In today’s slowly recovering economy, employees are being asked to work longer hours, take on more responsibilities and, in some cases, work at a reduced rate. At the same time, managers are diligently searching for ways to increase the efficiency and effectiveness of their employees as they continue to reduce the number of employees, their benefits, and reduce or eliminate employee incentives and rewards. However, there is a growing body of evidence that suggests reducing incentives and rewards may be a big mistake. A number of studies have been conducted by long-time respected organizations that point to a direct connection between employee satisfaction and customer satisfaction and loyalty.
One such organization, Northwestern University’s The Forum: Business Results Through People (The Forum), has long researched the link between motivated employees and organizational performance. One recent Forum white paper reported, “Today, the body of research proving the economic benefits of making this connection has become too compelling for even the most cynical executive to ignore. Many different organizations, coming at the issue in many different ways, have found concrete connections between employee engagement and customer satisfaction.” These connections have been researched and verified in a variety of Forum studies of the healthcare, banking and insurance industries, as well as other business segments.
James Oakley, assistant professor of management at the Krannert School of Management at Purdue University and a Forum researcher, studied nearly 100 U.S. companies representing nearly 5,000 employees and found a clear connection between employee satisfaction and financial performance. “The linkage,” he said, “is through employees’ impact on customers. There is a relationship between attitude and profitability…that relationship is bridged by satisfied customers. There is a direct link between employee satisfaction and customer satisfaction, and subsequently between customer satisfaction and improved financial performance.”
Another research group, Marketing Innovators’ International (MII), noted that today’s best-performing companies have strong employee reward and recognition programs in place. It cited T-Mobile USA’s rewards and recognition program, which helped the wireless provider win top ranking in the J.D. Power and Associates “Wireless Customer Care Performance Study” three years in a row. “The company implemented a well conceived incentive program, with rewards and recognition the employees care about,” the MII report noted. Key to success: T-Mobile took the time to conduct extensive up-front research with its employees to determine the best rewards and program structure.
To attract, retain and — best of all — delight customers, companies now more than ever need employees to work as a team in a collaborative effort. Therefore, when considering a way to reward and recognize employees, the shift must be from individuals to the collective whole.
Incentives are a way of life. Parents use incentives to motivate their children. Companies use incentives to reward CEOs. Retailers use incentives to boost sales and generate customer retention and loyalty. And employers can use incentives to create a collaborative and efficient workplace environment.
With shrinking budgets, however, how can employers successfully reward their work teams? An employee recognition program’s goal is to modify a person’s behavior. To promote collaboration, the focus must shift from individual recognition to team recognition. For an incentive or reward to have the desired effect, it must offer high value and be universal for all team members. Employees will not try to earn something that has no value to them, which in turn may affect their work within the larger team.
Employers must select a reward that motivates and encourages the desired behavior of the entire team, but the reward does not have to be expensive to be effective. In fact, a small, inexpensive reward given to each of the team members on a frequent, regular basis reinforces and recognizes the team’s desired behavior more effectively. Furthermore, the reward should provide instant gratification, and avoid disconnect between the action and the reward.
A tangible gift is often perceived to have a higher value than its actual cost. A gift card is a solution that is relatively inexpensive, has a perceived higher value and can be given instantly to team members as a reward for collaborative efforts. A $5 to $10 gift card redeemable at the local coffee shop, for a sandwich at a favorite lunch spot, or a movie ticket, gives employees immediate recognition. A gift card also serves as a long-term reminder of the accomplishment.
Gift cards continue to be a top choice among companies for their employee recognition programs. In 2010, more than 170 Advertising Specialty Institute (ASI) distributors, including sales and marketing representatives, business owners, and corporate executives from the promotional products industry, cited recognizing employee/team performance (20 percent), boosting employee/team morale (12 percent) and building employee/team loyalty (11 percent) as three of the top five primary objectives to offer gift cards as incentives.
Launching an employee recognition program using gift cards is relatively easy. Gift cards are readily available in local grocery stores, pharmacies and convenience stores. They can also be purchased online directly from merchants, in small quantities and in bulk. Many major retailers and gift card suppliers offer companies a discount off the face value of the cards for large purchases, thus offering companies an added savings. Additionally, gift cards are easily inventoried and fit securely in a small safe or desk drawer.
When considering a gift card program, employers should be aware of several new trends, some of which are now available and others that will be evolving during the coming years. There are new personalization and customization options with which a company can custom design a gift card with its corporate logo, team logo or other personalized messages. Several new technologies just beginning to emerge (but expected to grow in popularity during the next several years) include flexible options that will enhance the rewards delivery process. These include print-on-demand gift cards and gift card rewards via e-mail and mobile phone delivery. The key to incentives is to tie the reward as closely to the positive performance as possible. So, the sooner a team is recognized for positive performance, the more their actions are reinforced.
An employee reward program does not have to be expensive, difficult to plan and manage, or time consuming to be effective. Your program can be complex with a sophisticated points-based system, or as simple as predetermined team goals and reward criteria supported by a supply of assorted inexpensive gift cards to hand out when goals have been met.
Whether you go with a sophisticated all-encompassing program or a simple project-based program, the benefits to your company will outweigh the costs. And best of all, an employee reward program can essentially pay for itself through cost savings in increased team productivity and output. And, higher performance will be a reward in itself with a bigger and broader base of happy, loyal customers.