Archive for the "Measuring Recognition & ROI" Category

Compensation Cafe: A Question of Measurement and Value Creation

By Derek Irvine

Compensation Cafe logoRecognize This! – Nonfinancial metrics are increasingly used in compensation formulas; recent research and trends in crowdsourced data may improve the value of these trends.

Getting compensation formulas right can be challenging, ensuring that leaders maintain a balanced focus on short-term results as well as long-term value creation. Traditional levers in those formulas have been in the form of various financial metrics. Companies are also increasingly turning to nonfinancial metrics as well, to reflect more of a balanced scorecard approach.

The efficacy of nonfinancial metrics is the subject of some debate, however, captured in a recent research highlight in MIT Sloan Management Review. Discussing that research in this recent post on Compensation Cafe, I believe the issue boils down to two main questions:

whether [those] metrics are indeed related to a firm’s ability to create value, and appropriate to include in compensation formulas [and] the extent to which these types of metrics can be cascaded to compensation formulas for managers, aligning measurement and value creation across the entire organization

The first part is largely answered by the research in question, calling for organizations to assess the degree of influence (as a lead indicator) that a metric can have in predicting the creation of value. A related issue is the measurement of nonfinancial metrics, in terms of both accuracy and reliability.

But as I write in the full post, these concerns may be rapidly receding in an era of big data and crowdsourcing:

Imagine the insights that can be afforded by having recognition data not only on specific behaviors that align to a company’s core values or results, but also on the social relationships that capture patterns of collaboration, teamwork, and innovation.

Crowdsourced data may also help widen the scope from traditional nonfinancial metrics, like engagement and satisfaction, to the full range of activities that impact the bottom line. Instead of metrics that are infrequently captured in annual or semiannual surveys, real-time data is generated on accomplishments and results, as well as key behaviors like recognition and coaching.

The availability of nonfinancial metrics that are crowdsourced helps to answer the second part of the question, cascading the use of those metrics in compensation formulas across the company to align behavior and drive long-term value.

Which nonfinancial attributes do you think leaders across the company should be compensated on?

Recognition, from Culture to Practice!

By Traci Pesch

Photographic light spiralRecognize This! – A sustainable culture of recognition starts with “why” to inform positive spirals between culture and practices.

Why does employee recognition matter? What elements make social recognition a success? How do we even define “success?” What types of significant results are achievable through social recognition?

These are a few of the most common questions I hear about social recognition. Beyond the obvious, “Yes, it’s important to say ‘thank you’ – to notice, acknowledge, and appreciate the efforts of those around you,” social recognition does have significant impact on how our people experience work. (So why not make it a more WorkHuman environment?)

So, why is recognition important?  More importantly why is creating a culture or recognition vs just implementing another program so important?  A culture of recognition contributes to success by creating a positive spiral effective, encouraging greater alignment with core values, and reinforcing key behaviors that drive businesses forward.

In turn, connections between employees are strengthened, leading to greater engagement and satisfaction, as well as improved trust and collaboration.  Employees who are recognized for their contributions are more likely to bring their whole self to work, resulting in a range of outcomes and results.  Essentially, recognition done right, drives top priorities and business results.

Illustration of culture spiral text

We’ve thought about this a lot. It’s our passion. We’ve been refining this with our customers for years, codified in our book The Power of Thanks.

Recognition BlueprintThis blueprint for social recognition success involves the elements illustrated here, starting with securing executive sponsorship and defining your goals and metrics for success, then continuing though creation of a strong program designed to reach all employees for that engaging recognition experience, and then offering a great choice of rewards in order to ensure every recognition moment has the longest emotional tail possible.

These are the elements from which our best practices and benchmarks are derived.  These best practices and this approach, is proven with large, global companies across many verticals.

With these elements in mind, have a look at your employee recognition program and the current state against each key element of success.  Our vision for all of our clients is to truly build a culture of recognition and appreciation that lives, grows and is sustainable.  As a matter of fact, this year we’re celebrating 10 years of partnership with several clients, who transformed their thinking from “let’s have a recognition program” to “let’s build a sustainable culture of appreciation and recognition and have quantifiable results to back up the WHY.”

What are some of your company’s ambitions for establishing a culture of recognition?

What Happens to Me When You are Recognized?

by Derek Irvine

Inspiring othersResearch is split on what happens to the motivation of people who see others get recognized. One solution is to simply recognize everyone.

There is quite the interesting debate shaping up among researchers looking into the motivational potential of recognition. The specific question under investigation focuses on the impact that recognition has not on recipients, but on the motivations of the people surrounding those recipients. Simply put, if I see you being recognized for excellent work, will I be motivated to step up my game or not?

In one camp researchers with the Centre for European Economic Research found data supporting the affirmative. In a controlled field experiment, participants were hired to complete a three-hour data-entry task. The researchers found that providing recognition to top performers drastically increased group performance, with the biggest gains driven by those who did not receive the recognition. It was hypothesized that these findings are largely attributable to a combination of conformity and reciprocity effects, as a “rising tide that floats all boats.”

But what if this effect isn’t as universal as we might expect? This is the question posed by a recent study published in Psychological Science. A set of experiments involved grading peer assignments as part of a massive open online course (MOOC). In a phenomenon termed “exemplar discouragement,” the research team found that students who were given exemplary peer material to grade were much more likely to quit the course than students given typical peer material. The implication for recognition in organizational settings is that individuals may respond to the recognition of others with decreased rather than increased motivation, when they perceive an outcome as unattainable.

What do these findings and the larger debate tell us about designing recognition strategies and programs that will extend motivation beyond the recipients to the entire workforce?

In two simple words: include everyone! Here’s why:

  • To encourage positive spiraling of a “rising tide.” Those who witness recognition clearly step up their games, contributing higher levels of performance. Subsequently recognizing these individuals maintains those high levels, and encourages other sets of workers to perform better. Onwards and upwards the spiral goes.
  • To avoid exemplar discouragement. Instead of recognizing only the best performances, excellent contributions across all levels of your workforce can be recognized and reinforced, from stars to core performers. Everyone can see that higher performance is an attainable goal and is more likely to strive towards that goal (further reinforcing the above spiral effect).
  • To measure and develop a more robust impact. The recognition-performance effect is amplified across teams, units, and geographies in your company. With the help of data analytics, leaders can nurture emerging positive spirals and encourage breadth and depth of contributions.

This notion of inclusion provides a straightforward way to reconcile the seemingly disparate findings from the research cited above: by expanding the focus from a single recognition moment to many, and from a few recipients to many. When no one is left unrecognized, discouragement may be hard to come by.

What other kinds of strategies have you seen be successful in keeping a workforce motivated?

Trends in Employee Recognition: Culture-Oriented/Results-Driven

by Derek Irvine

Compensation Cafe blog logoRecognize This! — Results-driven recognition programs that focus on deeply embedding recognition into the company culture have the greatest impact on employee engagement, motivation, satisfaction and retention.

WorldatWork released their latest“Trends in Employee Recognition” report this week. I shared key trends and insights on the report on Compensation Cafe today (click over for more).

To summarize, top trends highlighted are:

1) Prevalence of recognition programs in organizations continues to grow with emphasis on those that drive results. While length of service continues to be the most prevalent of program types, those that have real results-driven impact continue to grow in popularity, especially programs celebrating above-and-beyond performance, motivating specific behaviors, and encouraging peer recognition.

2) Top goals for recognition continue to align with types of programs offered. Motivating high performance, reinforcing desired behaviors, and creating  positive work environments through a culture of recognition continue to top the goals list for recognition programs.

3) Results-driven programs gain in importance in organizations overall, with an emphasis on increasing employee engagement, motivation, satisfaction and retention.

4) Creating at true culture of recognition and appreciation is a driving factor for increases in employee engagement and motivation.

“Through further analysis it was found that organizations with a strategic and/or embedded culture of recognition indicate that their employees have higher engagement, motivation and satisfaction. Additionally, organizations leveraging result-driven recognition programs, in particular, may be experiencing greater overall success.”

As I said in Compensation Cafe, Good planning matters. Employee recognition is not a nice-to-have soft-skill. When done strategically to reinforce desired behaviors and drive organizational strategic objectives, recognition can have a significant impact on the factors most closely related to increased employee performance, productivity and customer service. That requires detailed planning up front and continual evaluation as organizational needs change for two critical factors: (1) your primary goals and ambitions for the program and (2) the metrics you will use to measure success against those factors.

What trends for recognition are you seeing in your organization?

Compensation Cafe: A Paycheck Is Not Recognition for a Job Well Done

by Derek Irvine

Compensation Cafe logoRecognize This! — Psychologically healthy employees require appropriate compensation and praise for their efforts. Are the two in balance in your organization?

At a recent meeting discussing what contributions qualified as eligible for recognition, a meeting participant piped up, “Well, our hourly employees already get overtime pay for going above and beyond, so recognizing them would be like double-dipping.”

No. It doesn’t matter if you’re exempt or non-exempt. If you demonstrate desired behaviors in a commendable way, you should be recognized for it. It’s the classic discussion of the difference between compensation and recognition, which was the top of my most recent post on Compensation Cafe.

Check out the post for more on the topic, including a graphic illustrating the relationship between raises and recognition in terms of the amount invested vs the length of impact, Freakonomics research shared by Ben Eubanks, and even findings from the American Psychological Association.

Compensation Cafe: 2 Things to Get the Most Out of Employee Recognition Programs

by Derek Irvine

Compensation Cafe logoRecognize This! – Measurable, peer-to-peer recognition set apart average employee recognition efforts from Best-in-Class programs. Results are obvious to the bottom line.

Check out my post today on Compensation Cafe for a deeper dive into a September 2014 report from Aberdeen, “Next-Level Employee Recognition.”

The report highlights two key features of best-in-class employee recognition programs. Recognizing and appreciating employees for efforts, behaviors and results in line with what matters most to your organization is guaranteed to get positive results. But getting the most out of employee recognition programs requires empowering all employees to fully participate in recognition and giving managers actionable oversight of recognition itself through metrics and dashboards.

Here’s a graphic from the report as a teaser:

Graphic showing bottom-line impact of peer recognition programs

Click over for the full story.

Compensation Cafe: Employee Recognition – The Psychology Perspective

by Derek Irvine

Compensation Cafe logoRecognize This! – Employee recognition matters – to employee health, performance and productivity as well as to the bottom line.

There’s lots of research on the importance of recognition and the power of thanks. Long time readers know I’ve written about a good bit of it, whether the research came from academia, industry analysts or vendors. On Compensation Cafe today, I wrote about a new piece of employee recognition research that caught my attention mostly because of who conducted the survey – the American Psychological Association (APA) Center for Organizational Excellence.

Click over for the full post and more on 3 key findings I highlight:

  1. A better recognition experience leads to better business outcomes.
  2. Fair pay matters most, but don’t rely on that too much.
  3. We rely too much on manager recognition.

As I conclude in the original post, it’s a bit obvious why a psychological association would be conducting this research – because whether or not we’re recognized for what we do all day impacts our psychological well-being. And that’s also a bottom-line impact – the health and wellness of our employees.

Read the post and share your comments.

Compensation Cafe: Metrics that Matter

Compensation Cafe blog logoRecognize This! – “What gets measured gets managed” is true, but determining the correct metrics is the real trick.

We all know metrics matter. The real question is which metrics.

That’s the theme of my latest post on Compensation Cafe, in which I explore the metrics that matter from three points of view – the HR practitioner, the HR industry leader, and the CEO.

The theme emerging from all three is not surprising. As I say in the post:

Whether on an individual, departmental or organizational level, metrics that matter are those that illuminate company success. The challenge lies in clearly defining what the business success metrics are, then translating them into departmental, team and individual goals. The even greater challenge is ensuring every person then understands how he or she contributes to those goals in their daily work. The fastest path to success is constant feedback. Praise when you’re on track and provide course correction when needed.”

Read the full post and tell me, what metrics matter the most to you?

“Good People Data Makes the Business Run Better”

image of flowing numbers and lettersRecognize This! – More sources for data on our most valuable asset – our people – is necessary to drive organization success.

Data, specifically good data, drives successful companies. I call out the obvious with “good data” because a great deal of superfluous and even bad data floats around any company. As analysts often say, “correlation does not equal causation,” but correlation can reveal interesting insights if interpreted through the correct lens. Discerning the good from the bad, however, is the real trick, especially in this era of big data.

People data is particularly sensitive because the decisions we make based on the correlations (and causations) gleaned from people data affects lives. That’s why people like Thomas Otter are vital to our industry, helping ensure we are using HR data effectively. Otter was an analyst with Gartner for many years (VP of Human Capital Management trends and lead SAP analyst) before moving to SuccessFactors.

In an interview with HRZone, Otter commented:

“The modern HR system needs to do more. Make managers manage better, drive employee engagement, provide HR with insights, and most importantly, make the business run better.  The HR department is not the only customer of the HR system. Good people data makes the business run better.(emphasis mine)

That’s the context in which HR functions: managing the real assets that ensures company success (or dooms it to failure) – the people. Generally, however, we can do a much better job of assembling data on our people. All too often, the data comes once a year from an annual performance review or very informally through conjecture or gossip. The self-promotional types tend to rise to the top while those who are equally talented but less able to promote their own successes tend to have their skills marginalized.

So how do we gather more information more consistently from more sources on all employees? Social recognition, strategically applied, is proven to drive the data needed to make more informed decisions. With social recognition, all employees are on alert for excellence around them, particularly excellence linked to what the organization needs most – demonstration of the core values in contribution to achieving strategic objectives. When all employees are noticing, acknowledging and – critically – recording detailed praise and appreciation, far more employee data becomes rapidly available for timely decision making.

Otter confirmed this when asked what he viewed as the key HR tech trends for 2014 (quoting):

  • Compliance is not going away. Legal changes such as eSocial in Brazil, RTI in the UK, and imminent changes in EU privacy regulations will keep HR departments busy.
  • Social software has already revolutionised recruitment, and it will hit other part of HR in 2014. We are only just beginning to understand the power of analytics, and the reach that mobile brings.
  • Think beyond employees, and think total workforce. Contingent workforce is an opportunity and a threat.
  • Mobile goes mainstream.

Mobile is an especially important trend in this context of vastly increasing the amount of people data available for analysis. Implementing social recognition with a fully integrated mobile platform ensures greater participation (as “mobile goes mainstream”) and therefore more data available.

What do you learn from the data gathered through social recognition? Many things, including which employees excel at demonstrating specific values, who works most effectively across teams or within the team, areas in the company of exceptional performance and areas where intervention may be necessary.

How does your organization generate and aggregate people data? What do you look to learn from your analytics of that information?

3 Lessons from Ford: Why Culture Matters

Recognize This! – Company culture, as the culmination of individual behaviors, can be the critical factor for success in very difficult times.

The 2008 recession was shocking to many for many reasons, not least of which was the failure or near failure of very large companies that had become institutions in the minds of many. In the US, just one example is the auto powerhouse of the Big 3 in Detroit – Ford, General Motors (GM), and Chrysler. All three were hurting badly by the end of 2008, with two ultimately accepting bailouts from the US government. All but Ford.

What kept Ford from needing a bailout? There are several factors, including prior leveraging of its assets. But I think it’s more than just the clear-cut monetary business factors. Much of Ford’s ability to weather the economic storm and emerge stronger than ever in a very competitive industry has to do with their culture. Long before the recession hit, Ford President and CEO Alan Mulally had begun reshaping the culture of Ford, describing it this way in a recent interview with McKinsey:

“At the heart of our culture is the One Ford plan, which is essentially our vision for the organization and its mission. And at the heart of the One Ford plan is the phrase “One Team.” Those are more than just words. We really expect our colleagues to model certain behaviors. People here really are committed to the enterprise and to each other. They are working for more than themselves. We are a global company, so we really have to stay focused on the work. There are so many people around the world involved in our daily operations that it has to be about more than a single person—it truly has to be about the business. Some prefer to work in a different way. Ultimately, they will either adopt the Ford culture, or they will leave.”

In this short paragraph, Mr. Mulally is conveying three important components of his company and what it takes for individuals to succeed in order for the company to succeed:

  1. One Company/One Team – We’re all in this together, working towards the same goal. Teamwork isn’t just a pretty framed poster on the wall. It is fundamentally how we behave, locally and everywhere in the world.
  2. Behaviors matter, in everyone – The same fundamental behaviors that drive our success are required from all Ford employees. Commitment, teamwork, focus, business vision.
  3. Success comes more easily when personal and company values align – Your personal work style may not mesh with how we work as a company. There’s no value judgment, but you’ll be more successful in another organization that aligns to your personal approach.

Accomplishing this is far easier with a process and system in place to encourage and support it. Truly strategic, social recognition makes it simple for anyone to notice the good work of others in line the core values and recognize them for it. With everyone on board, the desired behaviors become much better understood in the daily work and therefore much more prevalent in how the work gets done – by everyone, everywhere. As important is the ability to then easily track where those desired behaviors are occurring and where not, so additional intervention and training can be provided as needed.

Should your company and industry find itself in a similar position as Ford and the US auto industry, how would your organization weather the storm? What would sustain you and support both individuals and the company as a whole to succeed even in the toughest of business environments?