Let’s be honest, most of us appreciate being given more money for a job well done. The challenge for employers, however, is securing a return on that investment. Research consistently shows that for people who feel fairly remunerated, cash bonuses do little to inspire extraordinary effort or enable higher standards of success.
While cash rewards unquestionably influence morale, far more important are the words of thanks people hear. Feeling appreciated, valued and respected are critical to the strength of anyone’s spirit and consequently engagement; and research proves it.
McKinsey & Company research found non-financial incentives are more powerful motivators than financial incentives. Similarly, Gallop research found people who receive regular recognition increase individual productivity, engage more actively with their colleagues, receive higher loyalty and satisfaction scores from customers, and are more likely to stay.
Reflect for a moment on how you feel when you receive thanks at work, or in any area of life. Perhaps as CEO you don’t feel thanked often enough; how does that make you feel? Most people are energised by the feelings of pride and self-respect that come with being appreciated. We’re all more likely to strive and go above and beyond the call of duty, if we believe we are recognised in our efforts and achievements.
Before we move on too quickly, however, let’s take a moment to acknowledge the important role rewards do play. But in doing so, let’s keep them in perspective. Both reward and recognition unquestionably form an essential part of any business strategy to attract, engage and retain talented people.
In some industries and professions, it is especially important to provide incentive schemes that allow your organisation to attract and retain the best talent. Ensuring a competitive position in your market, on both fixed income and rewards forms the foundations of your remuneration strategy.
Ensuring people feel fairly rewarded relative to their potential and contribution, in the context of what other employers are willing to pay, is just the starting point. Driving morale and engagement through reward and recognition requires a targeted, tailored and considered approach.
3 essential ingredients to optimising the positive impact of your efforts
Be fair and consistent
The decisions you and other leaders across your business make to reward and recognise people must be both fair and consistent. Ensuring that only people who behave in ways aligned to your organisation’s values are rewarded is essential to perceptions of fairness. A transparent, objective and unbiased decision-making process is required of every member of your leadership team.
Make it personal
With a little understanding of the person, you’re able to communicate in ways that work best for them. Some people, for example, enjoy being thanked in front of their colleagues, while others find that extremely uncomfortable. Some people want you to make a big deal of certain wins, while others in the same circumstances prefer a quiet celebration with little attention drawn to them personally.
Tailor not only the way you communicate but also the rewards you provide. Look for ways to provide rewards that each individual is likely to value. For example, take the time to learn about the personal interests of the people on your team, and how rewards can be aligned to those endeavours.
While understandably many organisations provide standard rewards or forms of recognition, providing options for managers and staff can improve the effectiveness of your efforts. People typically value the opportunity to choose the benefits they receive. They also appreciate their manager’s efforts to select tailored rewards. Understanding your workforce demographics is key to providing choice benefits people value.
Think beyond traditional ways of rewarding and recognising people. A recent SEEK study provides useful insight to the benefits Australian workers value most. Of the 4,800 respondents 84% said they value a combination of flexible work arrangements, additional superannuation and professional development.