According to Bersin and associates, over 87% of companies provide recognition based on years of service, a practice first mandated by unions. While retention of employees is critical and high turnover is undesirable – not connecting recognition to performance or company values is a disservice to employees, shareholders, and leaders. In her research, Bersin analyst Stacia Sherman Gar also shows that service-based awards have little to no impact on turnover, morale, or performance.
A much more effective approach to tenure-based systems is to provide recognition programs based on company values, results, and performance.
Values help define how you want people to work together and make decisions. Some of Google’s values include: 1) Fast is Better Than Slow 2) Democracy on The Web Works 3) Focus on The User and All Else Will Follow. It is easy to imagine how Google’s focus on the consumer helped to guide decisions and policies related to advertising and their uncluttered ad-free home page.
A well-selected values should deliver on the strategic imperatives or missions of a company. One of Zappo’s core values is “Delivering Wow Through Service”, reinforcing a brand promise and competitive differentiator for this successful e-commerce company.
Values-based recognition rewards employees who best demonstrate and exemplify the desired behavior, providing teaching moments for the entire company. In order to maintain their spirit of entrepreneurialism and ensure their size does not slow them down, Amazon provides a “Just Do It” award quarterly to an employee who provides a shining example of taking initiative and “getting ‘er done”.
Great companies are also built when there is tight alignment between the founders vision and the values needed to deliver on that mission. Apple’s relentless focus on building great products and attention to detail is a manifestation of their late founder Steve Jobs. Founder-based values can be very effective when you have a leader that embodies those characteristics.
Goal-based recognition provide awards based on measurable results. Many sales organizations use these for top performers, providing the award to the individuals who makes the most sales or consistently exceeds targets. Almost every position can establish this type of recognition program and leverage SMART goals to make sure they are effective and support company priorities.
In other cases, critical company results are accomplished by cross functional teams of engineers, designers, product, and marketing people. Thus, goal-based recognition can be applied to group or teams. Apple retail stores constantly monitor and optimize their operations to improve their customer net promoter score (% of customers who would strongly recommend to a friend).
Goals-based recognition can also be used to draw attention to key initiatives that need additional exposure. Many companies are in industries being disrupted by technology, business models, and global competition. Print and media companies need to get more digital, digital companies need to go mobile, and mobile companies may need to address new platforms and form factors. A forward-looking goal-based recognition program can help prepare a company for a very different future.
Although tenure and attendance based recognition is an easier system to manage, the effort to develop values and goal-based recognition will produce better results. You can still keep a tenure-based system, but put a lot more weight and attention on recognition that reinforces the values and results of employees and teams. You owe performance-based recognition to your employees, your customers, your board, your investors, and yourself.
Coffee is for closers, awards are for winners.