When an international survey of more than 7,000 employees ranks the UK 18th out of 20 countries for employee engagement, it is fair to say that British business has a problem with keeping staff enthused and excited about their jobs.
And yet research by integrated agency Maverick suggests that, by investing just ten per cent more in staff engagement, businesses could boost UK growth by £49 billion, or £2,700 per employee per year.
It is not surprising, therefore, that employee engagement is becoming a key focus for UK businesses and that employee reward/recognition schemes are proving to be an increasingly popular way to help drive improvements.
‘Recognition is coming back to the forefront,’ says Richard Hingley, group creative director at drpgroup. ‘Through the challenging economy, less and less was happening. It was as if companies didn’t want to be concerned with what they saw as the niceties, they just wanted to get on with business. But that’s changing again now. Companies are becoming more concerned about recognising and promoting good behaviours and pushing the values of the business.’
Those that have recognition schemes in place are convinced that they make a tangible difference to engagement levels. For example, global banking group HSBC operates three different recognition schemes that are designed to reward employees’ behaviours and their demonstration of its values (as oppose to fixed and variable pay, which rewards performance against an employee’s annual objectives).
The bank believes that these recognition schemes have delivered a huge pay off for the business in terms of staff morale and more. ‘We believe our approach to recognition has contributed to improvements in employee engagement. We know this through regular staff surveys and external benchmarking,’ says Nick Ulycz, head of HR at HSBC UK. ‘Programmes that recognise key priorities, like excellent customer service, also make sure our customers ultimately benefit.’
Housing association Moat also cites many benefits of its schemes, particularly in terms of keeping employee turnover low. Maureen O’Sullivan-Day, Moat’s HR and training manager, thinks that’s partly down to the ‘promotional and challenging’ career opportunities Moat offers. But she also thinks that demonstrating that employees are valued is vital to retaining talent. ‘We want to motivate high performance and encourage loyalty,’ she says. ‘Loyal, committed and enthusiastic employees enhance our reputation as an employer, which is essential if we wish to remain competitive.’
The company has both financial and non-financial reward schemes in place. Performance-related pay, for instance, sits alongside an additional performance-related bonus for those employees who, throughout the previous year, performed at an exceptionally high standard. Line managers can also nominate staff to receive smaller monetary ‘one-off’ discretionary bonus awards, which recognise and acknowledge work that is above and beyond the remit of their role.
‘However, we acknowledge that not everyone is motivated by financial rewards,’ says O’Sullivan-Day. ‘It is important that we give recognition too – and not just for tangible achievements, but also for role-modelling our values.’
Moat achieves this through its monthly Values Awards programme. Employees are nominated by their colleagues, with monthly awards then agreed by the senior leadership team. All nominees are told who nominated them and why, and those that are unsuccessful receive a certificate.
Winners, meanwhile, go on to receive shopping vouchers and a certificate presented by the housing association’s chief executive. In addition, they are automatically put forward for the annual Value Awards programme, alongside some additional nominations from colleagues, which is voted for by the employee forum and senior leadership team.
These annual Values Awards are then presented at the annual staff conference, Moativity. There is also an annual team award, which is decided by the executive team.
‘Individuals who are awarded a Values Award often speak of feeling proud and I also feel it has helped in cross-departmental working – colleagues are happy to recognise the pressure felt by those outside of their own departments,’ says O’Sullivan-Day. ‘The annual team award has introduced an air of healthy competitiveness. Teams talk of a desire to achieve the award the following year.’
An evolving landscape
However, a number of schemes seem to be shifting away from the annual or even monthly ‘event’, favouring instead smaller and more informal recognition processes, such as thank you e-cards or postcards sent between colleagues. ‘Research among our client companies show that people want less of an ‘occasion’ when their outstanding/extraordinary performance is recognised and more personal ‘thank yous’ and smaller rewards that make a difference to their day-to-day lives,’ says Sheila Parry, managing director of theblueballroom.
Over the past five years, Parry has seen employee recognition becoming more frequent and democratic, with peer-to-peer schemes becoming more popular as opposed to the traditional top-down recognition process from higher level management to individual employees. ‘The tone has changed along with the interactions,’ says Parry. ‘Communications is still an enabling factor but [it has become] much more social as people engage in peer-to-peer collaboration platforms to achieve something and therefore use the same channel to share successes.’ HSBC is typical of this trend as it is working on a ‘global recognition technology platform’ that will allow it to engage employees in more peer-to-peer recognition, while also making the administration and governance of its schemes easier.
Hingley believes peer recognition allows senior management to uncover ‘phenomenal stories’ from the frontline that they would never otherwise get to hear about. But as social-media powered peer-to-peer schemes become more popular, companies will have to ensure quality and not just quantity of nominations. Companies will have to be wary that employees do not just use these platforms to vote for their buddies. ‘Ask for more information as part of the nomination process and you will get fewer nominations,’ he says. ‘The stories that really matter will come from those who take the time to provide the detail.’
Agreeing what information is required to make a nomination raises another thorny issue, though. How do companies agree the criteria for nominations to ensure fair and consistent rewards across a business that is likely to be multi-functional and incorporating many different business objectives – some of which will be easier to see and measure than others? For example, sales versus administration?
For Parry, the key is to make recognition schemes transcend individual functions. ‘Identify what is common to all and reward what makes a difference irrespective of role – probably values, attitude, customer service, behaviours rather than individual tasks and goals,’ she says. ‘Defining a common purpose for the organisation and celebrating it is a unifying factor.’
For many, however, this may not be enough to overcome cross-departmental differences. Desired values and behaviours are still easier to demonstrate on the front line than in a quieter desk-based role. ‘We will be reviewing our Values Awards nomination process soon, as observations indicate they can be quite focused on departments that deal directly with our customers,’ agrees O’Sullivan-Day. ‘It is felt that because the impact on customers is quite obvious, nominations are more regularly received than from back-office functions. We would like to encourage more nominations for our vital supporting departments and we’ll work with staff across the business to work out how to do this.’
HSBC has also faced the same challenge, realising that reward schemes will be different for employees in its call centres, versus corporate bankers or those who work in head office. ‘A ‘one size fits all’ approach is not effective when dealing with a varied employee base,’ concedes Ulycz.
To resolve the issue, the bank’s recognition schemes break up as follows:
- A UK-wide scheme to recognise and reward employees.
- Plans led by individual business lines or functions (for example, retail banking’s ‘Extraordinary People’ awards, or the Communications awards). ‘These are consistent in the types of behaviours they reward, but it’s up to each business how and when they reward employees,’ adds Ulycz.
- A new recognition scheme, sponsored by the UK chief executive which aims to recognise employees who demonstrate outstanding behaviour and ‘courageous integrity’ at work.
A variety of schemes such as this may go a long way to ensuring everyone in the business has an equal chance of getting recognised. But it also sounds complicated and difficult to administer, especially when stacked up against separate bonus arrangements, which reward different business objectives.
Schemes that give managers discretion as to how and when they reward their staff may require additional training and ongoing support, while inconsistencies might creep in causing cynicism or resentment among those teams that perceive themselves to be neglected.
In this respect, Manchester Airports Group (MAG) may be at an advantage. It only launched a new recognition scheme last October, replacing previous schemes that were not utilised properly. The new scheme is linked to the company’s five values:
• Why not?
• Brilliant at what matters
• Power of team work
• Safe hands
• Finger on the pulse
Employees can win pins against each value, with a gold ambassador ‘ViP’ (Values in Practice) pin awarded after they achieve all five. ‘We didn’t want a monetary system solely and we felt it would be good to have something colleagues could wear with pride, for example, that the customer services teams could wear on their lanyards,’ says Advita Patel, MAG’s internal communication lead. Winners also receive certificates and £10 vouchers, with ViP winners getting the opportunity to take a partner, friend or colleague to join senior management at a quarterly celebration lunch, where they receive an award and £100.
‘It was a totally new concept. We spent several months exploring ideas and engaging focus groups. Our reward partner also met with key people across the business,’ explains Patel. The scheme was launched with a broad communications campaign, including posters and adverts on the electronic screens which can be found in rest areas across the airports. At the same time, line managers were given ViP support packs (including thank you cards, pins and vouchers) to help them understand the nomination process and also how the rewards scheme could link through to performance appraisals.
So far the scheme has received 450 nominations in three months and across all functions and levels, says Patel. And, while detailed information will not be available until the next engagement survey in October, anecdotal feedback so far suggests that everyone understands the scheme and exactly how it operates.
‘Before it was quite unclear and everyone was doing it their own way,’ says Patel.
Despite the freshness of the scheme, and the obvious research that went into agreeing and deploying it, the rewards team at MAG are still facing a few familiar challenges. Patel concedes that it can be difficult to get managers to follow a standardised process, with some doing more than others to get people’s nominations logged via the online form (although Patel hopes that this will be largely resolved by the introduction within the next few weeks of an app that will allow nominations via employees’ mobiles).
She also admits that there has been more buy-in from the operational group, who particularly appreciate the recognition from line managers (who they may not often see because of different shift patterns) and who enjoy wearing the pins as they move around the airports and interact with customers. ‘The HR and commercial group are less inclined to get involved because they see line managers every day. They can sit down with them and get feedback on the spot,’ she says. The pins are less likely to be an allure for this group too, given that they are less customer-facing.
And perhaps this is where the rub is. For companies appear to be working hard to implement non-financial recognition schemes that unify the business behind firm-wide values and behaviours. But the reality is that these are highly complex organisations that incorporate many different functions, cultures and even age groups – all of whom may perceive reward differently. Their varied needs may be impossible to fully align, even behind an agreed set of universal values. In the attempt to do so, companies may find themselves implementing a whole variety of schemes or embracing one that inevitably does more for one part of the business than the other.
This may not even matter. As the scheme at Manchester Airport Group shows, it may well be the case that one department needs a recognition scheme more than another because they have less access to management or regular feedback. In this case, making the scheme open to all but accepting it is more relevant to one function than another seems perfectly reasonable.
Firm-wide employee reward and recognition schemes continue to gain favour across many businesses – but they are far from simple to deliver consistently, fairly or simply. Evidence suggests, however, that companies will continue to strive to implement and improve such schemes. One reason is the rising capability of collaborative platforms, which allow for much broader reach and peer-to-peer involvement in reward schemes. But no doubt a more important motivator will always be the hope that such schemes can make an all important difference to what is increasingly seen as critical for sustained business success: high levels of employee engagement.