Preston Russell Law - Legal Services for Southern People

Rewards & Recognition

Saturday, August 13, 2011 by Brian Richardson, HR Adviser category Work to Rule

We have recently received a request from clients about how to institute a “bonus” scheme for their staff.

A director of the company had seen other companies operating bonus schemes and thought this would be a great idea for their firm and wanted the manager to implement one straight away.

When we first spoke to the manager we indicated that the best schemes linked organisational performance to personal performance and then there was the linkage to rewards. What needed to be identified first were the goals or targets that the company wanted to achieve and how those targets could be influenced by the actions of the employee. 

There is no point in rewarding something that the employee has no direct influence over.

What soon became obvious was the fact that the organisational goals that needed to be rewarded were the result of a number of people’s efforts not just the supervisors. It also became obvious that there were a number of goals or outcomes that were actually a normal part of the expectations for the job and that the goals were nothing special.

For some of the goals we recommended that the manager look at what he did now in terms of what happened when someone did a good job. He said “nothing special, it’s expected that they just do their job and get on with life.”

Research has found that what most employees crave is recognition and feedback.

In reality what this means is that when someone does a good job; tell them – you don’t need a fancy bonus scheme, all you need to do is to recognise the good work that has been done and direct praise towards those who have performed well.

Communication is the key to a good working relationship.

When I used to go into a multi national takeaway business I remembered that they had an “employee of the month”. This was public recognition by the employer that the employee mentioned had been on top of their game for the month. There may have been a small reward attached to the recognition – something like a movie ticket, but there was no fancy, major, expensive financial reward. Recognition was the key.

Smaller employers may find something similar works really well, even just a simple thank you in front of the other staff may be all that it takes to reward and recognise behaviours that the employer wants to encourage.

Performance pay is something that a lot of people like the sound of. It seems to be the new “key” to high achievement. There is a clamouring from the chattering classes for teachers to be subject to performance pay.

In Britain, research (Human Resources Management in New Zealand; Richard Rudman 4th edition) has shown that there are pitfalls to performance pay. In Britain organisations can be inconsistent; they focus on individual performance and then emphasise things such as teamwork and co-operation. There seems to be little, if any correlation between performance pay and high performance – poorly performing organisations are just as likely as the best performing organisations to have performance pay systems. And, very interestingly, people who got an organisation into trouble and then got them out of that trouble were more likely to be rewarded than those who never got it into difficulties in the first place.

In summary it seems, in Britain, that a bad pay system has the potential to do more damage than a good one has to bring benefit.

Getting back to the more specific bonus scheme, when looking at one make sure that it is SMART; that is it has to be Specific, Measurable, Achievable, Results driven and Transparent.

If those criteria are followed then a bonus scheme is likely to work. But, remember, a little recognition and good communication maybe all that is needed to achieve the goals that the company wants to achieve and to encourage good behaviours in all of the staff.