In VUCA (volatility, uncertainty, complexity and ambiguity) times, companies face challenges in drawing and retaining employees and therefore they need to articulate a solid Rewards & Recognition [R&R] strategy – a scheme that is unique and aligned with the company’s values, business goals, talent management and retention objectives. The pace of change will only continue to increase. Reward programs will require constant review to ascertain their appropriateness for the organization. Indian companies are also implementing rewards management strategies for attracting new employees and retaining older employees in the organization. Therefore, reward management is extremely significant to the success of every company. There should be a fair reward strategy covering all essential factors to determine the rewards.
(Source: "Emerging Trends in Reward Management" by Prof Sandeep Kaur, Journal for Studies in Management and Planning, Volume 02 Issue 11, November 2016 - A few words changed)
Let us first have an understanding of the phrase “Rewards & Recognition”.
‘Reward’ is a motivational act of the management that celebrates the performance of an individual employee or a team. This performance could be reaching specific and tough business goals or producing exceptional results in difficult times or a heroic act in an emergency. Many such acts may not necessarily be repeated and that is where recognition comes into play. ‘Recognition’ is an act of management that boosts an individual employee or a team to repeat desirable-but-non-routine behaviors (job/supervisory/managerial/leadership). Both rewards and recognition can be financial or non-financial.
Any company that wants its employees to walk that extra mile or to achieve breakthrough results (lift the bar of performance) would require a Rewards & Recognition policy. The primary purpose of the policy is to encourage employees to go beyond the normal, individually or collectively, to contribute to achieving business goals. In fact, a good R&R Policy also works as a catalyst for attracting talent.
A few objectives of a good R&R policy could be:
- Establish the criteria of performance- and team-oriented work culture.
- Recognize outstanding value-added contributions of employees in spite of constraints.
- Promote positive behaviors congruent with the company’s values.
- Create “role models” for others to emulate and exceed.
- Reward employees - consistently, equitably, fairly.
What are the recent movements in R&R?
In October 2016, Mr. Savji Dholakia, a generous diamond tycoon from Surat (Gujarat, India) rewarded his super performers with 1260 cars + 400 flats to employees as Diwali gifts! This generous boss had rewarded his performers in 2014 also with 491 cars + 207 flats under a similar initiative in 2014
HCL, one of the largest Indian IT companies, had declared the reward of Mercedes cars and vacations at exotic locations in India and abroad for its lead performers. Infosys had gifted iPhone 6s devices to 3000 employees. Another leading IT Company had instituted the CEO's Club, reserved for top performers.
The old is out and the new is in
R&R tools of the 90s and early 2000s are now hygiene factors. An appreciation letter from the CEO, a one-time bonus, an out-of-turn raise, publishing personal details in the in-house magazine, etc., have become too routine and rather dysfunctional. Such rewards have now become almost obsolete.
So what is pushing the new philosophy in R&R?
Five salient factors stand out.
- An accelerated change in the workforce demographics characterized by the dynamic aspirations of different generations
- The ultra-chronic need for retaining super-achievers
- Faster erosion of the perceived value (read shelf life) of the reward
- Need for flexibility
- Increasing focus on diversity
In R&R, there are two types of organizations - one that sets the trend and the other, which abides by the set course. Following (read copying) trends in R&R is a little dangerous. Why? Because, metaphorically speaking, “each human responds differently to the same type of food”. The need of the hour hence is customization based on a company’s values, business plans, and inherent strengths.
The R&R guidelines of Infosys would not hold any relevance for TCS. Therefore, the perpetual need to ideate, experiment, and innovate, with the shifting workforce dynamics and business priorities. HR heads would also have to dig deeper to understand the quantum and longevity of impact that a reward creates.
How would or should rewards look in the near future?
For Junior Management, the rewards could include a latest gadget or an unlimited GB data plan for a year or a marriage sponsorship or sponsoring a child’s education for a year. Another choice could be fully sponsoring the higher education of choice.
An all-paid, all-bachelor group's one-week international vacation could be a perfect testimonial for pinnacle performance. This group is young and has an interest in sports and adventures. Then how about sponsoring the deserving ones for advanced training in an adventure sport? The company can examine the hobbies/passions of the performers and offer matching R&R. If an employee likes tennis, then how about a sponsored trip to a grand slam final of choice? Even workplace design (ergonomics) has a lot of ‘reward’ value.
This group brings energy, aggression, flexibility, and above all, passion. Of course, the attrition rate is the highest in this lot, but then the moot point would be to maximize the delivery while working on retention.
What would Middle Management fancy as rewards? Annual sponsorship for a child's post-graduation or a paid vacation with their family or an all-paid interior design of the house or a subscription to an internationally acclaimed domain magazine or a paid-up wealth-management advisory service or a plug-and-play new home. These people would be typically in the mid-30s/early-40s and hence might even prefer membership to a best-in-class club. Imagine the impact if the reward was to shadow a board member for two full days.
Employees in this bracket are more stable than the younger ones. However, the challenge for the HR head is to offer 'renovation' opportunities. As knowledge fades faster than ever today, this lot would be pleased if offered learning opportunities for leadership/domain skill development at a premier management school. A reward that holds a high impact on the near-future career is always in demand.
The Senior Management is the most sensitive lot of the triad, simply because they have different aspirations and possess the rich experiential knowledge of the business, industry, and the environment. Retention here has more to do with the assignment depth and personalization. Monetary necessities are no longer relevant.
The primary need for this lot is opportunities for making and crossing the new bridge. The approach for this lot would have to be completely personalized. Representing the company in international conferences or being a trustee of a premier management school or spending two months in the company's CSR domain or retreating for spiritual purposes are a few examples of rewards that could suit or even entice this group. It would be just fine to seek inputs from the lead performers on what type of reward they would choose.
According to the Staying@Work Survey 2016, over 50% of employees say their jobs are a primary source of stress, especially in companies where there is less regard or prioritization for personal safety, health, and well being.
While HR heads can certainly work on reducing stress through better job design, technology adaptations and improving the psychological climate, the situation also offers a window to R&R.
The buzzwords for a strong R&R policy are spontaneity, variety, personalization, consistency, equity and fairness. Is it time to revisit yours?