Points to ponder:
Rewards work when there is a direct business impact.
Incentive reward framework fails to address complex scenarios.
Structures need a strong foundation to survive.
People feel valued when they are recognized for their performance.
Communication is the core of any recognition program.
All solutions have side effects.
Success is directly proportional to quality of team work.
Timely recognition reinforces the desired behaviours.
Samir was worried about the profitability of his 200 million rupee company. Samir was operating with minimal raw material and labour cost. He did not know where to save further. The next biggest operational cost was oil consumption. Machines needed oiling every day. The oil consumption was around INR 9 million per annum. Samir figured out that the main reason for high oil consumption was wastage. Samir explained to the oil man that he can earn a bonus equal to his salary if oil wastage is eliminated. The oil consumption came down by thirty percent and the profitability was doubled due to this incentive reward framework. Rewards work when there is a direct business impact.
As time passed by, Samir witnessed his company grow ten times in size and scale. As the size, scale and complexity of the business grew, multiple factors started impacting the business. It became difficult to establish the exact contribution of a person on business results. Samir wanted to replicate the rewards success story to improve profitability but things were not working out. The people side was even more complex. A well rewarded high performer left his job, complaining that nobody told him that he was important. Incentive reward framework fails to address complex scenarios.
People needed something more than money. They needed appreciation to fulfil their safety and social needs. A benchmarking study recommended introduction of recognition programs. Everyone appreciated the initiative. Spirit was high. Since it was the first time and recognition was not costly, managers wanted to recognize as many people as they could. The program became a monthly affair. Recognition by rotation became a practice. The recognition program lost its sheen. Samir was disappointed because the impact on profitability was negligible. Structures need a strong foundation to survive.
Samir was thinking of scrapping the recognition program. He visited a zoo with his family and watchedan animal show. Samir was amazed at the motivation level of animals to perform stunts. Food was the motivation driver. But there was something more. Samir observed that trainer was appreciating and patting animals when they performed actions. Animals were also enjoying the public recognition of their performance. People feel valued when they are recognized for their performance.
Recognition program yielded even better results than rewards program. Sincerewards were confidential so were achievements. Mostly underachievers got highlighted to act as a negative reinforcement for undesired behaviours. But, recognition was a public affair. Hence, the achievements were being highlighted. The aspiration for recognition created positive reinforcement for the desired behaviours.
Performance surged but then there was a dip. Samir found that recognition program madethe organization highly competitive. People stopped sharing information with each other.Individualssucceeded but the organization didnot. All solutions have side effects.
Samir was watching a cricket match. Another insight knocked his head. Cricket team bats to score runs. Same team fields to save runs. Team wins if scored runs are more than the given (unsaved) runs. Cricket is so much like business. Runs scored are the Revenue. Runs given are the cost. Team wins if revenue exceeds cost. Individual achievements in batting and bowling are very important. However team that fieldstogether to save each run wins the match. Success is directly proportional to quality of team work.
Fielding effort is not recognized as individual achievements but success of the team depends on this unrecognized factor. Samir observed that Bowler and Captain were appreciating fielders whenever they were saving a run. Team members kept appreciating each other for saving the runs. Samir made few modifications to the recognition program. Teamwork was made the central theme of recognition program. Spot recognition was introduced to appreciate each small effort to save a run.Timely recognition reinforces the desired behaviours.
Samir used technology to display spot recognitions to all to spread mutual appreciation and positive reinforcement. The competitive environment got transformed into a collaborative culture. Technology made calculations easier and communication faster. Online recognition became the way of life. Social Ceremonies were withdrawn to save cost. There was a visible impact on morale. The social ceremonies were brought back. By this time, Samir knew that there is no perfect recognition program. The objective is to fill people with positive energy and let them enjoy their work. Keep reinventing.