say it with rewards

He's doing a great job. He is your 'high performer'. But the competitor has made him an offer. With a fatter 'compensation package' to boot! You can't pay him higher than that. He's already amongst your highest paid employees.  Now he says he's going…

How many employers find themselves in this situation to day? Too many to count. You thought you were among the most competitive paymasters in your market - and you're probably not wrong. Yet, all of a sudden a poacher comes along willing to pay more. How then can you retain your talent?

It is here that non-financial recognition, a vital element of any reward strategy, assumes great significance. Non-financial rewards, if executed appropriately, can be an organizations most effective tool to motivate and enhance employee performance and to build a platform for a lasting relationship with a valued employee. In the final analysis, it may just swing that the employee is tempted by that exciting offer to stay with you.

For a start, let's view non-financial reward in two ways viz.: Immediate reward and Career reward. Immediate reward could be one-time material reward such as gift vouchers, dinner vouchers, paid holidays, or any other gift in the form of acclaim or public acknowledgement of employee contribution. Career-related reward is a more effective form of non-financial reward, which may be one with a long-term implication for the employee.

Immediate Rewards

This type-comprising personal or public praise or material rewards - is meant to acknowledge work well done at that moment when it means the most to the employee and the team. It tends to be informal and delivered on an ad hoc basis, but it communicates a responsive, performance sensitive management. Some means could be:

Line management thanking an individual or group for their contribution by providing details of customer feedback.

¨ A brief, informal note to an employee.

¨ Taking time in regular meetings or informal gatherings to recognize the work of employees.

¨ Providing positive feedback in the presence of more senior staff.

¨ Utilizing the performance management process to comment on good performance.

¨ Presenting employees with plaques, certificates, formal letters or the like: Running an employee or team of the month program, say, in the in-house magazine.

¨ Material reward such as gift vouchers, organization logos, subsidy of travel or holiday expenses, allowing employees to retain frequent flier points accumulated on business travel

Though no rocket science, these rewards are usually simple to administer, cost little and do not form part of the employee's regular compensation. Yet the impact can be huge and encourages lifting the performance bar in the organization to a certain height.

Career Rewards

This reward is related to the employee's professional development.  Rather than offer an immediate prize for performance, these are usually long-term and have an on-going motivational effect. Career rewards involve a dual benefit to both the recipient and the organization.  Apart form the value of these rewards as a form of non-financial recognition, their contribution to succession planning, career development or performance management strategy is more pertinent. Some of these include:

¨ Providing formal or informal training opportunities

¨ Supporting an individual or team to take on new initiatives or additional responsibilities

¨ Allowing a valued employee greater autonomy in his work

¨ Providing opportunities to attend external or overseas training programmes, seminars, or conferences

¨ Instigating career breaks or sabbaticals to recognize key contribution to the business

¨ Offering valued employees the opportunity to rotate in higher positions or to lead key projects in the organization.

Clearly, while organizations have an array of options to enable non-financial recognition, if managed carelessly, the whole reward strategy could backfire. Often, organizations have ended up demotivating both reward recipients and those who were left out. So, what are some of the success factors?

Praise Does Not Pay The Bills

Recognition must be recognized for what it is part of the overall reward equation remuneration package. Trying to make a low-cost gifts part of the performance-based component of pay will be ineffectual. It isn't an informal version of variable pay! Instead, it could suborn the motivational effect of spontaneous praise.

Also, non-financial rewards need to be proactively managed with regard to the timing, formality and value. Praise or material rewards are most useful when they reward employees for past performance, and are spontaneous and timely. Another key variable impacting the success of non-financial rewards is the implementation.

Sensitive implementation of rewards is essential to ensure morale enhancement of the rewarded employee without adversely impacting the rest of the workforce.

¨ Keep the cost of material rewards relatively low.

¨ Reward past performance and specify the behavior or achievement that is being recognized.

¨ Maintain interest through variety.

¨ Make genuine praise a part of your management style.

¨ Manage recognition as part of your reward equation.

Recognition As An Incentive

Rewards like an overseas holiday or long-term career rewards should not be understood as a prize for past performance, but an incentive for improved future performance. For most effectiveness, these need to be managed as vigorously as other performance management systems.

¨ Identify what performance will be rewarded. For instance, development of new product, cost reduction, productivity improvement, customer delight, or demonstration of organization values.

¨ Set performance targets those are clearly linked to business strategy and accepted by the employee as fair and achievable.

¨ Ensure that performance measurement criteria are clear, reliable and consistent.

¨ Manage recognition systematically.

Aligning Non-financial Rewards With The Corporate Culture Of The Organization

Culture is unique to an organization. It is a system of shared values, beliefs and perceptions that directly or indirectly influences the behavior of employees. Often, different functional groups, business units, or occupational clusters spawn off their own sub-cultures. Non-financial reward needs to be in sync with the corporate culture. After all, it is about underlining preferred behavior and performance.  For instance, on a shop floor where teamwork is encouraged, recognition for any one individual while ignoring the team may provoke dissatisfaction, embarrassment, and one-upmanship. A well-designed recognition program can work as a culture-building tool, aligning culture to organizational goals and strategy.

Recognize Individual Preferences

Recognition will be effective as long as it fits with what an employee values, likes, and needs. Different forms of reward will have different impact on individuals - hence while tailoring such a strategy, individual preferences must be kept in mind.  The opportunity to attend an overseas conference may prove to be more of an inconvenience to an employee with a dependent child. Instead, a management development program at a local institute would be more welcomed.

It often makes sense to offer employees a choice. Ask them to choose from the 'buffet' of rewards. Material and career rewards. Material and career rewards can be more troublesome if badly managed. However, if implemented consistently and objectively, they can help align individual behavior and corporate goals. Non-financial rewards when sporadic, without any strategic perspective can only fail to make sustained impact. Making such rewards readily accessible could undervalue its potential. This calls for a fine balancing act for maximum impact.