Recognition for Contract Workers

I was recently advising a large global company with local manufacturing facilities in India on various Recognition programs they could adopt for their Sales, Support and Manufacturing organizations. I learnt that over 20% of the total number of employees in the company were contractors employed through a third party staffing company. The contractors were at the lowest levels in the organization – field sales, factory workers etc. A number of supervisors/managers were including these contractors in their Reward and Recognition programs and wanted my advice how they could do more for them. To some extent, they considered them equivalent to full time employees when it came to recognition and wanted to integrate them into every program we would design for them.

This poses some legal questions. Can you include contract workers in your Recognition programs? The answer varies by geography and the legal/labour rules applicable locally. I decided to speak to a labour lawyer to get his opinion on this. I managed to find a good lawyer who would give me some quick advice without sending me an invoice.

The lawyer’s advice was exceptionally clear – For contract workers, the company should NOT provide any benefit outside of the fees payable to their employer (i.e. the contract staffing firm). Ideally, you should exclude contractors even from company celebrations to the extent possible. Individual rewards and recognition are an absolute “NO-NO”. Why? Because anything done for contractors outside of the contract fees is tantamount to “Pseudo Employment”. Such practices done over a period of time coupled with a few tenured contractors, could put the company at risk – essentially, the company can face legal action and be forced to employ the contractors as full-time employees and extend all employee benefits to them, retro-actively. This would pose a short term financial burden, longer term HR implications and impact long term benefit plans. So his answer in short was "IF you employ contractors, treat them as contractors and stick to the contract document on what you can do and what you cannot do – do not try to integrate them into the company and extend any employee benefits to them”.

The Rewards Continuum!!

What kind of Rewards work best to drive employee engagement and motivate employees?

A colleague of mine “Jay Whitehead” (jaywhitehead@rideau.com) and I were recently at a client meeting, when the client asked “What kind of Rewards work best to drive employee engagement and motivate employees”? Jay answered the question very well and I thought his response will be useful to a lot of us. His response was the following:

Rewards work in a continuum. At one extreme, you have an investment banker working in Wall Street with 6 figure salaries - For him/her, merchandise awards, cash awards are nice, but not very significant. They crave for the softer Recognition – someone saying “Thank You” to them, getting a $20 plaque in front of the company employees, getting an email from the CEO congratulating him/her for a good job done etc. The Recognition for them is less dependent on the product/merchandise as it has very little value for them.

At the other end of the continuum, you can have a call center worker in India earning $300 per month, has a lot of unsatisfied basic needs and aspirations for a better life. So for them, dinner vouchers, household goods as awards, cash awards etc. mean a lot. Any recognition done without a product/material will be trivialized by them – e.g. an email from the CEO is nice, but I would love to get a TV from the company for the contributions I have made. For them the recognition experience must be matched with an appropriate product – the bigger the recognition, bigger the award value they inherently expect.

In between these 2 extremes, the balance between the recognition and the reward product changes in a linear manner.

So when you are looking at creating a Recognition program, you may want to design the mix between the recognition and the actual reward along this continuum. In most companies, this would mean that for the lower level/junior employees, merchandise/reward products would play a very important role and for the senior employees, the recognition experience would play a more critical role. This does not mean that we have no reward products for the senior employees, and no recognition experience for the junior employees. It is really about the balance between the two.

Recognition Program Design 101

I have consistently been receiving queries from HR folks about their company's recognition program. They typically send me their Recognition Policy document and ask me for feedback. Over a period of time, I figured out that I was getting these queries when the HR person was tasked with evaluating the company's Recognition programs and come up with a enhanced and better program. Based on what I have seen, I have given a very high level guidline you can use while designing a Recognition program.

The program you design needs to touch a large segment of the employee population i.e. around 60-70% of the organization should feel that they can actually get some of the awards/recognition. Recognition needs to be very pervasive within the organization - “Everyone likes to get Recognized – so Why are we stingy with this?”.

An ideal Recognition program should have a variety of initiatives/awards that can touch 100% of the employee population:
1) The Premier Corporate awards (for the best-of-the best): Touches about 10-15% of the employee population.
2) The BU/Department/Location level awards (Senior Manager driven awards): Touches about 25-30% of the employee population
3) Manager level awards: Spot rewards/low cost team level awards: Touches about 40-60% of the employee population
4) Standard Corporate Awards: Exhibiting corporate values, CSR, Long Service awards etc. (Touches 100% of the employee population).

In one of the following posts in the blog, I will try and provide a sample Recognition Program Design that you can readily use and customize for your organization.