Too much of Recognition

Over the last few months, I have been asked one question by a few clients/prospective clients - "If we do so much Recognition, won't it backfire on us? Won't we set people's expectations too high in terms of appraisal ratings, bonuses etc.? "

In all the cases, my response or my team member's response was the classic one "Has anyone ever told you to stop giving them Recognition?" - we then talk about various definitive studies around this including Gallup's Q12 survey, where one of the questions is "Have you been recognized in the last 7 days?". Using this ammunition of strong responses, we handle the question deftly.

But in the last several weeks, I have asked myself this question, and intuitively feel that this needs to be researched more and thought through more - even though I cannot really argue about the merit of the responses we usually give.

In order to try and do this in a meaningful yet fun way, I met with a few people managers in our client organizations, who don't seem to believe too much in the Recognition stuff (Raw criteria I used was those managers who don't get excited to meet with me to talk about Recognition).

Here is the data I collected from 5 of them - stated verbatim with minor edits:

1) Boss, if I keep giving out Spot awards to my people, I am setting expectations that they will get good ratings - I am the one who will suffer at the end of the year when HR tells me that 30% of my people will have to get a below average rating.
2) We are paying these guys a salary for showing and doing work. Recognition has to be done only when the guy goes above and beyond what is expected of him. Saying Thank You for what is in his job description makes no sense to me.
3) If I keep recognizing my people, they will stop valuing any awards I give them. Unless you create scarcity of awards, the value of the awards will go down and render them useless.
4) Look - we are a fast growing company. I would rather focus on promoting the good guys than do all this Award stuff. Maybe in 10 years, when our growth slows down, I will be forced to do all this stuff.
5) Don't get me wrong - I like Recognition and believe that it will have a big impact on our people. But our management needs to believe in it and provide budgets to do good stuff - right now we are doling out peanuts. If you throw peanuts, monkeys will dance - you won;t get performance. Come to talk to me after you have convinced our management to spend on Recognition.

I am not even going to attempt to analyze the data, but will probably try and undertake a small project to study this perception around "Too much of Recognition" not being healthy.

What is Social Recognition?

Over the last few months, multiple HR folks have been asking me about Social Recognition. Given that I have generally been a late adopter of technology trends, I really didn't have a good answer for what Social Recognition was. So I spent a few weeks reading about Social Recognition, talking to folks who are experts in Social media with respect to businesses. Here is my short understanding of what Social Recognition really means and the business impact it can have for organizations.

1) Those who have seen the movie "The Social Network" would recall that "Facebook" was about taking the social experience of college and creating an internet equivalent of the in-person social experience. In the same way "Social Recognition" is the internet equivalent of broadcasting employee recognition stories and allowing anyone interested to Comment, Like and follow the activities/thread related to a Recognition story.

2) Should HR folks think about Social Recognition - YES in a big way. Outside of the small costs involved in a technology platform to enable Social Recognition, everything else is free. Depending on how the employees use the tool, it has potential to become a highly engaging & employee location independent website. Plus it creates a healthy competition among managers to do more recognition within their teams/groups. The ones who use Recognition and the ones who don't, become clearly visible on the portal.

3) Well! - Social Collaboration platforms within organizations made a lot of noise but have not really taken off - i.e. organizations are not yet ready to pay for these platforms, which means they don't see tangible value yet. In the case of Recognition, the Social Recognition platform sits on top of a tangible Recognition program, which means that activities are already happening in the organization and the platform is only used to broadcast and spread the news. So chances are - more people will actually logon to the portal for nominating, reviewing, redeeming etc. So Social Recognition is not a new destination employees need to visit, but an addition to the same place where employees were anyway visiting. So unless you have strong underlying Recognition platform in place, introducing just Social Recognition will be futile.

Summary: Focus on establishing a strong Employee Recognition program first and build a Social Recognition platform on top of it. Just like in the movie "The Social Network", Social Recognition is about taking the offline Recognition experience onto the internet to turbo-charge the impact of the program.

Tax Treatment of Awards

While I am no tax expert, I wanted to share common practices used by companies while dealing with the tax treatment of awards. Readers are kindly requested to consult their respective tax experts before making any decisions for your company. The information below is simply meant to be a guide.

Ask an HR person in an organization how they deal with taxation of employee awards, and the most typical response you would get is that we don't worry about it upto Rs.5,000. Post that the amount is taxed. What exactly is this exemption of Rs.5,000 and what is covered in this Rs.5,000?

According to the large accounting firms, the Rs.5,000 annual tax exemption amount is only for organization wide non-distinguished awards (e.g. Diwali gift for all employees, New year gift for all employees). Any other award based on performance or milestones that are given to individuals need to be taxed and do not fall under this Rs.5,000 limit. This means that every performance or milestone based award given to an employee is taxable. Any award given to the employee - vouchers, products, merchandise etc. fall under this category.

What about trophies, framed certificates, mementos?

Currently the common practice seems to be to not worry about these and simply ignore the value of the these awards from a taxation perspective. Plus, for the income tax authorities, tracking who has received a trophy etc. is not practically possible. But tax experts suggest that at some point of time, companies will need to include the cost value of these trophies as an employee benefit and provide for the tax amount appropriately.

With the usage of Award programs and the value of the awards being very low in India, and the process to monitor spends being very complex, these spends don't seem to be on the radar of income tax sleuths at this time.

From a company perspective, I would generate a report, on a financial year basis, by employee, listing the various awards he/she has received alongwith the value. I would then hand this over to the tax experts in the company and seek their advice on how to deal with this. From a budget perspective, I would also provide for a "Gross-Up" amount on the overall Award program - i.e. If I have budgeted INR 1 Crore for award products in a financial year, I would increase the budget to about 1.3 Crores to provide for tax payments.

2012 - The Year of Employee Recognition in India

My best wishes to all of you for a great 2012.

My Recognition Prediction for 2012: 2012 could be the YEAR for a large number of companies in India to launch a robust & structured Employee Recognition Program. We wish them all the best with their efforts.

It's Just a Certificate

"User Experience", "User Interface", "Branding", "Good Design" etc. are terms which mean only one thing to a typical HR manager running a Recognition program - doing this will cost me money. In our approach and intent to do everything at the lowest possible cost, I believe that we end up being "Penny Wise, Pound Foolish" in a number of occasions. Let me give you an example:

A number of companies have a Recognition program which includes certificates of some kind. If you have ever received one of these certificates, how did you really "FEEL" about the certificate. I have been terribly disappointed with the quality of the certificates that companies use - even the really large ones which are so fussy about branding when it comes to their products. I will not be exaggerating if I say that majority of these certificates are very poorly designed by some guy who installed Coreldraw or Photoshop in his computer just a day before or decided to use Powerpoint/Word for designing the certificate.

If I was giving a certificate to anyone, I would want them to feel good (Real good) about the certificate. I want them to take the certificate home and show it to their family, show it to their colleagues and possibly keep it in their desk for everyone to see. For this to happen, the certificate needs to look GOOD. In most cases, the recipient takes the certificate, thanks the giver, and then shoves the certificate in a file in his draw.

It's time we start spending money on designing great quality certificates - for about 1000-5000 bucks, we can get a freelance designer to do a real good certificate using paid images available on istockphoto.com, imagesbazaar.com etc.

Employee's Date of Joining - Just another day in "Paradise"

For the last several weeks, I have been asking a simple set of questions to the clients I met with:

1) Do they remember the exact date on which they joined the company?

The answer has been "Yes" 100% of the time.

2) On any of your anniversary dates, has your manager called you and acknowledged the fact that you have completed "x" number of years by saying "Thanks"?

The response rate drops to a dismal 10%. A few did mention that they got an email from an automated system and some even said that they received a gift in the mail on one occasion.

3) Do they believe that every employee in the organization remembers their date of joining? After a quick thought the response has been "Mostly / Majority / Yes, I think so".

4) Do you believe that your employees want to be atleast acknowledged on their service anniversary - whether it is year 1,2,3 or whatever?

Again the answer has been "Yes, I think so" in 90% of the cases.

Here we have a day/date that is very meaningful to the employee "year-on-year", but it is just another day in the calendar for the company.

From an other perspective, isn't this a great opportunity which does not cost anything, for the manager to build a relationship with the employee and show that these occasions are important and meaningful? If the company can support this with a meal voucher for 2, to allow the manager to take the employee out for lunch, won't the Manager-Employee relationship be significantly strengthened?

By missing out on this easy opportunity, the employee's date of joining ends up being "Just another day in Hell - oops sorry - Paradise".

Recognition in Government Organizations

Over the last week, I met with several officials from the Ministry of Finance, the Government of India, talking to them about the impact of Employee Recognition programs.

The government's HR issues are different from the private sector:

1) Employee Attrition: Their attrition rates are close to Zero. Their employee benefits are best in class, though compensation as a independent component is in the bottom 25percentile in the industry. Stability, Benefits (while on duty and post retirement), Pride and Power associated with government jobs and no real threat to the job due to poor performance / lack of performance makes a government job quite coveted. Essentially, once you have entered the door, life is good.

2) Role of a Supervisor: Being a middle manager in the government is probably one of the toughest roles - these are essentially the civil services officers (IAS, IFS, IPS etc.). Their bosses are typically the ministers / ministry officials who are quite demanding. The people they manage act in a manner that they are doing a favour by doing work. To manage a non-performing employee, the only tool the supervisor has is to write a performance note that goes into the employee's file for life. Given the serious implications of this note, it is used very rarely (covering probably 2-4% of the total employee population). In terms of carrots, the supervisor can influence promotions, postings to a small extent. They also currenrtly issue certificates to the top performersm typically signed by the minister responsible for the department - all this touches 2-4% of the employee population. So how does a supervisor effectively the remaining 92% employees? This, I believe is one of the moist critical HR challenges the government has today.

So what are some of the ways the government can address this (and they seem to really want to).

1) Using a Stick to manage performance: Typically, when a supervisor tries this approach, the employee write an interference not to the ministry which results in the supervisor getting transferred to another department. So using the stick is not easy.

2) Anything related to compensation is determined for the entire government by the Pay Commission. So again there is very little individual departments or supervisors can do about this.

3) Given the constraints with using the stick approach and differential compensation, the only real option for a supervisor to create a high performing organization is to make his/her employees genuinely want to do work and deliver their best. If the employees trust and respect the supervisor, I believe that they will give their best voluntarily. So how does a supervisor build this trust and respect.

Here is where a very simple and low cost Employee Recognition program can have a significant impact. If every supervisor had access to a set of tools he/she could use, then over a period of time, they can build this respect and trust, atleast with a small percentage of their employee groups, thus elevating performance.

The tools the government can start off with could be the following:

1) A set of Birthday cards, Thank You Cards, Anniversary Notification cards that the supervisor can use at his/her discretion.

2) A simple low value Spot Award program that comes with a certificate signed by a unit level head / representative from the ministry.

Infact, one of the government representatives we met, mentioned a practice the ex Chief Election Commissioner, N. Gopalaswami (2006-2009), followed diligently. His secretary was asked to track the birthdays of all employees within his group and he would take an effort to personally write a birthday note and mail it to the employee ensuring that the employee receives the card on his / her birthday at their home. It is apparent that a number of supervisors within the government may be using creative ways to build respect and trust with their employees even with the constraints of the workings of the governments. So if the government is able to formalize this practice, the impact can be far-reaching and will significantly drive positive behaviours.