Let’s first start what a misaligned rewards & recognition consequences are, evidently that will help us understand the costs of doing this wrong – In a famous Harvard Business School experiment found that when a laundry firm introduced a prize draw to recognize perfect monthly attendance, productivity actually fell by 6 to 8 per cent because those who routinely arrived on time anyway disliked how those habitually late were now potentially being rewarded to do something they considered normal. It strikingly reveals how staff values are important to understand and recognize too.
Similarly, in the case of General Motors, in a testimony coming directly from its chief executive to congress of GM’s increased efforts to improve safety procedures, the lawmakers seemed uninterested, as they saw the dichotomy between the words & the practices. Evidently, the managers’ bonuses are based partly on vehicle-quality improvements, and while safety is supposedly, the paramount in significance, it’s the cost, which is “everything” at GM, and by the behavioral superseding of cost over safety, company’s systematically ended up discouraging employees from raising safety concerns.
Organisations that cultivate a strong workplace culture are four times more likely to have highly engaged employees, four times more likely to have employees that promote the organisation as a great place to work, seven times more likely to have employees innovating and 74% more likely to have increase in revenue, says the research. Needless to put that Rewards & Recognition, one of the strongest impact levers of reinforcement, and as seen from earlier cases, has potential to make or break the system, should it be designed & deployed wrongly.
So what should be criteria for effectiveness of R & R: an effective system should keep employees focused on what’s important from an organization’s perspective, reinforce desired employee behavior, and lead to alignment of organizational and individual goals. Therefore, a systematic way to create synergy between strategy, organizational goals & culture is to value, recognize and reward identified behaviors, nudging to the mentioned organizational macros.
Continued to Part 2: How rewards & recognition can create unintended fault lines in the organization