Lucky 10

I recently met with a company which is completing 10 years (a very successful 10 years) in Jan 2011. The HR team is preparing a nice scrap book (with comments from a number of people) to be sent to all those who have been with the company since Year 1- i.e. those who joined on or before Dec 31, 2001. Good initiative and the scrap book looked great.

I asked the team some uncomfortable questions:
1)What about those who joined in Jan/Feb 2002 – have they contributed lesser because they joined a month later?
2)Do you think this tenure program is sustainable? Can you replicate this level of effort for all employees completing significant tenures?

My colleague S Max Brown, often talks about why a Recognition initiative/program is not just meant for the recipients, but also for those who observe the recognition initiative/event. The Recognition initiative communicates to everyone (including the non-recipients) what the company and the leadership team values. So it is imperative for the team planning a recognition initiative to evaluate how the program will be received by the non recipients as well.

Recognition for Small Enterprises

I have been getting enquiries from a number of companies with 200 to 1000 employees (the Small Enterprises segment, I guess), asking me if we could help them with the administration of their Recognition program. I met with a few of them to understand their requirements better. In most cases, they don’t do any recognition currently, but the HR person has been asked by the CEO to run a program and this person now wants an R&R platform. I want to avoid making a premature judgment of their requirements, but I am convinced that what these companies need is not a software platform for running their R&R programs. If they are serious about using Recognition as a strategic HR tool, they need to begin building a culture of Recognition. How can they do this? First, by helping the people managers in their organizations understand:
1) Why Recognition is important for the employees they manage?
2) What is the return on investment they can expect for the effort they put into recognizing their employees?
Once the managers have bought into the idea and concept of using Recognition more effectively, HR can provide a small budget and high level guidelines for each manager and let them design and run their own recognition and reward program within their teams. This way, managers can begin using recognition easily, without getting stifled by organizational processes around approvals & procurement. Given the small spend, I would advocate letting the managers determine and procure the award products directly, with some checks and balances to ensure that fair market value is paid for the reward products procured. HR can supplement the localized efforts by designing and running an enterprise wide formal recognition program.
I believe that for a 1000 employee organization, the effort around the administration of the programs will not justify any spend on a platform/system. Once the usage of recognition significantly increases, HR can evaluate investing in a simple system to track and manage the programs – I would actually wait till the people managers start complaining that they are finding it difficult to run their R&R programs. In most cases, the only real support managers need would be around the procurement of reward products (specifically those that require customization).
Going back to my interactions with SMEs, I have been urging them to evaluate if their real problem is not having a Recognition system or is it that their managers are still not on-board with using recognition.

Short Analysis of Recognition Practices in India

Over the last few years, there has been a lot of talk about Indian companies adopting global best practices in a number of management areas. One of the questions, clients invariably ask me when I meet with them, is to find out how other Indian companies are adopting “Recognition” and how much they spend on “Recognition”. I did an analysis of 30 large companies in different industries I had met with (think of it as the Sensex companies for Recognition), and collected some information about their Recognition activities and spends. Here are some of the key findings:

1) RECOGNITION ADOPTION: Adoption of Recognition as a strategic tool varies from being virtually non-existent (in one case) to being heavily integrated within their culture (in 2 companies, the practices seem to be robust enough to the extent, that my colleague and President of the Recognition Management Institute (www.realrecognition.com), Roy Saunderson (http://rideau.com/blogs/roy-saunderson), believes that they could be a candidate for RPI’s Recognition Best Practices award (www.recognition.org – Recognition Professionals International), if the companies applied.

2) RECOGNITION SPEND: Not surprisingly, the spend on Recognition is much lower than the North American standard of over 2% of annual Payroll costs. The annual Recognition spends in India range from .002% to about 1% of payroll costs, with the average and median both around 0.5% of payroll costs. To put the figures in perspective, if a company has about 15,000 employees and an average employee salary of INR 200,000 per annum, then they would be spending around INR 1.5 Crores annually on various Recognition initiatives. A number of companies on my list are probably spending more indirectly (e.g. travel costs related to big recognition events, additional travel costs for overseas holidays etc.), but I have used conservative figures based on whatever credible information I had with me.

3) RECOGNITION REACH: A bulk of the Recognition spend (over 70% in most companies) is focused on the top performers (10-15% of the employee population). This is an area companies have to really think about and determine how they can adopt Recognition in a manner that can touch a larger employee population – I am not professing recognizing and awarding employees for things that don’t merit recognition, but companies need to design recognition programs to recognize employees for exhibiting behaviours/company values and doing activities that drive towards the vision and business objectives. The focus currently seems squarely focused on business performance providing very few opportunities for the non-superstars to get recognized in a meaningful manner.

4) AWARDS: The most popular award for top performers is an international holiday with Bangkok clearly being the favourite destination. Other popular destinations were Goa, Dubai and Malaysia/Singapore. Cash and Cash equivalent awards are very popular and extensively used.

5) RECOGNITION PROGRAM OWNERS: Most of the Recognition programs seem to be driven by the HR resources supporting a business rather than by the line managers in the business. System adoption for Recognition programs is minimal (a few companies use their intranet and a simple plug-in solution to automate some of the processes), with a bulk of process around nominating and awarding employees being done manually by the HR resources. Two companies have adopted a globally proven and robust platform.

I can go on and on with my analysis (probably better suited for a white paper once I collect more information and obtain permission from companies to share specific data), but I will stop here and let you folks digest the information above.

Contra View on Recognition

I recently had a fascinating meeting with the HR lead of a very large financial services institution. After I had passionately made my pitch on why Recognition is critical for companies and the business benefits of a good recognition program, the person reacted in a very unexpected manner.
He told me that in his company, they don’t believe in or do any of this stuff. He went on tell me “We do things that really matter to the employees – growth opportunities, security, market aligned pay with aggressive performance linked payouts. Since we have consistently been growing 30% year on year, employees are pushing themselves hard because they can see real growth potential – we have been walking the talk by promoting people internally very aggressively. We also bend backwards to assist employees in times of distress – We have had situations where we have hired a helicopter to provide medical help to an employee”.
I then asked him how satisfied their employees were and if lack of recognition was pointed out in their employee surveys – he told me that they don’t do employee satisfaction surveys. It was more important for them to have aligned employees rather than satisfied employees as they believed that “satisfaction” was too subjective. They did employee alignment studies – their aim was to ensure that employees were aligned with the business objectives and values of the company.
He then went to tell me how they have had bad experiences with awards, vouchers, merchandise in the past (primarily with misuse of these award products) and now they have almost gone into a state of “Nothingness” with respect to employee rewards. The only thing they do is to send their top performers on a holiday overseas.
In summary what he told me was that stuff like Recognition will work in a company which is not growing aggressively and once they run out of other options to positively impact the lives and careers of employees.
My aim with this post is to simply present the contra view, a leading industry player shared with me, rather than react to the views.

Recognition and Obama's visit to India

When Rideau decided to establish a business presence in India, it was really based on the fundamental belief that “Recognition” was about real leadership, and people and businesses in India would value this thought process in the region. Over the last several months, we at Rideau, have been evangelizing this concept of Recognition and how we can all work together to make this world a better place to live in.
President Obama’s recent visit to India, to me, is simply about Recognizing India’s newly developed importance in the world stage – both from an economic and a global security perspective. A few of my colleagues from the USA asked me - what was Obama really trying to accomplish with the visit and if there were any concrete outcomes for the US from the visit? Clearly, what my colleagues were asking me were for the specific results of Obama’s visit to India.
One of the key areas within Recognition, we have been advising clients on, is to start focusing on Recognizing the behaviors and activities, that would eventually lead to results. The hope is that a larger segment of the employee population could be recognized for exhibiting the identified behaviors, making them more engaged with their work, eventually leading to a larger segment of the population delivering business results.
My response to my colleagues in the USA, about the results of Obama’s visit was along the same lines. The President seems to believe that India would be a good partner for the US in the 21st century. Historically over the last 63 years (since India gained independence) the partnership between India and the Western world has primarily been a one way street – The western world giving and India taking. This seems to be changing with India’s growing economy, and the belief now seems to be around a mutually beneficial partnership where both partners give and take in a collaborative manner. The visit really underlines the need to begin a strong relationship between various sections of the two countries. Coming to specific results, around 20 deals were announced, which according to Obama would lead to the creation of 50,000 jobs in the US. Would these deals not have happened without the Obama visit? - the answer is “No”. Most of the deals would have anyway happened. But what the visit has done is to showcase these deals in a manner where a larger section of the economy on both sides, will now explore increased partnerships. This should in all probability lead of additional investment and job creation on both sides. Essentially the visit has simple recognized these deals and provided an incentive for other such deals to follow through.
The other thing the Obamas accomplished during the trip was to come across as normal people with the same kind of worries and vulnerabilities as people in India – Jobs for American people, Security for the common man and the fight against terror. Their body language and the way they carried themselves – whether it be dancing to Indian music or speaking at the parliament – Barack Obama came across as being a common man focused on doing good for the world. The image of the USA being a superpower that bullies the world was definitely wiped out during this trip – this could never have been accomplished without a personal visit by the President. What result will this behavior lead to? For one, when people in the US talk about India’s outsourcing industry taking away American jobs, the response in India will be one of empathy, rather than a knee jerk reaction. The industry will probably start communicating better on why outsourcing is infact good for the USA as it will help US companies focus on productivity and innovation leaving the routine activities to someone else. The second, people in India (a huge and growing consumer base) will start looking more favorably towards American products and services. So the end result could be one, where US companies innovate and create products that find a large and profitable market in India, while at the same time, the outsourcing industry in India supports the operational aspects of US businesses, providing wealth to a large Indian population to go out and buy those products. This self propelling cycle is the one that will eventually help both the US and India grow together.

Recognizing Up

Over the last few weeks, I have been asked by two people as to why recognition programs were always about recognizing down, rather than recognizing up. Can’t organizations allow employees to recognize good managers and good leaders?
Though my first reaction was “We can’t do that”, I found the thought intriguing. If we categorize managers into three buckets – the senior/executive level managers, the middle level managers & junior/supervisory level managers. The senior managers typically get paid very well, receive significant visibility both within and outside the organization, have powerful roles with a reasonable span of influence and large budgets they can control. When we look at the middle level & junior managers, they need to deal with employees at the ground level, manage their bosses, and have limited decision making ability. Let’s say an employee comes to a manager with a significant issue. The manager’s job then is to escalate it to the senior manager and try and facilitate a solution. So the middle level & junior level managers are caught in the middle. This juggling act can become pretty stressful for them. This could be the reason why a lot more employees are choosing to be in non-supervisory roles – their return on investment for the effort and the pain they go through is not significant enough. So in some ways, if these managers who perform the juggling act day-in and day-out, can start getting recognized by their sub-ordinates, it may start having a reasonable impact on the engagement levels of the managers.

Recognition Events

I had an interesting conversation with an ex-HR leader of a very large global company. He was telling me about how his company spent 40% of their India recognition budget in hiring a popular musician to do a concert at their annual awards event. He told me that in the past the participants were so bored with the presenter talking about the achievement of the employees being awarded, that the event was considered a painful experience by all the employees. In the last year, the event was a huge success because of the musician and the concert.
I found it very strange that he felt proud about using a “Distractor”- the musician, to turn the focus of the audience away from the employees who were being rewarded. In essence, the company did not know how to make the recognition event engaging for the audience and the recipients, and hence chose to convert the event into a music concert and then called it a grand success.
I don’t have a problem with companies making the awards night a grand event with popular stage performers/musicians, but the focus obviously needs to be around the award recipients and why they are being rewarded. Rather than make a mockery of the recognition event, the company should probably set up a young energetic group of volunteers to create and run the event. I am sure most large companies have enough young creative high energy employees who would love to coordinate an event, especially when it comes with a nice budget. Then the event would serve a dual purpose - focus on the recipients and provide employees an opportunity to exhibit their creative and stage skills.

Employees First, Customers Second

I recently read a book “Employees First, Customer Second” by Vineet Nayar, CEO, HCL Technologies. Is Vineet propogating that companies start treating customers as second rate citizens? Absolutely not – His book is really sending a message to the leadership in organizations telling them that, as leaders, your primary job is to enable your employees to deliver value to your customers by removing the bottle-necks and the time-consuming processes put in place by management and the support organizations such as HR, Administration & Finance. If your employee is worrying about filling a big form to get his salary tax credits for the previous years, how is he/she going to focus on your customer?
Taking the same concept to “Recognition”, where the HR organization is designing an enterprise wide recognition program, they spend most of their time worrying about how they will administer the program, the resources they will need, IT issues with the platform etc. This diverts the focus away from the managers and employees who will actually be using the recognition programs.
If I were a manager in a company, what do I really need to recognize my employees frequently and consistently?
Primary Needs:
1) A budget I can use
2) Broad guidelines on the various categories I can award my employees for
3) Other avenues to recognize my employees in larger forums beyond just my team
Secondary Needs:
1) Support in procurement of suitable awards (customization where possible)
2) A mechanism to share some notable contributions of my employees with the company at large
3) A forum where I can understand what other managers are doing from a recognition perspective
So why does the HR organization responsible for creating a mechanism to enable the managers to use recognition more effectively, focus on the secondary requirements rather than the primary ones. I have seen a number of RFPs which focus on the breadth and pricing of products a recognition service provider offers. It’s time we start looking at managers as customers and focus on the customer’s requirements.

Sending a Birthday Gift to Employees

I recently met a company which has over 2000 employees and one of the programs they run is to send a birthday gift to all employees on their respective birthdays. The value of the gift is around INR 500. I wondered if the INR 1 lakh they spend is really worth it. I asked the HR manager if they have questioned the spend on this. He told me that once in a while, someone asks if we should be doing this and if we would do it if we were a larger organization. He went on to tell me why they felt the birthday program was important for them.
1) This was one of the few things where everyone in the organization from the CEO to the cleaner boy were treated as equals – they would all get the same gift in the exact same packaging during a calendar year.
2) They viewed this as a touchpoint – their leadership believed that they need to make use of every opportunity to touch the employees - they felt that a person’s birthday was a significant day in the employee’s life and it was the employer’s obligation to acknowledge the employee on this day.
3) The company had almost 40% of its employees who were factory workers. This population expected management to only offer them gifts on important occasions – big festivals like Diwali, Christmas etc. By recognizing them on their birthdays, it made these workers feel that the management/corporate office cared about them. So they actually wanted the gift to come from the corporate office rather than from their local supervisor - Ironical to our philosophy that managers are the ones who need to recognize the employees.
4) He also candidly admitted that since the birthday gifting program was in place, they were unsure about the impact if they removed it. Given the small cost, they would rather let the program continue than stop it and deal with any negative impact it may have.

Points as an Award

Points based programs seem to be flavour of the times when it comes to recognition programs – not without reason. Points based programs offer the following benefits:
1) Makes it easier to managers to recognize their employees frequently without the need to present an award in person and create an event around it everytime.
2) The award (Points) are credited immediately to the employee’s account, making the recognition instant.
3) The manager does not need to worry about whether the employee will like the merchandise/award he/she has chosen.
4) The manager can decide to recognize in an impromput manner without the need to plan a few weeks in advance and worrying about whether the merchandise will arrive on time.
5) The employee has the flexibility to accummulate points and choose a product that he/she really values.
6) Global implementation becomes easier as the merchandise is delinked from the recognition program.
The best place “Points” as an award fits into is in “Spot Award” programs. Managers can print out a certificate (where the system supports it an email with the certificate can be sent to the recipient and the team), announce the award and the employee’s account gets credited with the points instantly.

Recognition Budgets

In almost all meetings I have with prospective customers, the “Budget” question invariably pops up. How much do I spend on recognition programs? What do other companies spend on recognition programs?

RPI (Recognition Professionals International) – had undertaken a survey in 2003 (in North America), where the average budget for recognition programs was 2% of payroll costs. RPI further recommends a budget between .5% to 3% of payroll costs, with 2 to 2.5% of payroll costs, being the ideal budget for an effective recognition program.

From informal interviews with about 30 organizations across various industries in India, the recognition related spend in India seems to be in the range of 0.5% to 1% of payroll costs.

The amount of interest from prospective customers shown around budget data clearly demonstrates the need to undertake a formal survey in this regard.

Jewelry as Rewards in India

As I learn more about the global recognition industry and the kind of merchandise companies use for their recognition programs, it surprised me that jewelry was a big component in North America. In the Indian business/cultural context, my first reaction was that I couldn’t see an employee recognition program having jewelry as a reward option as jewelry is considered too personal in India. When I researched this a little further, I came up with a number of other reasons for this:

1) To call a piece of jewelry “gold” in India, the gold quality would have to be 18 carat or more (unlike in North America, where the gold quality can be 10 Carat or more). This means that gold jewelry will be expensive and may not fit into the budget of corporate recognition programs.

2) Gold still rules the jewelry market in India and other materials (even expensive ones like platinum) are not valued as well in the market. This makes it more difficult to use alternate materials which may bring the cost down. Also, "real jewelery" (made with genuine stones and high quality gold) has stood as a status symbol. So while imitation jewelry and lower priced jewelry may look as good, but they are not inherently valued by the users, and are typically considered a compromise.

3) Jewelery, in spite of the huge market size in India, is still largely an unorganized business sector, dominated by local, family owned players. This has meant that it isn't easy to precisely determine the quality of the product or go with a brand that's trusted.

4) The primary end users of jewelry are women and historically companies have employed far lesser women than men. According to publicly available data, women accounted for just 18.4% of the working population in the organized sector in India in 2003 (according to the Financial Express). For context: Contrary to popular perception, a large proportion of women in India work – primarily in the unorganized sector.

My thoughts on using Jewelry as a reward option in India - the best bet would be to stick to the following:

1) Genuine gold is hugely valued in India and a number of banks (e.g. www.icicibank.com) and large jewelry houses offer certified 24 carat gold coins (99.9 % purity). These sealed and well packaged gold coins could be an attractive product to include in a reward catalog.

2) There are a few branded jewelers who have established credibility in the market (Tanishq, Asmi & Gili). These retailers offer gift vouchers and certificates which can be included in the reward catalog.

Service Awards – Do they make business sense?

A few days back, I was presenting Rideau’s offerings to a prospective client – a very large company (about 25 years old) with over 100,000 employees globally. When we were talking about tenure based service awards, the client told me that they don’t do service awards as the management believed that no one should get recognized just for showing up – that was what their salary was meant for. My colleague, S. Max Brown, and I were taken aback as we fundamentally believed that service awards were the quintessential foundation block for a good recognition strategy in a company. I have been reflecting on this ever since with a view to create a compelling case for a service award program that can be sold to a very hard-nosed businessman.

My understanding of the way a number of global service award programs work is the following: The employee gets an e-mail congratulating him/her on completing 5/10/15 years with the company with a link to a catalog from where he/she can choose an award. In my opinion, running a service award program this way will probably not justify the investment a company makes in the program. Imagine that on your birthday, your mother or a loved one sends you an e-mail wishing you a happy birthday with an online link for you to pick a gift from. Worse still, imagine if the e-mail came from an automated system that your mother has signed up for, to ensure that she does not forget anyone’s birthdays.

It is widely accepted that service awards are very powerful for the following reasons:
1) It has the potential to touch 100% of the employee population.
2) The criterion for the award/recognition is crystal clear and cannot be disputed at all. Plus the award has no chance of inducing feelings of jealousy among co-workers.

I fundamentally believe that an employee-employer relationship is special and important enough (simply because of the amount of active time an individual spends at work) that a tenure based milestone needs to be celebrated by the employee’s team the same way that a family celebrates an individual’s birthday. This does not mean spending loads of money on cakes and gifts, but simply allowing the employee to be in the spotlight on that occasion and using the service award presentation to create a setting and reason for the celebration.

In conclusion, if the delivery of the award is not done in a meaningful and memorable way for the employee and the audience (may just be the individual’s small work team), I don’t think spending money on service awards is wise – an automated e-card that costs nothing will do the same job.

Employee Engagement & Quality Control

I happened to visit a car manufacturing facility a few days ago. I walked through the floors of the assembly line passing by grumpy workers. I could almost see the following written on their faces “I hate this job and this company – but I need the money, and that is the one and only reason I am doing this.”

Accompanying me on this walk was the quality guru of the factory, and he was telling me about all their global quality certifications and the processes the company followed to ensure the cars rolling out of their assembly lines are of world class quality. When I glanced at one of the workers who was going about his work – mounting the tires on a car, I felt I heard the following “I am going to do as bad a job as I can afford to, without any risk to my job – so you better put in place quality controls and measures and whatever else is needed to cover the company”. If only they were thinking, “I am going to do the best job I can, knowing I can always rely on the tools available to me and the quality control measures the company has put in place to ensure any unintentional errors I make are identified and corrected before the car moves to the next stage in the assembly line.”

What would it take for the company to move from the existing scenario to the new scenario I had described? “Higher Employee Engagement” is the silver bullet – but unfortunately, that is not something available off-the-shelf. A great reward and recognition program encompasses “Day-to-Day” recognition, informal recognition and formal recognition programs. This could prove to be a very cost effective solution in driving up employee engagement levels, especially for a large workforce doing repetitive jobs.

Bollywood and Employee Recognition

There was an article in the Economic Times not too long ago about how training managers in Indian corporates were incorporating clips from Bollywood movies into their training programs to make the programs more engaging and enjoyable - Shah Rukh’s speech to the team in “Chak De India" as an example of motivational speeches, Aamir’s comments in “3 Idiots" on how professors need to teach, or the power of team work and the impact on the team of an individual moving in a different direction in “Lagaan."

I recollect a scene from Munnabhai MBBS – where Sanjay Dutt or Munnabhai talks about the power of “Pyaar Ki Jappi” (“Hug of Love”) and demonstrates its power by hugging an old worker (a floor cleaner) and thanking him for cleaning the hospital floor for the last 30 years or so. Relating this to the contents of the CRP (Certified Recognition Professional) course, I had recently taken, I wondered about the positive impact “Day-to-Day” recognition could have on an organization. This old worker is clearly at the bottom of the corporate pyramid at the hospital and can be replaced easily with another worker, but the work he does is quite valuable in the true business sense – which patient would choose to get treated in a hospital which can’t even manage to keep its floors clean. If the worker’s manager or better still, one of the senior doctors, chats with him for a few seconds while passing him, tells him the work he does is very valuable to and explains why, I bet the floor will be sparkling clean for the next few weeks at least.

Employee Recognition in India

Ask any professionally run company in India if they have an employee recognition program in place and the answer will be “YES.” Dig a little deeper and more often than not, you will find that most programs are managed in an ad-hoc manner with very little thought process that has gone into it. It gets even worse if you start asking questions about ROI (Return on Investment), Recognition Strategy and Management Commitment to the program.

I personally believe that “Employee Recognition” can be a very powerful tool in the arsenal of business leaders and HR professionals to drive up employee engagement, which in turn, as has been proven over and over again, drives better business performance & customer satisfaction.

To compare this philosophy with Maslow’s hierarchy of needs, employers typically do a great job in taking care of the employee’s PHYSIOLOGICAL NEEDS (Compensation & Benefits) – Level 1, and SAFETY NEEDS (work-place, medical facilities, housing etc.) – Level 2. The individual’s SOCIAL NEEDS – Level 3, are fulfilled by becoming a part of a group of colleagues at work or by their strong family set-up outside of work. Post this, the fourth and the fifth needs (ESTEEM and SELF-ACTUALIZATION), tend to be clubbed in a majority of organizations i.e. the same employees who are valued and recognized are the ones who are promoted and grow up the corporate ladder. So employees tend to stay at level 3 (SOCIAL needs fulfilled) or move 2 steps ahead (SELF-ACTUALIZED). Are companies missing a trick in the book by not having a larger pool of employees at level 4 (ESTEEM needs fulfilled)? Logically, shouldn’t there be a larger number of employees with fulfilled esteem needs than those who are self actualized? Won’t employees be happier and more engaged if their chances of moving up the hierarchy of needs are higher?

A robust employee recognition program that is directly linked to the company’s vision, mission & values, and has the commitment of management, can effectively move a larger number of employees to level 4 (ESTEEM) and motivate a larger number of employees at level 3 to work harder, given that they now have a more realistic chance of moving to level 4.

The topics I hope to cover in this blog will centre around this philosophy and belief in the art & science of employee recognition as it applies to organizations in India and the surrounding regions. I will look forward to your participation.

Global Recognition

In the last 12 years, I have had the luxury of working in, and traveling to multiple countries, helping companies establish and manage their operations outside of their base locations. In this blog, I hope to share my practical insights in the area of Employee Recognition & Rewards, as it applies to various countries globally, starting with India – my current location. I have also initiated my research on identifying & documenting recognition practices in different countries in the field of Rewards & Recognition and hope to share my learnings as I go along.