At many U.S. companies, salaries continue to be stagnant, with little financial surplus available for bonus rewards. Experts predict that rewards and recognition programs will begin using more peer-to-peer platforms, nonmonetary accolades and innovative incentives to engage and retain employees.

Unlike other business segments that saw massive workforce cuts and talent competition slow over the course of the recession, employers in the technology sector continued to fight for top talent throughout the economic slowdown. The cutthroat war over star employees continues, and some startups have found unique ways to compete with the large coffers of tech giants like Facebook and Google.

The founder of one such startup, Cameron Yuill, explains how his company, AdGent Digital, competes with larger companies by offering employees things those big organization can't.

"You're offering people something larger companies can't: the benefit to work on something with meaning that they will have a real influence on," he explains, adding that employees will have direct influence on projects within a small startup, whereas, "in a big company they are just a cog in a wheel."

For example, AdGent has robust career development opportunities that allow the 35 employees to explore jobs across company sectors. Another size-equalizer for small employers is flexible work scheduling.

Although it's a small group, employees are internationally dispersed. In order to unite the workforce, the company insists everyone attend a group conference call every Friday unless they're meeting with a client. During the weekly meeting, leaders present a "Ducky award" to an employee (nominated by a peer) who has furthered the company goals or helped out a colleague. Leaders send the recognition trophy, a rubber duck, to the employee so they can show it off on their desk, wherever that may be.

Twice a year, the company's top performers, along with their spouses or partners, meet in a unique setting "as a reward for their contribution to the business," says Yuill. Most recently, 12 star employees and their partners stayed at an idyllic resort in Northern California wine country.

"It was a great way for our partners to see what their spouses or significant others are doing every day at work and meeting the people they talk about," explains Yuill. Employees have challenging schedules and work extremely hard for the organization, so Yuill feels they should "reward partners as well for putting up with us, really."

Another popular motivator for employees is the opportunity to attend conferences. If employees reach a set goal, the company pays their way to the conference. Essentially, the employees need to drive the revenue to pay for their trip.

"The financial rewards are the bread and butter for coming to work and working hard. I think the nontangible stuff, like the trips, conferences and events ... have a whole lot of value and a greater effect on morale," says Yuill.

Bonuses, comprehensive benefits and financial rewards are often viewed as givens in employees' minds. "It's hard to get people to appreciate things that they think they are entitled to," says Yuill. "It's the nonentitled stuff that people really like."

He advises employers to think how they can take employees out of their daily working lives to show appreciation - those are the perks and rewards they will remember for the rest of their careers.

"It's the memories that bind people to the company ethos," he says.

 

Social recognition gains prevalence

According to a forthcoming survey by Towers Watson, 35% of U.S. companies have implemented a social recognition program, defined as providing multiple inputs to allow employees in nonmanger roles to give recognition. The survey also found that social recognition programs are more prevalent in financially high-performing firms than in low performers, and the disparity is a considerable 15% gap.

Employers are readjusting how they manage employee rewards in light of an uncertain economic environment and changing compensation regulations.

"Given the uncertainty of the economy and volatility in business conditions, companies have been reluctant to introduce [previous levels of compensation and benefits]" explains Laura Sejen, global practice leader, rewards, Towers Watson.

Companies are reluctant to reintroduce 401(k) matches or increase raise or bonus levels on fragile budgets, and are looking at alternative ways to reward employees for a job well-done.

Even if employers have a little extra wiggle room for budgeting merit increases or financial rewards, more employers are putting a concentrated amount toward smaller employee groups, so that those most deserving of raises receive a more substantial amount.

Employers are also turning to recognition programs to spur productivity and acknowledge accomplishments throughout the year. Not only is recognition cost-effective, it's a crucial piece of keeping employees engaged.

Whereas an annual incentive reflects performance over a year's time based on specific company objectives, recognition affirms the employee's success at the moment the achievement occurs. It's a great tool for managers to recognize great work immediately and rapidly deliver the reward, presenting it as an example to other employees.

"You get more mileage out of a dollar in recognition than a dollar in a base pay increase," says Sejen.

Most employees work in a team environment, and their co-workers may have a more complete view of their work achievements than an immediate manager.

 

Need for protocols

Sejen stresses the need for governance to make sure the program doesn't devolve into a buddy system. She suggests having protocols in place to keep the system fair, but cautions employers against a tyrannical and rigid program.

"This move to more social, collaborative software allows [employers] to break down those silos. At the end of the day, an organization is nothing more than a network," explains Chris Caldon, senior vice-president of Peoplefluent, a service provider for companies to manage employee rewards and recognition.

Through peer-to-peer platforms, employees can access more information and interact easily with colleagues across company locations and sectors.

In addition, HR can use this technology to promote underutilized benefits available to employees. For example, HR traditionally communicates career development programs or tuition reimbursement programs by broadcasting them through the company intranet. With interactive technologies, HR can connect employees with company-sponsored programs more directly and dynamically to keep workers engaged.

When an employee graduates from an educational program, for instance, HR and employee peers can congratulate the worker on the peer-to-peer platform. Immediately, the individual and the company benefit they used are more visible as colleagues learn additional details about the company's tuition reimbursement program.

 

Leverage other systems

Philips North America began using a peer-to-peer platform for recognition purposes, almost by accident.

The diversified health and well-being company, internationally known as Royal Philips Electronics, set up its internal social network, called Connect Us, to join a large, global workforce and exchange ideas. The company has 23,800 employees in the U.S. alone.

"In order to operate a business of this scale and scope, we have to have the systems in place from a business perspective that allow that. We're able to leverage those business systems to stay in better contact with each other, and it allows us to more formally put in programs of recognition," explains Luke Marble, senior director of compensation, Philips North America.

The platform puts all employees on equal footing, regardless of title or level in company. "When you have a social media network, the boundaries have to disappear," says Marble. "Everybody has to be equal. Even our CEO is on Connect Us, but he's on Connect Us just as a member of the Philips community."

Eventually, the company implemented its peer-to-peer recognition program on the platform to allow any employee to email a "thanks badge" to recognize their colleagues' achievements or send an informal thank-you note. To make the appreciation more exclusive, employees can send a maximum of five badges per week. Managers of the recognized employee are also informed by email.

Similarly, the We Are Philips program is a peer-to-peer recognition program that highlights the accomplishments employees make and illustrates how they are modeling the company's values and culture. Three times per year, winners representing each company ideal are showcased throughout North America to inspire others to succeed.

Marble says the company has never encountered a problem with employees sharing their thoughts and appreciation openly within the platform. The tone is always collaborative and collegial.

"What caught us off guard is how quickly it caught on and how quickly people took to it," says Marble, pointing to one employee as an example of how powerfully the program can improve workers' lives. The individual was struggling with a geographical relocation when someone in his building sent him a notification on Connect Us, acknowledging his hard work.

Within a few days, everyone in his work group had stopped by his office to thank him for his commitment and to check in to see how he was doing.

"The amount of energy he got just from knowing that people cared was tremendous. He was walking on air for a week or so afterwards. And as his work-life has now balanced out, that's not something he's forgotten about," says Marble. The employee still recounts his amazement that so many people came out of the woodwork to thank him for his contribution to the company.

 

Going the extra mile

Marble believes that "reward programs need to be focused on those people who, on a daily basis, drive the business, and when they go above and beyond, they need and deserve to be told that they are doing a good job and that they are appreciated."

Recogntion@Philips, the company's more formal rewards program, is an online, global recognition program that enables managers to deliver frequent, consistent and tangible employee recognition to individuals and teams who go the extra mile. Managers award points to individuals who are displaying the Philips core values and behaviors.

Employees can also earn points for watching Philips' biweekly news broadcast and answering a four-question quiz correctly or signing up for a company-sponsored nonprofit event. Employees can redeem points for material rewards or donate to company-supported nonprofit organizations.

"The intrinsic value of the work you do is as significant a motivating factor as any specific financial reward," says Tom Sykes, product manager at Peoplefluent. However, he admits that employees often expect to be financially rewarded for excellent work. He suggests managers detail how employees can achieve a financial reward, specifically articulating steps to success.

 

Achieving balance

Financial rewards should always be part of a broader talent management program, so there is a balance between monetary and nonmonetary rewards.

Further, peer-to-peer recognition should be a part of daily life to reinforce appreciation. Visible activities and presentations around recognition can elevate the program to new levels. Many companies use random prize drawings for gadgets or large cash rewards as one way to spur excitement throughout the year.

"By having periodic high-touch efforts, you can elevate the effectiveness of those programs," says Sykes.

In today's workforce, he continues, "it's no longer just about managing pay, it's about looking at the rewards in a holistic manner so that they encompass a whole spectrum of solutions."

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