There is no doubt that a system for rewarding performance can be a very powerful motivating tool to improve productivity, quality, and overall teamwork.

Yet most reward systems are geared around a few individual managers rather than encouraging a philosophy of one team, one direction, and improvement of the overall system. As global competition intensifies, a real opportunity for competitive advantage exists through the encouragement and development of the capabilities of all employees in the service of the organization.

Rewards in the form of money, other tangible items and recognition are integral to motivating individuals and teams to sustain the highest levels of performance. Despite this, the financial and non-financial reward systems in many organizations bear little relationship to the motivational needs of the employees.

Traditionally managers have not been lavish with praise and few organizations have recognition and financial reward systems in place. Wages bear little relationship to performance or goal achievement and there have been few team-based reward systems established. Instead, mediocrity rather than excellence has been encouraged by across-the-board pay increases that reward poor performers and good performers equally.

In recent times, however, there has been a paradigm shift in terms of the allocation of rewards to employees. More organizations are arriving at the belief that to keep stakeholders happy one has to keep customers happy and to keep customers happy one has to keep employees motivated. This belief will produce work environments radically different from those in the past.

Organizations that establish a reward system for employees that are based on productivity goals will increase employee commitment because such schemes foster responsibility. Employees will want to own tasks that are recognized and appreciated by the organization.

Reward systems that are based on team efforts will encourage team members to work cooperatively and efficiently to meet team goals. Throughout this month we emphasize the importance of recognizing team efforts as the most effective means of rewarding employee performance.

Rewarding performance in an organization can be introduced in two ways: through positive recognition systems and through team-based reward systems. The basic difference between the two is that you recognize behavior and you reward results.

Positive recognition systems are designed to encourage and reinforce desired behaviors and performance. Recognition may be in the form of praise, encouragement, formal acknowledgment or low-cost formal rewards, such as prizes, plaques or gifts. Provided basic needs are being met, positive recognition systems are as important as financial rewards. Numerous studies over the years have shown that recognition for a job well done is a fundamental motivator of employee performance and many find personal recognition as motivating as money.

Some of the most effective forms of recognition cost nothing at all and can generate enormous returns. A sincere word of thanks from the right person at the right time can mean more to an employee than a formal award or money. Part of the power of recognition comes from the knowledge that someone took the time to notice the achievement, seek out the employee responsible and personally deliver praise in a timely manner.

Some of the lasting spin-offs associated with recognizing staff performance include:

• company loyalty is enhanced;
• staff members feel motivated to keep up the good performance, and perform even better;
• the team leader’s relationship with team members improves;
• it improves morale.

I will leave the last word to Catherine Meek:

In the 20 years I have been doing this and the thousands of employees I have interviewed in hundreds of companies, if I had to pick one thing that comes through to me loud and clear it is that organizations do a lousy job of recognising people’s contributions. That is the number one thing employees say to us. “We don’t even care about the money; if my boss would just say thank you, if he or she would just acknowledge that I exist. The only time I ever hear anything is when I screw up. I never hear when I do a good job.” Recognition programs are a very important element of your total compensation program.

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