Wednesday, October 26, 2011

Competition Is Good, Except When It’s Not: The Difference Between Incentives And Recognition

I'm often asked, "What's the difference between incentives and recognition? Aren't they the same thing?"

No, they are not. Incentives and recognition are two distinctly different mechanisms that can be used to boost employee productivity, but each has its proper place and time for use. Incentives in particular can cause unintended consequences if not thought through fully.

A recent LA Times article provides an excellent example of incentives in the form of leaderboards gone awry.

"In the basements of the Disneyland and Paradise Pier hotels in Anaheim, big flat-screen monitors hang from the walls in rooms where uniformed crews do laundry. The monitors are like scoreboards, with employees' work speeds compared to one another. Workers are listed by name, so their colleagues can see who is quickest at loading pillow cases, sheets and other items into a laundry machine. …

"Isabel Barrera, a Disneyland Hotel laundry worker for eight years, began calling the new system the 'electronic whip' when it was installed last year. The name has stuck. … According to Barrera, the whip has led to a sort of competition among workers, some of whom have tried to race to the head of the pack. But that has led to dissension and made other employees worry that a reasonable pace won't be enough to keep the boss happy. Barrera and Beatriz Topete, an official with Unite Here Local 11, said employees have been known to skip bathroom breaks out of fear that their production will fall and managers will demand an explanation. They say they felt bad for a pregnant employee who had trouble keeping up."

The Difference between Incentives and Recognition

The chart below illustrates the primary differences between incentives and recognition.IncentivesVsRecognition

Most importantly, incentives are focused on the "What" while recognition is focused on the "How." For example, the laundry scoreboards are purely an incentive focused on the "what" of employee deliverable of number of pillow cases loaded into a machine, etc. Recognition, on the other hand, would perhaps praise and reward Beatriz for chipping in to help her pregnant colleague keep up with the work but still take needed bathroom breaks. In this example, Beatriz is being recognized for "how" she is getting her work done.

Ensure Incentives Remain on Track

  1. Set reasonable parameters and expectations. Competition can be an effective motivator as long as employees don't believe their jobs are on the line based on the outcome. Overcome this challenge by setting clear goals at the outset and sticking to them.
  2. Take into account individual employee situations. To be fair, incentives must take into account individual exceptions (such as the pregnant employee at Disney). No employee should ever feel as if they need to put their health or well-being in danger to meet incentive expectations. This is often the primary problem with safety incentive programs in which employees simply do not report safety issues to ensure they will meet safety goals.
  3. Don't rely solely on incentives. Incentives serve a purpose for motivating teams to meet or exceed short-term, highly visible goals. But necessarily only a few employees will benefit. Recognition, properly implemented, is designed to reach the vast majority of employees, acknowledging and praising employees frequently and in the moment for actions and behaviors to demonstrate core values and contribute to key objectives.

Do you use incentives or recognition in your workplace? Which do you find more effective?

As Globoforce's Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin, Montreal and Boston.

Thanks to Derek Irvine / Compensation Café


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