The Perfect Fit

By individualizing employee rewards, companies are hoping to boost retention, productivity and loyalty.

Friday, September 1, 2006
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As an HR consultant at Kaiser Permanente in Panorama City, Calif., Sue Yaller is often asked to perform a variety of tasks. Several years ago, she worked a few days a week for more than two months at another office that was at least two hours away from home. She spent many evenings at a hotel instead of with her husband and four children.

"I missed being with them, talking with them about how their day was," she says. "They made comments periodically, 'Mom, why do you have to keep doing this?' Once in a while, they'd throw in, 'We need you, too.' "

Then one Saturday morning a letter arrived at her home by special delivery. It was from Yaller's boss and was addressed to her children. It explained why Yaller was being asked to work away from home, what a great job their mother was doing and how much the company appreciated her efforts. Attached to the letter was a $200 American Express gift certificate that Yaller's boss encouraged the family to spend on something fun.

Yaller says her entire family was touched. "Even if she hadn't sent us anything, the letter itself and the way it was delivered was rewarding enough," says Yaller. "It was something that she took the initiative to do and I know it's from the heart."

At a time when the national unemployment rate is less than 5 percent and skilled workers are in big demand, companies have started a new trend--tailoring employee rewards in hopes of preventing valuable staff from going elsewhere.

While plaques, award ceremonies or other traditional rewards used to be one-size-fits-all, they no longer have the impact they once did. Employees nowadays want to be singled out for their contributions and rewarded with something more meaningful.

Carole Erken, HR area director at Kaiser, and Yaller's boss, began six years ago using letters to recognize employees individually. She also performs an intake assessment on her direct reports. She asks questions to determine what types of rewards they prefer and ways in which they want to be acknowledged--via a public ceremony, private conversation, handwritten note, letter sent to their home or any other way.

By assuming people's preferences for acknowledgement, she says, managers run the risk of offending or embarrassing them. Erken points to several occasions when employees were devastated because their managers recognized their achievements at public ceremonies or, without proper information, spoke inaccurately about their efforts.

"It discounts the type of recognition that you're giving," she says, adding that she oversees approximately 8,000 employees throughout Southern California. "When you take that extra step--tailoring it to them--it makes it more special."

Rewards or acknowledgements don't have to be expensive. Sometimes, Erken gives candy bars to employees who love chocolate. One time, she sent a bottle of aspirin to an employee for his extra efforts on a specific project. She also sends e-praises--e-mails with colorful graphics--when employees have done something special.

While these efforts may be small, the payoff has been huge. Erken says the two offices she manages have the highest retention rate of the company's 13 HR consulting offices in Southern California.

Room for Improvement

While this trend is growing, there's still a gap between how employees are recognized and how they want to be rewarded, says Mark Peterman, vice president of client solutions at Maritz Incentives, a marketing-services and performance-improvement company in Fenton, Mo.

According to a survey conducted by Maritz in 2005, 64 percent of the 1,002 full-time employees who responded believe their companies needed to offer greater choices of awards.

"Our interpretation of this data is that you need to spend time understanding what's meaningful to your employees and recognize that at all levels," says Peterman. "A lot of times, employees are likely to be satisfied with their jobs and less satisfied with the [company's] employee-recognition program and rewards."

Maritz practices its own advice. In the past, it helped companies reward top sales people with trips to selected destinations on specific dates. Now, it offers four or five small trips to different destinations throughout the year and caters to unusual requests such as a Canadian Jeep trip to meet a polar bear or the opportunity to work with a dolphin trainer for the day.

Peterman suggests employers shy away from cash prizes because they get confused with compensation. Besides, he says, employees tend to spend cash on everyday products such as groceries that will soon be forgotten.

"What you want is a reward for your employee that says 'thank you,' " Peterman says. "You want it to be meaningful, memorable. Cash is really none of the above."

Meanwhile, individualized rewards are being used as strategic tools to help retain and engage employees. The retention battle is no longer fought at the worker's 20-year anniversary but one or two years after employees come on board, adds Peter Hart, CEO at Rideau Recognition Solutions Inc., based in New York and Montreal.

He believes companies must conduct focus groups or survey employees to find out what they want--even several weeks after they receive an award. They need to determine whether they provided the right type of reward, whether the recognition was what employees had hoped for or what other things they would have preferred.

More companies are also looking at reward and recognition programs from a holistic perspective and bundling them together. While studies show that 90 percent of companies have recognition programs, he says, a recent Gallup survey revealed that more than 60 percent of Americans do not feel recognized. The reason for that is such programs are not synchronized with each other, he explains.

"[Recognition] is not about things or stuff but really about using these programs to try to build that relationship between the manager and employee," he says. "You've got to have other things to entice people to work for you and identify you as an employer of choice."

Simma Lieberman, president of a management consulting firm in Berkley, Calif., that bears her name, says when evaluating reward programs, it's not so much a matter of what's right or wrong but what could be better. For instance, how can managers be more empowered to reward employees or learn more effective ways to praise them?

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Even managers with good intentions, however, can unintentionally discredit a reward.

She tells the story of one employer that routinely rewarded its employees by taking them to a nearby establishment to play virtual reality games and drink beer. But employees didn't enjoy the experience and believed their employer had financial ties to the place, which discounted the entire reward.

"The impact is not going to be that the [employer] really cared about the employees," she says.

Likewise, she knows of managers at another company who have no discretionary funds to reward employees or even to treat them to lunch.

But those who are empowered can really make employees smile. She recalls one manager giving an employee--a single parent and avid baseball fan--the day off, two box seats to a San Francisco Giants game and a free parking pass. Another gave several hundred dollars' worth of gas on a credit card to an employee with a long commute. One boss even rewarded one young worker who loved music with an iPod and a certificate for iTunes.

While this approach may take more time, she says, it's well worth the effort. Happy employees are usually more productive and loyal, and take less time off of work.

Raffles and Games

While some companies may not tailor their rewards, they've done the next best thing--expand their offerings.

Kenexa, an HR technology and services company, linked the number of employee rewards to its annual goals. The better the company performs, the more prizes become available via a raffle. Prizes include a car, one-week vacations and plasma TVs, says Jeffrey Jolton, the company's director of global consulting in Lincoln. Neb.

Each employee distributes up to 10 raffle tickets to peers who've achieved something special. Anyone with remaining tickets at the end of the year is not eligible for the drawing. Tickets are assigned through a special Web site that also e-mails the receiver a personal thank-you note from the sender. Then the electronic tickets are converted to paper raffle tickets. Fewer than 10 percent of the company's 800 global staff win a prize.

The raffle is usually held in January and videconferenced. "Everyone is wired in for the big event," Jolton says, adding that the company's CEO draws tickets out of a big drum, then reads the person's name and achievement. "There's a lot of excitement about it. There's magic to it."

Instead of a raffle, the 120 employees at Personix play games. The company participates in an incentive program called Snowfly, created by Snowfly Performance Incentives in Laramie, Wy., says Teresa Bledsoe, HR manager at Personix, which manufacturers Visa and Mastercard credit cards in Nashville.

Supervisors log onto a Web site customized by Snowfly and award tokens to staff for special achievements. Employees then log on to their individual accounts on the same site to check the number of tokens received. Each token is worth 1 cent, she says. Then they use the tokens to earn points by playing different online games. No one ever loses. They can trade in their points at anytime for 100 different prizes that range from cash to a half-day off with pay to a golf game with the company's vice president of operations.

"All of our managers and supervisors have the ability to recognize employees immediately," says Bledsoe. "Employees watch [their accounts] and they want to do good things so they can get tokens to get points to get [rewards]."

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