Similarity between Recognition & Marketing Spends

I was chatting recently with a college buddy who happens to lead Marketing initiatives for a popular consumer brand in India. After the initial chit chat about how things were going for each other, he started venting his frustration about him having to repeatedly spend significant time and effort in justifying the investments the company was making in marketing. The three questions he grappled with all the time were the following:

1) By doing this marketing initiative what is the direct short term impact on our Product Sales & Profitability?

2) Have our competitors invested in a similar marketing initiative?

3) Can't the marketing initiative be rolled out at a much lower cost - say 10% of the proposed cost?

Impact on Sales & Profitability:

ROI (Return on Investment) calculations for marketing can be quite complex because of the all the variables involved. If "x" is the amount spent and "y" is the increase in sales in the next quarter, and "z" is the % increase in sales attributable to the marketing initiative, then the ROI = (z*y)/x. The trouble with this calculation - while "x" and "y" are easily measurable figures, "z" is a subjective figure that needs to be agreed upon. Why? Typically alongwith the marketing initiatives, there are other efforts which are made to improve sales - maybe sales training, better short term incentives for sales reps, better consumer spending climate etc. You can even argue that the impact of the marketing initiative is actually non existent and you could have achieved the increased sales simply because of all the other factors.

Investments made by Competitors:

My buddy went on to tell me how easy it was to get marketing budgets approved for doing similar things that their competitors had already done - e.g. if our competitor has sponsored a cricket match, getting a large budget to sponsor the next cricket tournament was easy. No questions were asked about RoI etc. - essentially, if they are doing it, then it must be working - so let's do it.

Actual Cost of the Marketing Initiative:

Even after the marketing initiative has been approved in principle, questions are asked about every rupee that is proposed to be spent - Can't we hire a cheaper photographer for the photo shoot, can't we advertise only in the metro cities etc. All this after the marketing initiative proposition provides a clear analysis of why and what we are recommending. It is as though, people start thinking about the spend, once they have approved the marketing initiative in principle.

If you look at the above scenario, companies view "Employee Recognition" initiatives the same way. It starts with the question on whether "Employee Recognition" spends has a tangible impact on any key employee factors (e.g. Employee Retention), and if yes, to what degree? This is highly subjective - should this number be 1%, 5%, 10%, 15%?

Next, what are our competitors doing? Again, if they are doing it, then it must be working. So let's do it.

Third - Do we really need to give out 2000 rupee trophies - can't we just do printed certificates? Does the spot award need to be 500 bucks - won't 100 bucks suffice?

In practical terms, both marketing expenses and Employee Recognition expenses are viewed as costs and not as investments. So the key to create buy-in for a long lasting Employee Recognition program would be to start with a small budget, identify the key factors you want to impact using the program (e.g. Employee Retention & Engagement), put in place mechanisms to measure & monitor the investments made, make some assumptions on the impact variables (prior to the launch of the program) and compare the returns with the other investments being made to improve the same factors - Employee Retention and Engagement.

Spot Awards - Is there a guideline for the tangible value of the award?

We were helping a client redesign their Global Recognition program and were trying to determine the values for their Spot Award program. As a philosophy, the client wanted the Spot Award to be a tool available with every people manager to instantly recognize their employees for accomplishments or measurable behaviours aligned with the Company Values. They wanted a tangible award in addition to an e-Certificate.

After a lot of deliberation, we came to the conclusion that a Spot Award of this nature should at the least enable the individual to have a cup of coffee and a snack with a colleague/friend. So in that sense the award value would have to be around Rs.200/Rs.250 in India and perhaps $10 in the US. We used the same yardstick to determine the figures for other locations.

We also considered using a range, starting from a coffee and a snack for 2 (Rs.200/Rs.250) to a meal for 2 (Rs.800/Rs.1000) at the top end of the spot award program. The manager would have discretion on the award value based on what the employee was being recognized for and the business impact of the accomplishment.

Given that this company is just beginning to invest in creating a Recognition culture, we wanted the initial program to be really simple. So we ended up making a decision that the initial Spot Award program would have a single value and in the next year, we would introduce a range of values.

Annual Gifts for all Employees

I had a HR head of a mid size company call me recently asking me to refer a few good merchandise suppliers for their annual gifting program. Essentially, the company gives out an annual gift to all employees on a particular day - the gift is typically a laptop bag, a nice pen set or equivalent (value around 500-2000 bucks).

From a recognition perspective, I have seen this practice to be unsustainable and invariably it gets dropped at some point of time in the company’s evolution - either because of size, budget cuts in a bad year or someone senior enough simply asking the question "Why are we doing this?".

Before spending the money on this, you need to ask the questions – what business value do I get by spending money on an annual award? How meaningful is the award for my employees? Are there better ways to use the same budget and do something more meaningful and more value adding for the business and for my employees? My idea is not to discourage companies from doing annual gifts, but to share some perspective I have on this.

If you really want to do an annual gift that will serve a purpose, give them something that most individuals as consumers will not buy (or see value in buying), but is very desirable – e.g. Bose headphones, a Hidesign bag, a Mont Blanc pen etc. This way, they get something they would normally not buy on their own, but have an aspiration for - so they feel really good about the gift. This means that they would tend to talk about this to other people and help build your employer brand etc. Again such aspirational gifts tend to be expensive and may not fit within your budgets. For simple branded utility stuff, such as laptop bags, pen sets etc., a better idea may be to set up an online branded company store and allow employees to buy stuff at discounted prices. Many merchandisers offer a simple online platform for this now - free if you negotiate hard enough and don't need too much customization.

The most well known example in India of the "Annual Gifting" practice was Cognizant, where all employees would get an annual gift every year. In the last few years, before they discontinued this practice, employees literally had to go to a merchandise warehouse in a remote industrial area to collect their gift. Guess, someone at Cognizant asked the question "Why" and they scrapped this program last year.

Lessons from the Lion Whisperer

This post has nothing to do directly with "Recognition", but is just some information about how powerful "Trusting Relationships" can be.

I just finished seeing a very unique and fascinating documentary on "National Geographic TV" on a guy, "Kevin Richardson", who runs a private wild-life sanctuary called the Kingdom in South Africa. The Kingdom houses lions and hyenas and Kevin cares for them in an unreal manner.

I picked the following words from his website: http://www.lionwhisperer.co.za/

"As a self-taught animal behaviorist, Richardson has broken every safety rule known to humans when working with these wild animals. Flouting common misconceptions that breaking an animal’s spirit with sticks and chains is the best way to subdue them, he uses love, understanding and trust to develop personal bonds with them. His unique method of getting to know their individual personalities, what makes each of them angry, happy, upset, or irritated-just like a mother understands a child-has caused them to accept him like one of their own into their fold".

Dude - Get me the Coffee!!!

I was recently on a short vacation to Thailand and was almost shocked at the courtesy and customer service orientation of the folks who worked at hotels, restaurants and shops there.

We were staying at a Courtyard Marriott and went one morning for breakfast. we promptly had a hostess invite us very politely, and request us to find a place. The problem was we couldn't find a place and came back to the hostess. The hostess apologized profusely and went around looking for a place and came back and told us that there was no place - we already knew this as we had done the rounds. So I asked her, if we can reserve a table and come back. She said that they don't accept reservations for breakfast. Ok - we asked her what we should do. She had no clue. So I told her that we would wait for a few more minutes and see if someone gets off a table and we would just grab it. We did exactly that.

Again, we had a very polite waiter come and greet us - we told him to get the table cleaned. Again, the guy was polite, apologetic, but took a really long time to clean the table and set new place-mats and cutlery for us. Since it was a buffet, we quickly grabbed our food. The waiter approached us again and asked if we wanted something to drink - Coffee, tea etc. We asked him for 2 coffees. he said "Rightaway Sir' and went. After about 10 minutes, I waved my hand towards the waiter - he promptly came and I asked him about our coffees. He profusely apologized and said he will be right back. 5 more minutes passed and I could see the waiter literally going from table to table, apologizing to everyone for something or the other. It seemed to be a case of the waiter going to anyone who called him, but not really doing any real work. We finally got our coffee - cold. We did not even bother to drink it or call the waiter back as we knew how the events would play out.

This was a classic case of "Inefficient Politeness/Courtesy" - Given a choice, I would have preferred a waiter who was efficient, but not very polite rather than a very polite waiter, but a really inefficient one. This type of event played out repeatedly at a few restaurants we visited, with the hotel check-in staff etc.

This was a classic case of "Artificial Recognition" of us as customers - the waiters/staff were very polite, courteous & well meaning, but just didn't deliver the goods. I wondered how many managers treat their employees this way - telling them all the time "Thanks", "Great Job" etc., but when it came to things that mattered - appraisal ratings, promotions, training opportunities, project opportunities etc., they just don't work/push hard enough to deliver. This seriously dents their credibility and creates problems for them.