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Inside
Incentives |
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As efficiency and service become more important in our marketplace, competition is at an all-time high. Downsizing
(aka/firing people) has become the rule of the day, since achieving the greatest competitive advantage through streamlining became the prevailing consensus. However, time has illustrated that downsizing isn’t always
the best avenue to competitive advancement. Competitive advantage is no longer measured by economies of scale, but by effectiveness and flexibility. In one word, performance. A recent university study concluded that downsized firms risk losing the ability to innovate by destroying the informal human links that advance the process of creating new ideas. Another study, by a Massachusetts consultancy, revealed that while downsized firms will experience a brief surge in profitability, they will eventually fall behind their competitors. For performance-based companies, employee recognition is a vital part of continually communicating and reinforcing constantly changing goals. Downsizing negatively impacts employee performance, Consequently, as firms begin to re-analyze the relationship between downsizing and long-term profitability, the role of employee recognition must grow. People And Profitability But many firms have trouble relating employee satisfaction to company profits. This is often why employee-recognition programs tend to get overlooked in strategic planning. However, a study done by Harvard University professor Leonard Schlesinger Jr., draws a clear connection between employee satisfaction, customer service and profits. Employee satisfaction leads to good service, which, leads to customer satisfaction, which ultimately results in increased revenues. Remember, though, that there’s little point in conducting employee-recognition programs unless you sincerely value their service. A genuine expression of gratitude by management is essential. Companies serious about recognition mention employee accomplishments at company meetings or at special events and publicize them in the corporate newsletter. The selection of awards is also a major element of a successful employee recognition program. Product incentives are primarily used in programs to increase productivity or quality of performance. Research reveals that using products to motivate can be highly effective and cost-efficient. In 1999, the Incentive Federation conducted a study to determine users’ objectives, practices, costs and results across all levels of American businesses. The study revealed that while cost (65%) and profitability (62%) are the top two decision factors when designing recognition programs, 61% of respondents in the non-sales recognition and motivation category use merchandise incentives to motivate. Over 65% of respondents strongly agreed that product awards are remembered longer than cash, and that a more exciting, memorable program can be built around merchandise. If an employee-recognition program isn’t based on true, meaningful corporate values, it will be unsuccessful. An effective plan requires that a firm take a good look at its core values and beliefs. Using high-perceived value or name-brand merchandise in a program helps emphasize the importance a company places on hard work and commitment. Such products create an image of trust, quality, and consistency, some of which rubs off on the company. Harnessing Employee Commitment But choosing the right products with your counselor is only part of the equation. For many firms, the question remains: How do you motivate employees? There’s no quick answer, but there are some common elements found in successful programs. The first and most essential is that the firm must be totally committed from the top down to valuing employees. Remuneration is important, but so is clear company-wide communication, commitment to training, the ability to be flexible, timely positive feedback and tangible recognition. When planning recognition programs, understand what makes committed employees. It’s important to give them a clear picture of what they’re working toward. Employees should also feel their compensation is competitive with others doing the same kind of work. Employees want to feel appreciated and recognized for their work and most want to have a say in the way their jobs are done. They believe — often correctly — that management overlooks various ways to improve quality and efficiency, and they typically have the best perspective on how to make improvements. Middle management, too, must make a commitment. Primarily, it should adopt a non-dictatorial managerial style — one that utilizes coaching, encouragement and empowerment rather than intimidation. This isn’t always an easy transition for some managers. Without it, however, upper management’s best efforts will come to nothing. And, unless the CEO and senior executives believe employee commitment is as important as product development, finance and marketing, there’s no way the full power of commitment can be tapped. “Right” Products Show Commitment All told, companies spend nearly $27 billion annually on motivational programs. At the same time, nearly two-thirds of all purchases made are for high-perceived value products. Making this merchandise the centerpiece of any motivation program is a proven way to create interest and excitement. This becomes even more important during periods of rapid change and uncertainty in the marketplace. Merchandise programs have assumed new importance as people seek out another source of stability in their lives. Among the major trends of 2000, were a continued movement toward premiums with high-perceived value such as sporting equipment, watches, luggage, electronics, apparel, and other items available as promotional products. Patrice Kelly is a freelance writer based in Cleveland, OH |
