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How to reward your employees

In casual conversation recently, while discussing the issue of low employee morale with the owner of a small cash-strapped company, I suggested the biggest boost to productivity would be for him to show more appreciation to his staff. It could be as simple as saying 'thank you' or 'good job'. The response: "If I go around telling everyone good job, they might feel they were in a strong position to ask for more money".

This employer mentality is by no means uncommon. A UK Workforce Mood Tracker survey shows that 64 per cent of UK workers would leave their job for a company that clearly recognised contributions, meaning they were not getting enough positive feedback where they were. Ninety per cent of respondents said employee recognition motivates them to do a better job. That's a statistic that cannot be ignored, misinterpreted or spun.

But before employers start rushing off to draw up reward mechanisms, the difference needs to be understood. Recognition and reward are not interchangeable nor are they synonymous, as more and more companies are realising. The trick to success is walking the tightrope in between.

Reward, usually involving cash by means of pay rises, gifts or bonuses, is often seen as the easiest option for employers. But it does not always lead to more motivation or productivity and can mean money down the drain on plaques, watches and potted plants with little or no positive results.

A company might for instance already have a reward system in place for those who meet their weekly, monthly or yearly targets. It might be a small bonus or an employee badge of honour. Generally such rewards do not constitute real motivation for most people. Hands up, who's genuinely fired up to go that extra mile in order to have a gold star on a whiteboard or a gift card for 20 pounds...well maybe the latter but I'm not going to kill myself for it.

A huge bonus might be an incentive, depending on the employee, but at the same time, meeting targets is no indication of real engagement, loyalty or job satisfaction. It's simply a means to an end. Employees motivated entirely by monetary reward can be a costly retention risk.

Recognition on the other hand, which according to the Mood Tracker survey, is what the other 90 per cent craves, plays into human nature - the desire to be appreciated not only for the work you produce but the effort you put in, and also for who you are and what you bring to the company culture. Employees want you to notice their contribution.

The biology could not be simpler. Dopamine, a neurotransmitter that helps control the brain's reward and pleasure centres, is triggered by praise and appreciation in most people, probably stemming all the way back to parental and teacher approval. This feel-good factor can be brought on by recognition of achievement and prompts the individual to take action that will recreate the experience again and again.

Thus, employees who receive regular recognition are more likely to take pride in what they do, thus becoming more engaged, loyal, productive, happier, willing to go above and beyond, and to share their job experience with others. That should speak for itself in terms of retention, branding and the bottom line.

Now here come the fine lines. Firstly, 'please' and 'thank you' are not recognition. They're just good manners and should already be enshrined in the culture. If not then that would be a good place to start because it helps a lot. Secondly, a manager who comes around five times a day saying 'good job' is just going to be annoying and perceived as insincere. Thirdly an employee who meets set targets is not performing a feat. It's them doing what they're paid to do.

Studies have shown that while recognition is motivating, it should come little but often. The recipe, according to Gallup polls is once a week - with sincerity. Don't gush and never qualify it with a 'but'. Other appropriate times would be at the close of a project, or when the employee has gone above and beyond or visibly contributed to the company's goals. Praise should not be dished out just for smarts and outcomes but also for effort. 'Couldn't have done it without you/you all', is a great start. Said at a team meeting is even better.

Then comes the other fine line. Oodles of recognition are all fine and dandy but at what point does that recognition need to be turned into reward? You have your basic recognition based on common courtesy and respect for those doing their jobs, and specifc recognition for high performers.

But talk is cheap... literally. Therefore common sense would suggest that reward comes after a period of consistent recognition of visible and impactful employee. There are of course those rare employees for whom work is its own reward and who do not seek external approval. The recognition of a job well done comes from within. At the same time, it is a rare person who doesn't like to be appreciated in some way shape or form.

Before getting into the Tao of Recognition, employers should consider that each employee who has earned a reward will have a different idea of what it means to them. Maybe there are people who love gold stickers and tin badges. But for most it will be something that they feel will contribute something to their lives, which usually means money, time, gifts, a nice meal, a shopping voucher or even travel incentives.

Talk to employees, see what motivates them personally, get their input and always make sure fairness prevails by offering rewards of equal value. Don't make it a competition. Every employee should understand the criteria and reasons behind the reward system and know that they are recognised and appreciated in any event whether they aim for the gold star or not. Rewards can fall into categories such as outstanding customer service, innovation, teamwork, cost-cutting and efficiency proposals, which give employees across the board the opportunity to benefit. Recognition can even be given to employees that are a positive and uplifting influence on other staff.

The Tao of Recognition

- When you do say 'thank you be specific'. It adds more meaning. Did your employee come up with some good ideas? Say so. Did they help a customer above and beyond was as required? Spell that out. Don't forget to praise effort as well as ability. People who work hard are also deserving.

  • Recognition could also be given through an email that's CC'd to higher-ups.
  • If senior staff have said positive things about an employee or their work, let them know.
  • Recognition of employees also means recognising who they are as people. It means asking them how they are, how is their day going but it must be sincere. If you don't remember their child's name, you're losing. Make time for them.
  • Organise team celebrations, bring a cake. Ditto for birthdays and work anniversaries.
  • Bring food or snacks often but not regularly. Having pizza Fridays will just backfire if it's axed for any reason.
  • Managers often receive gifts or product samples. Instead of stuffing them in your briefcase, pass them on to staff occasionally either to a deserving individual or for everyone to share.
  • Allow employees to accumulate time off if they put in an extra hour or two here and there - top performers generally put in more than eight hours even when there is no official overtime sanctioned. There is no direct cost in offering them back at least some of their time.
  • If there is work that can be done from home, allow them every now and then to do that.
  • Try to ensure recognition is not 'automated' by sending out the same email or using the same line with everyone. Employees want to know what specifically they've contributed. The same goes for automated birthday or anniversary messages, cards or gifts. Recognition must be strategic or it will become meaningless.
  • Encourage peer-to-peer recognition. According to research from Deloitte, employees feel better when the people they work side by side with also appreciate what they do. Make it part of a culture of encouragement that helps unleash the potential of some shrinking violets perhaps. Everyone deserves to be noticed and everyone has good qualities. Learn to see them.
  • Don't forget to gather feedback by communicating regularly with employees to make sure they don't perceive any favouritism. Be ready with the facts and explain exactly why X or Y were given special recognition or reward. The last thing you need is festering resentment.
Implementing a cost-free recognition programme whether informal or formal might sound like a lot of work for busy managers but it is as crucial as any other recruitment or retention tool. That aside, it should not be seen as a chore by managers or HR who should by default be interested in the wellbeing of their workforce. Otherwise employees will see right through it and you won't have the respect needed to make a recognition and rewards mechanism count for anything. Group hug anyone?