging the worth of the individuals working for them are destined to face continual turnover problems that are frustrating and expensive. Money alone is not sufficient to keep the best people: they can get it elsewhere. Job advancement won't do it either: with flattened corporate hierarchies, mergers, and downsizing, there aren't enough steps left to advance to.
Even fringe benefits, although valued by employees, can't provide the stimulation of instant online recognition. You don't find a lot of people saying, "I'm really gonna rock today: I have dental insurance!" What will do it is an "environment of recognition" that includes appreciation and reward, including on-the-spot rewards, from the boss or a fellow worker. Managers can lay the foundation with such appreciative phrases as, "Thank you," "You did a good job," or "I really appreciate the work you did on that assignment."
Recognition can make a major contribution to corporate morale and is often an important ingredient in a company's appeal to prospective employees at any level. In contrast to incentives, which usually are geared to achieving objectives over a specified period and are often confined to the sales force or another select group, recognition programs are designed to reach a much broader population.
HOW ONLINE RECOGNITION WORKS
Online recognition lets you reward individuals or groups of people anywhere in the world, and do it promptly and fairly. Some key points:
- Achievements that you want recognized should each be assigned a point value based on your goals and your budget. If recruiting is high on your list, for example, give high points to employees who recruit a new hire, and give them bonus points if the person takes the job.
- Reward service employees for performing a specific task well. Customer service reps, for example, might be recognized for being patient with cranky callers.
- Reward safety efforts or process improvement suggestions.
- Recognize anniversaries and promotions.
- Make it easy for employees to be informed and reminded of the program online. Quick access will avoid lengthy online visits, which waste time for both employer and employee. By simply entering a password, participants should be able to access their personal accounts on the designated Web site so they can check their balances or order rewards.
- Promote the program and praise awardees liberally in public. For online programs, this obviously works best on a Web site, but don't forget company newsletters and magazines and meetings and corporate events.
- Offer a variety of reward options. An online program enables you to offer rewards through catalogs, both online and in print, through links to online retailers, or by issuing gift certificates or debit cards that can be used online or at stores.
CRITICAL ISSUES
Encouraging peers to nominate awardees. Although most programs bear the stamp of management, human resources professionals have come to realize that employees often are in the best position to recognize the achievements of fellow workers. As a result, many programs now provide for nomination by peers—usually with final approval by a manager.
What do winners want? People put a lot of value on trophy items that they will keep around forever in their home or office. There is also demand for electronics and special gifts that employees wouldn't ordinarily buy for themselves. Flexibility and choice are also importatn reward characteristics, which make gift certificates and gift cards a valuable reward option.
Internet vs. intranet. Online programs can be delivered via the Internet, which works best for a large, widely dispersed organization. But a company's own intranet can sometimes do the same job with the help of customized software that sets up the program and tracks its progress.
WEIGH YOUR CHOICES
In choosing an online recognition company, consider such factors as:
- Costs. Estimate what costs might be involved in designing your site, service fees, prices of the awards chosen, shipping, and administering the program. Then compare that with what it would cost to do the job in-house, taking into account your own time and the number of people that would be required.
- Amount of research and monitoring required from your human resources department to set up and maintain the program.
- Demands likely to be placed on your information technology (IT) department to facilitate the program.
- Attractiveness of the Web site. How well it works. Is it easy to access; do accounts and awards come up promptly?
- Does your online recognition vendor offer a broad selection of the kind of awards your employees want?
- Professionalism. Does the supplier help with the program theme, rules, and messages? Does it handle the administration, online ordering, and point balances?
- Special features. Does the supplier have any special advantage over the competition in terms of creativity or functionality?
- Fulfillment time. Does the supplier ship awards within a few days of order or a few months? Some firms now offer two-day fulfillment.
- Experience. Has the supplier performed for businesses of your size and type? (It pays to check references.) Does the company have people who know the sales-tax rates and rules of every state and can guide you on other tax issues? Is it capable of awarding and deducting employees' points automatically?
CASE HISTORIES
Using its own expertise in-house, Hinda Incentives developed an online recognition program for its nearly 100 employees, including office and warehouse staff. The program was designed to retain and reward people for loyalty, exceptional performance, and desired behaviors. Employees received points, redeemable toward awards of their choice, for every five years of service, as well as for customer referrals and new employee referrals and hires. Managers could also recognize employees for outstanding service through an Above and Beyond/On-the-Spot Recognition component, and peers could use the program to propose coworkers for instant recognition.
Within the first year, Hinda had 22 employee referrals, resulting in 15 hires, with a savings of $36,000 in hiring fees. The retention rate of employee referrals was 93 percent. The company also had 12 customer referrals, accounting for approximately $400,000 in sales. The peer-to-peer program provided an opportunity for employees to reward each other for making a special effort at solving problems, exceeding an internal or external customer's expectations, or for resolving a major issue as a team.
Liberty Mutual, a leading provider of workers' compensation insurance, programs, and services, partnered with Bravanta to design and implement a centralized online performance recognition program for its employees. Previously, Liberty Mutual ran multiple recognition programs across several of its business units. The streamlining and integration of these disparate recognition programs substantially reduced time and costs involved in administrating the company's recognition efforts. As a result, Liberty Mutual earned a higher return on its investment from savings in time and administrative costs and from increases in overall program effectiveness.
An express delivery company (it insisted on anonymity for this article) used an online program to reward the extra efforts of employees across the country. It focused on modifying, reinforcing, tracking, and recognizing employee behaviors in four areas: abiding by safety procedures, reducing vehicle accidents and violations, exceptional effort on the job, and loyalty and service based on consecutive years of employment.
Although the process was decentralized, it had all the benefits of centralized administration. The program was built around a reloadable incentive reward card from American Express Incentive Services, and administration was handled by Altour Incentive Management, a Scottsdale, AZ, application service provider. Managers at the delivery company could access the program and follow a step-by-step process to issue awards to eligible workers.
The system monitored the awards issued and compared them in real time to the budget limits assigned to each manager or cost center. Managers could tell instantly when an award was issued, approved, funded, and fulfilled. Result: Employee performance improved, and the time from award issuance to fulfillment was cut in half.
TAX CONSIDERATIONS
Putting a recognition program online, especially for a company with employees around the world, may give rise to questions about the tax treatment of the awards. First, the basics from George Delta, legal advisor to the Incentive Marketing Association (IMA): "Essentially, safety and long-service awards are deductible for the employer and excluded from the employee's income up to $400 a year for each employee. If the employer has a written plan, he may give up to $1,600 to employees, as long as the average cost per recipient does not exceed $400 in any given year. The award must be tangible property (travel, for example, does not qualify). There are some other minor restrictions on safety and length-of-service awards."
Because of the scope of their operations, global companies may have more unusual tax considerations. If it has employees in various countries worldwide, each with different tax regulations, for example, the company must gear its online recognition practices accordingly paying the tax or determining the local tax rate to be applied to the individual's income. If this is an issue, check with your online recognition servicer provider to see if it has experience handling global tax implications.
ONLINE SERVICE PROVIDERS
American Express Incentive Services offers a variety of different online programs. Go to http://www.aeis.com.
Hinda Incentives, a clicks-and-bricks provider, offers a variety of Web-based solutions, including an online employee recognition program with full front-end customization. Go to http://www.hinda.com.
www.incentivecity.com is an application service provider offering loyalty, incentive, and consumer promotions online.
Maritz Inc. provides program-building ideas and tools that enable clients to select and customize sales contests, retention programs, and other performance improvement solutions. Go to www.martiz.com.
USMotivation has an application that allows managers to launch, communicate, customize, track, and measure multiple recognition programs online. Go to http://www.usmotivation.com/.
ASSOCIATIONS
For related associations, go to the Industry Association Listings page.BOOKS
To order any of the highlighted books through Amazon.com, click directly on the book title.1001 Ways to Take Initiative at Work, by Bob Nelson. Latest ideas on how to recognize employees and build momentum in the work force. 240 pp. 1999. Workman Publishing Co.
1001 Ways to Energize Employees, by Bob Nelson. Weaving together case studies, examples, techniques, research highlights, and quotes from business leaders, this handbook offers suggestions for increasing employee involvement and enthusiasm. 213 pp. 1997. Workman Publishing Co.
The Loyalty Link: How Loyal Employees Create Loyal Customers, by Dennis G. McCarthy. The author spells out his formula for developing a loyalty-driven culture that empowers employees to strive to create customer loyalty, and he devotes a chapter to fostering teamwork.
The Reward Plan Advantage: A Manager's Guide to Improving Business Performance Through People, by Jerry L. McAdams. The author describes recognition and group incentive plans, as well as types of awards and implementation. This book comes closer than most to addressing brass-tacks programs that managers at almost any level of an organization can implement. Jossey-Bass Business and Management Series.
Secrets of a Successful Recognition System, by Daniel C. Boyle. This short book provides a simple program designed especially for companies trying to break down barriers between management and a union. Based on the importance of thanking employees, the book provides some practical ideas, but its approach seems a bit simplistic for complex labor-management issues.
ONLINE RESOURCES
www.incentivecentral.org has comprehensive information on all aspects of the incentive business, including online recognition. The site was developed by the Association of Retail Marketing Services, The Motivation Show by Hall-Erickson Inc., Incentive Marketing Association, Promotion Marketing Association, Promotional Products Association International, and the Society of Incentive & Travel Executives. It is managed by the Incentive Federation Inc.
RELATED SMN ARTICLES
For information related to this article, go to 3027, Incentives Online; 9199, The People Principle; 9200, Employee Recognition; and 9201, Recognition vs. Compensation.