The foreword to the CIPD report ‘Show me the money! The behavioural science of reward’ states ‘the time is ripe for a renewed look at how we design and apply reward strategies’.
We agree.
Why? Because a growing body of evidence based on behavioural science research is providing some truly significant insights into human behaviour at work. It’s creating a far better understanding about how employees are motivated. That understanding means we’re starting to figure out how our brains react to different types of reward and therefore how those rewards affect behaviour.
There’s still a long way to go. The surface has only just been scratched and more research needs to be done within the organisational context. But even so, it’s a positive move away from designing employee recognition programs that end up being based more on assumptions than evidence. Because even though we’ve known for years that employee recognition is a really important thing to do, getting it right has been a huge challenge.
We’ve struggled to define quite what right looks like. Conveying thanks through a long service award celebration on a Friday night is very enjoyable and is certainly appreciated at the time. But it’s an outdated approach for most of today’s employees. Do recognition practices like employee of the month or a standard Christmas gift really have anything to do with values, behaviour and culture? Or do they run the risk of turning employee recognition into a competition about performance or sending out a message that it’s too much effort to appreciate each employee as an individual?
What does this report tell us about employee recognition?
The report examines how individuals respond to all types of incentives. Money has a powerful impact on behaviour but that can include unintended negative effects. In certain contexts, these types of tangible rewards run the risk of undermining intrinsic motivation.
The report also highlights that systems based on team or individual performance can actually build in dissatisfaction and diminishing returns. But despite this, research still points to a need for employees to feel their individual contribution has been recognised. Employee recognition practitioners must find a way to reconcile these two seemingly contradictory issues.
So where does the future lie for employee recognition?
What does all this mean if you’re thinking about your approach to employee recognition? As the report says, it means it could well be time to give greater emphasis to the intangible non-financial rewards. Step forward social recognition.
As well as avoiding many of the problems associated with the more traditional approaches, social recognition is a pragmatic alternative. We now live in a social age where more and more employees expect and need ongoing feedback. We also live in an era where big financial rewards don’t offer a sustainable way of showing recognition.
Demonstrating your appreciation financially is all very well but look at the damage caused when the budget suddenly needs to be cut back. Far better to introduce a cost-effective, consistent approach that can ultimately embed itself as part of your company’s culture.
Social recognition is starting to take centre stage and presents a solution to many of the challenges raised in the CIPD report. The report itself covers a lot of ground and it may give you some new ideas and thoughts to help you address your employee recognition challenges. It gives you a balanced review of the evidence – and that includes acknowledging the complexities involved. But even if it feels like uncomfortable new territory to be in, don’t dismiss it without giving it some serious thought.
As the report says ‘We believe the application of behavioural science insights to people management and development has the potential to be game changing’. It does. And in some instances it already is. So don’t get left too far behind.
