Many HR leaders would agree that designing employee rewards and recognition programs for a company can be challenging, it can become even more complicated when designing a recognition program for a global workforce. Using a one-size-fits-all approach to global employee recognition might lead to an epic fail; therefore, it's best to understand the ways you can improve your chances of success.
In this 4-part series, focusing on employee recognition programs, we will explore this topic and provide practical ideas to support your company. In this first part of the series, we will be discussing the best practices for designing a global employee recognition program.
What is Employee Recognition?
Employee recognition is a formal or informal but meaningful way of letting your employees know how much you value their performance and loyalty in the workplace. Usually, companies use recognition to motivate employees, reward specific attitudes and behaviours, and influence other employees to achieve better results.
Why is recognition important? With the help of recognition, employees understand that their company values them. Employee recognition increases employee productivity and reduces employee turnover. According to a Harvard Business Review article, "formal recognition can take the form of awards, bonuses, promotions, and raises while informal recognition can be a verbal thank you or handwritten note."
Other forms of rewards and recognition include perks and savings options, gift cards, points, experiences, and activities.
The Business Impact of Employee Recognition
Several studies have shown the business impact of recognition on employees. Recognition improves employee retention, engagement, productivity, and morale. Here are a few supporting statistics:
A Gallup report states that "employees who do not feel adequately recognized are twice as likely to say they'll quit in the next year."
A Deloitte article shows that employee engagement, productivity, and performance are 14 percent higher in organizations where they practice employee recognition than in those without recognition.
A study of the global workforce by The Boston Consulting Group, which ranked 26 factors of happiness on the job, showed that “the most important single job element for all people is appreciation for their work.”
Typically, most employee recognition programs apply any of these structures:
Also known as the traditional or top-down employee recognition, the manager-employee is a popular method used by many companies. Here, a supervisor evaluates an employee's performance during a formal performance review process, which sometimes occurs once a year. For many employees, the formality and timing of the process cause some form of trepidation because it's usually a win-or-lose outcome, and here's why:
If the reviews are positive, the employee might get a pay raise, promotion, or award. However, if the reviews are negative, the employee might get demoted or lose their job. Research has shown that the majority of employees do not believe their managers know how to recognize them. Therefore, the manager-employee structure is often viewed as less motivating for employees, and political since it rarely reaches the "quiet but critical high-performers" in the organization.
In a peer-to-peer recognition structure, employees are recognized by those at the same level or on the same team. This type of recognition is often less formal than the manager-employee structure and allows employees to give their peers more immediate feedback. Peer-to-peer recognition feels less like a performance review and more like an organic expression of gratitude.
According to the 2018 survey conducted by the Society of Human Resource Management (SHRM) in collaboration with Globoforce, organizations that use peer recognition reported a positive impact on the organization; however, it is more effective when the feedback is ongoing throughout the year. The downside of this structure is that employees may give their friends favourable reviews instead of focusing on their work-related value.
According to the 2019 Deloitte Global Human Capital Trends report, team-based organizations are a more effective model for operating in today's dynamic and unpredictable business environments. When employees work as a team, they assist each other in reaching organizational goals. Therefore, the team-based recognition structure allows a company to recognize and reward the team members' overall performance and collective contributions.
Instant recognition is any form of recognition that is given on the spot. Therefore, this recognition structure is also known as On-the-Spot recognition or Spot Bonus. According to the World at Work, a spot bonus is an informal cash reward delivered "on the spot" to employees. They are used to motivate employees in a timely and cost-efficient way.
Reports have shown that there is a generational preference for instant recognition—80 percent of millennials prefer on-the-spot recognition over formal reviews, and it is estimated that by 2025, 75 percent of the global workforce will be millennials. This means that organizations can expect a continuous increase in the popularity of instant recognition by the millennial workforce.
Best Practices to Consider When Designing a Global Employee Recognition Program
The following are some best practices to consider in your company:
1. Determine your recognition strategy
As an HR leader, the first and most important step is determining your employee recognition strategy. This entails the following:
Getting your executives to understand the business impact of the employee recognition program and sponsor the program.
Budgeting for the financial, human, or other resources needed to execute the plan.
Establishing guidelines that describe the standards of assessment, the qualities and behaviours that deserve recognition, the recognition program's structure, the frequency of rewards, and the type of rewards (such as gift cards, plaques, cash, reward points, or special events).
Communicating the recognition guideline to employees so that they are aware of the company's expectations of them.
It is also crucial to align the recognition program with your company's vision, values, and objectives to achieve success. Research by Bersin & Associates found that "only about 60 percent of organizations tie their recognition programs to business goals". Lastly, ensure that the program is achievable, timely, relevant to your employees, and measurable.
2. Get everyone on board
You will need to involve the leaders, managers, and employees in the recognition program. Leaders play a pivotal role in shaping a company's culture, and as such, they have a responsibility to reinforce behaviours that reflect the company's values. Leaders need to set the tone for the rest of the organization by demonstrating those behaviours that deserve recognition and participating in the recognition programs.
Also, since managers will vary by cultural backgrounds, you will need to train them to use the recognition program effectively. According to SHRM, "managers must be able to respond to nuances in communication styles, as well as deal with different expectations that employees have of their leaders across national cultures." Leaders and managers play a crucial role in the success of a global recognition program.
Lastly, it is important to involve your employees in the design and implementation of the recognition program. Since recognition is targeted at retaining and motivating employees, find out what is important to them and give them a choice—some employees may prefer private recognition while others may want public recognition. Some employees may choose to be rewarded with an experience, while others may select cash or other gifts.
3. Practice multidirectional recognition
As discussed above, a popular type of recognition structure is the manager-employee, where recognition comes only from the top. However, popular does not necessarily mean best practice. It is important to allow recognition to come from any direction—from managers, peers, or direct reports. If the company allows external parties such as customers or business partners to reward employees, they need to establish those guidelines for employees.
A major challenge for HR leaders is finding ways to motivate and retain talent. It is not advisable to assume that your international workforce will be motivated by the same incentives. As a global company, you will need a recognition platform that all your employees can access across your different offices. The platform should offer customized and culturally-relevant rewards to them.
According to a Deloitte article, today's employees want personalized, flexible, and customized recognition. Therefore, when choosing a recognition platform, ensure that the provider has global suppliers and support centres to help deliver rewards to employees on time.
5. Gamify the recognition program
Gamification offers several benefits, such as active participation and competition. By gamifying your recognition program, you motivate employees, through points, badges, or leaderboards, to improve their performance and outcomes. Based on findings from a gamification expert, Toby Beresford, companies can design a gamification program to drive the right behaviours. With recognition programs, companies can practice gamification to encourage people to "win" something for themselves, through their contributions to the company.
6. Evaluate and monitor program metrics
The best way to track the business impact of a specific employee recognition program is by measuring key metrics such as return on investment (ROI), retention, employee engagement, productivity, and participation. As a strategic HR leader, it is important to collect feedback about the program, determine if the company met its recognition objectives, and show the company the business impact, successes or failures or the program, and areas for improvement.
Having introduced employee recognition and discussed the best practices for designing a global employee recognition program, we are looking forward to sharing the next part of this series next week. For part 2, we will be showing you key employee recognition statistics and analyzing the different ways recognition programs can impact your company.
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