7 Key Trends in Rewards & Recognition

7 Key Trends in Rewards & Recognition

By Derek Irvine at CompensationCafe.com

The Incentive Research Foundation recently issued a detailed report that compiles and categorizes research from 46 different sources into its “2012 Trends in Rewards & Recognition” report.

I’ve highlighted seven key trends below with excerpts and my own thoughts.

1) Move Fast

Five year strategic plans no longer serve in a fast-moving, global business world. As organization leaders need to flex and adapt their strategic objectives to changing economic requirements, they need HR systems – including recognition and reward programs – that can flex just as quickly to reinforce those changing objectives in employee daily work.

“‘Fast HR’ encourages throwing out standard tools in favor of more expeditious methods to direct, focus, and energize employees. Non-traditional reward programs are congruent with the ‘Fast HR’ movement in that recalibration is easier and involves fewer legal issues than do standard compensation components. … Moving forward, program owners should expect decision making to be pushed up the chain of command with frequent and abrupt changes in strategy to accommodate shifts in business strategy.”

2) Mobile to the Fore

We now live in a mobile world. Mobile applications will do to business in the this decade what the internet did in the 1990s. Not adapting to mobile will mean being left behind. Indeed, as mobile applications more and more become another way of interacting with the same web-based or SaaS platform, there is little reason to not incorporate mobile into recognition and reward program planning.

“According to McKinsey, 33% of all smartphone owners now prefer using them for Web browsing or e-mail—even when their PCs are nearby. In addition, as more than 50% of mobile applications switch to the next generation base website code (i.e., HTML5), the functional differences between mobile devices and their non-mobile counterparts are becoming negligible. … Better product pipelines, faster processing, and whole generations of native mobile users now in the workforce makes integrating mobile applications a necessity.”

3) Gamification Plays Out

Gamification can play a role in recognition and rewards, but program designers and managers must be careful to ensure they aren’t gaming the wrong behaviors. You never want to “game” a system to encourage more recognition for the sake of recognition alone as that weakens the purpose and intent of the program. Instead, game factors such as “most rapid reward approver” to ensure recognition reaches the intended recipient quickly.

“Increasingly, consumers and employees expect an experience that reflects their own engagement and workflow. At a minimum, program managers should review the achievements required for all reward and recognition programs to ensure their target audiences have been given ample resources and training to achieve the required level of performance.”

4) Research Proves the Point

The weight of research behind moving away from cash-based incentives to non-cash strategic recognition and rewards can no longer be ignored.

“One of the biggest trends has to do with the growing acceptance of non-cash compensation within both science and the C-suite…. In Motivating People; Getting Beyond Money (McKinsey) the authors assert that it’s ‘time to challenge traditional management wisdoms that it is money that really counts.’ Their research points to ‘non-cash motivators (including praise from immediate managers) as being more effective motivators than the three highest-rated financial incentives (i.e., cash bonuses, increased base pay, and stock options).’ They further suggested that, nonmonetary compensation can maximize effectiveness in aligning the goals of the organization with the priorities of its people.’”

5) Economic Stress Impacts Innovation

The last few years have created an environment of fear in organizations. Those that figure out how to overcome the fear by recognizing and encouraging innovation, interaction and teamwork will emerge as the market leaders.

“A lack of consistent recognition has impacted the ‘cooperative’ nature of some work environments. In fact, 59% of managers say that economic conditions—and the competitive stresses and pressures that come with it—have negatively impacted their culture. This ‘fear factor’ within some firms has stifled innovation, creating reluctance on the part of employees to share new ideas or take chances. Recent research supports this, showing that employees at ‘Rewarder Organizations’ generate ideas 250% more frequently than employees of organizations that are not rewarders. Note that 18% of the employees at rewarder organizations were afraid of being associated with failure when taking chances.”

6) Technology Integration Required

Integrating HCM, CRM and recognition and reward systems simply delivers more data value to an organization by giving you more points of information on performance and areas needing improvement.

“All technology-enabled reward and recognition schemes need to be integrated with the company’s internal social media sites and (if applicable) to external platforms as well. … If not already completed, ensure that any systems currently owned or supported by the program can be integrated (as much as possible) with organizational CRM and sales force automation systems. If possible, be aware of your organization’s (or clients’) technology protocols to ensure that you are not blindsided by mandates toward cloud computing or virtualization.”

7) Global Tries to Go Global

Global recognition and rewards isn’t easy. Deploying a program in the US and then rolling it out later in the same exact form to global locations is nearly always doomed to failure. Successful global programs involve globally distributed “influencer” employees from the beginning.

“Generally speaking, although many organizations want to go global with their reward and recognition programs, doing so involves obstacles that are more cultural and managerial in nature: Customs, practices and social norms in emerging economies differ quite markedly from those in the U.S.”

What other trends are you seeing in employee recognition and rewards?

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 and Boston. Follow Derek on Twitter at @DerekIrvine.

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