Strong company cultures begin with clear visions. However, establishing and sustaining these cultures dependson employees who understand their organizations’ values and engage in behaviors that align with those values. Successful companies recognize that culture is an effective way to find, build, and maintain an engaged, high-performing workforce. In The Power of Thanks, Eric Mosley and Derek Irvine discuss how companies can use social recognition to proactively manage their organizational cultures and generate business value.
PART 1: UNDERSTANDING ORGANIZATIONAL CULTURE
Each day, employees engage in hundreds of interactions and decisions. The sum of these actions is a company’sculture. When a company creates a culture, it selects the values that define it and then encourages the behaviors that express those values.
The business world is more dynamic than ever before. Decisions must be made rapidly, but the amount of data related to those decisions can be overwhelming. When employees share a common set of values, they serve as guideposts and simplify decision making. A culture of recognition is unique because it engages, energizes, and empowers employees. In many cases, this results in better performances and higher profits.
Recognizing an employee’s effort and saying “thank you” is a powerful motivator. Giving thanks shines the spotlight on the right behaviors and indicates that someone is on the right track. One of the best ways to generate more recognition and manager feedback is to measure it in a clear and open way.
Recognition is one of the foundational elements of Positivity Dominated Workplaces. A Positivity Dominated Workplace is one where all employees promote engagement, high energy, risk management, candor, and other behaviors that are central to the company culture. Positivity leads employees to believe, “It is up to me to make sure things turn out all right.” Employees are compelled to take personal responsibility at all times, not just during good times. Recognition reinforces the right actions, encourages employees to take those actions repeatedly, provides guidance, and adds social value.
Appreciation and gratitude reinforce employees’ sense of belonging to something greater than themselves. Although appreciation and gratitude are closely related, there are distinctions between the two. Gratitude is more personal than appreciation. It means expressing thanks for a benefit one has received. Appreciation demonstrates that an action is valuable, while gratitude demonstrates that an action is personally beneficial.
Mosley and Irvine suggest that psychologist Abraham Maslow’s Hierarchy of Needs is a metaphor for what workplaces can provide to employees. Pay ensures food and shelter, while the work environment offers safety, social contact, and self-esteem. When people love their work, they find their identities and achieve self-actualization. The highest human needs in Maslow’s hierarchy–social contact, esteem, and self-actualization–are nurtured through appreciation.
There are several aspects of appreciation that make it vital for culture management. Appreciation is motivating, humanizing, specific, empowering, and powerful. When people thank one another, it benefits both the giver and the receiver. Gratitude uplifts people’s spirits and promotes well-being. There are 14 beneficial effects that gratitude has on the health of employees and the workplace:
Grateful people achieve more.
Grateful people are better corporate citizens.
Grateful people are less likely to burn out.
Grateful people pay it forward.
Grateful people are morally alert.
Giving creates a positive feedback loop.
The opportunity to give increases employees’ commitments to their companies.
Givers are more engaged.
Gratitude increases emotional wellbeing.
Grateful people get along better with others.
Grateful people are more resilient to trauma.
Grateful people sleep better.
Grateful people are physically healthier.
Grateful people are less depressed.
Research has found that nonmonetary rewards are the key to improved employee performance. These rewards are more flexible, affordable, and immediate than salary increases. They can be paid in the “currency” of recognition. When managers and employees offer respect, recognition, encouragement, and emotional support, they make deposits of goodwill and energy in one another’s lives. Those deposits can be spent on productive activities.
Engaged employees contribute to their companies’ cultures and constantly reinforce the values that support their organizational missions and bottom lines. Engagement is defined as the willingness to do more than the minimum on the job. Unfortunately, employee engagement is rare and its absence costs organizations hundreds of billions of dollars. The authors believe that empowerment and encouragement are factors that generate and maintain employee engagement over the long term. Empowerment is the foundation of accountability and delivering on commitments, whileencouragement is practically free and it literally gives employees courage to act in ways that reflect their organizations’ values and cultures.
PART 2: UNDERSTANDING SOCIAL RECOGNITION
Before organizations can create recognition programs, they must first establish their visions. These visions should articulate what the recognition will achieve, how it will support company values, and how it will complement the ways employees communicate and work together. Once visions have been created, great leaders then empower their organizations to build new cultures. This can be accomplished by creating social architectures that support the cultures. The authors believe that social architecture is to culture what foundations and beams are to buildings. Social architecture is manifested through small behaviors including communication, traditions, and privileges.
Johnson & Johnson is a good illustration of social architecture. Its “Credo” is a statement that describes the company’s responsibilities to different stakeholders, including doctors, nurses, patients, employees, and shareholders. The Johnson & Johnson Credo includes specific behavioral guidelines that are flexible enough to apply across the different countries and cultures in which the company does business. By reinforcing core values globally, Johnson & Johnson has created a powerful asset.
Three aspects of social architecture are essential for high-performance cultures:
The link that connects these three elements is social recognition. Shared values are reinforced when recognition shines a spotlight on specific behaviors that are tied to a particular company value. Engaged employees act as a cornerstone of a company’s social architecture. Company values will not have an impact on employee behavior and performance unless they are understood in the same way by all employees.
One way to reinforce a company’s culture is to hire candidates who are more likely to behave in ways that are consistent with the culture. At Zappos, for example, applicants participate in two sets of interviews. The first focuses on their qualifications, while the second focuses on their fit with the culture. Then, every new hire works in the call center for one month. If after one week individuals do not feel that they fit in, they can take the pay they have earned plus $2,000 and move on.
A strong social architecture supports all forms of employee engagement. Every day, companies should reward valuable behaviors, whether they are associated with small improvements or major initiatives. The value of social architecture is to promote the behaviors that support the company’s mission and goals. Different forms of recognition are the tools that work best for creating social architecture.
The Social Recognition Journey
Recognition extends along a continuum from simple, tactical steps to enterprise-wide initiatives and long-term strategic practices. As organizations progress along this continuum, they engage in a recognition journey. Recognition is powerful and its benefits increase as initiatives become larger and more strategic. Different levels of recognition have different characteristics:
*Tactical recognition features spot recognition programs that are handled by supervisors on an ad hoc basis.
*Enterprise recognition reaches every part of an organization around the world with a consistent program.
*Strategic recognition puts greater emphasis on culture management, linking recognition with company values and long-term strategic goals.
*With the advent of technology, mobile recognition is also a reality. Employees can recognize their colleagues anywhere, anytime through a secure interface.
The idea behind recognition in the workplace is that employees produce their best results when they are motivated to engage fully with their work. Motivation can be classified into two categories:
1. Extrinsic motivation occurs when employees want to gain external rewards, such as cash or promotions. It requires a continual flow of tangible, external rewards.
2. Intrinsic motivation occurs when people want to gain a sense of achievement. It thrives in environments that focus on achievement.
To create broad, adaptable sets of rewards for employees, businesses must attain a balance of extrinsic and intrinsic motivation. One way to achieve this goal is by combining incentives and recognition. Recognition is a very efficient motivator that is more economical than continually increasing employee salaries.
In a reward plan, cash has its place. However, it is only recommended for reward levels that are large enough that they are not lost in employees’ paychecks. Noncash awards at several different levels ranging from $25 to $1,000 are a good use of a recognition budget. The authors recommend the following guidelines when developing tactical, enterprise, and strategic recognition programs:
*The rule of thumb for tactical recognition programs is “catch employees doing something good.” These programs are fulfillment driven, and tangible rewards should be based on a predetermined cash amount or item from a catalog. With these types of programs, there is minimal reporting and little consistency across departments, so they work best in small businesses.
*An enterprise recognition program distributes tactical recognition across an organization’s divisions. It establishes standard objectives and practices for accomplishing recognition goals, which makes the program scalable across large companies. Enterprise recognition programs usually require tools to scale training, communication, and delivery of awards.
*Strategic recognition programs take recognition beyond the HR domain and leverage its power at all levels in a company. Recognition data offers insight into the degree to which company values are lived out each day. With data visualization tools, it is possible to see which values are emphasized and by which departments and locations. For employees, strategic recognition shows the connection between behavior and values, resulting in increased morale and engagement. For managers, this type of recognition promotes thinking about which behaviors embody company values. For executives, strategic recognition makes a direct connection between encouraging certain values and determining whether those values are being lived by employees and managers.
The overarching goal of the recognition journey is integrating social recognition with talent management practices.
Mobile, Round-the-Clock Social Recognition
Today’s workforce is more global, multigenerational, social, and mobile than ever before. These factors are all impacting the way companies design employee recognition solutions. For example:
*The global workforce. Each global organization has one business culture that spans multiple countries and locations. As a result, a global recognition system must operate on a single platform that accommodates the different cultural and business considerations across locations. In the current 24/7, borderless work world, recognition can happen at any time and in any place.
*The multigenerational workforce. Today, three generations of employees work together as peers. Recognition can unify these groups since it crosses lines of authority, seniority, and social distance. Recognition generates appreciation and respect and unites people.
*The social workforce. To succeed at work, employees must interact with one another. This requires social bonds built on trust, communication, respect, and appreciation. As workplaces become more socially active, recognition reinforces the attitudes that facilitate cooperative work.
*The mobile workforce. Given the popularity of mobile devices, social recognition programs should be designed for use on smartphones and tablets. This will increase employee participation. Software as a service (SaaS) recognition systems are often a good solution that can be integrated with other HR systems.
Consumer technologies are playing a larger role in recognition solutions. Four examples include:
1. Video recognition. This technology makes it easy for employees to create quick and meaningful videos that capture specific messages of appreciation.
2. 24/7 connectedness. The round-the-clock nature of business has led to employees’ personal lives and work lives blending. Recognition systems enable users to interact and recognize their peers at any time.
3. Badging and free recognition. Some recognition solutions offer “free” recognition, such as online badges or “thumbs up” icons. While these can be useful, the key is not to devalue the power of thanks through recognition that is not equal with the level of effort or result that the employee achieved.
4. Gamification. Gamification is the term used to describe adding elements of game design to nongame contexts. In recognition systems, game design must connect achievement to company goals and values. The key is to tap into the right motivators and engagement for maximum effectiveness.
PART 3: PUTTING SOCIAL RECOGNITION INTO PRACTICE
When building strategically effective social recognition practices, organizations must develop blueprints with five specific parts:
1. Sponsorship. Social recognition is attractive to executives because it relates to their three key concerns: competitive advantage, performance, and profits. Executive participation in a social recognition program elevates its status. Senior executive sponsors should act as global program champions by monitoring and discussing the program as part of the quarterly executive dashboard and guaranteeing that the program moves forward. At a minimum, the head of human resources (HR) should act as an executive sponsor and ideally the CEO or business unit presidents will also become involved. In addition to executive sponsors, it is essential to have an in-house program manager. This person should be accountable for designing and launching the program, as well as for interacting with outside vendors.
2. Design. Recognition programs must be designed with clear ambitions, metrics, and input from stakeholders. When establishing a recognition ambition, an organization must consider its core values and strategic objectives. The resulting strategic goals should be documented and stated as direct outcomes. Measurement against these goals will ensure that managers give recognition the priority it deserves. Before program execution begins, metrics must be determined and reported on a regular schedule. Displaying metrics on a performance dashboard will help create accountability. Tracking large numbers of recognition awards gives dashboards greater relevance. Program metrics, such as the number of awards per department, should be broken down into relevant targets for each division, department, or country leader. Reports should be distributed throughout the organization, all the way up to the CEO.
3. Reach. Social recognition is most effective when everyone participates, so programs should ideally touch everyone in the company. A business case for recognition, showing the program costs and expected benefits, must also be developed. Work done by Globoforce and studies by WorldatWork suggest that effective social recognition programs cost between one and two percent of overall payroll. One of the benefits of social recognition is that it creates a big “winner’s circle.” Giving many small awards, as well as a smaller number of larger awards, allows higher penetration rates for the recognition program. Effective social recognition programs are those where everyone is eligible to give and receive recognition for a job well done. When setting award guidelines, the authors recommend using the following best practices:
*Keep the number of award levels as simple as possible.
*Create award levels that relate to the degree of the employee’s contribution.
*Simplify the nominator’s choice by ensuring that award values are substantially different from one another.
*Provide examples of behaviors for each award level to ensure consistency of awards on a global basis.
*Bear in mind that the appropriate currency for a compensation strategy is cash, while the currency for a recognition strategy is noncash.
4. Adoption. When implementing a social recognition strategy, the goal is to achieve quick adoption by a large number of employees. This translates into better return on investment for the program over time and faster results. To promote adoption, organizations can use a three-phase communication process. The first phase is prelaunch communication, which creates anticipation and enthusiasm. The second phase is launch communication, which is designed to educate and inspire early adoption. The third phase is postlaunch and ongoing communication, which is integrated with daily activities and is intended to remind employees about the program. Creating a single, unique brand identity for the social recognition program results in marketing efficiency, unity, and culture reinforcement. Another important aspect of adoption is training employees on how the recognition program works. Managers must also be trained on when and how to create recognition moments. An effective recognition moment has three elements: (1) the award must be connected to a values- and goals-based activity; (2) the award is made quickly after the activity occurs; and (3) there is a personal message describing why the activity matters.
5. Rewards. For the rewards aspect of social recognition programs, the most important factor is that recipients receive their gifts of choice. Many effective programs offer gift cards to local merchants so recipients can touch, feel, and choose directly. It is also useful to provide merchandise rewards that enable quick selection and redemption.
Truly successful recognition programs have five essential building blocks. When these elements are in place, a social recognition program is ready to launch.
1. The stated vision is tracked through executive and manager dashboards. The global vision for the program must be articulated and the program’s targets must be described in metric or key performance indicator (KPI) form.
2. A plan is in place for a core values distribution analysis. Values distribution analysis charts should be generated from the data that is collected. Executive leaders must agree to monitor the information and take action if the results show problems.
3. An executive sponsor has been identified. One or more executive sponsors must monitor and discuss the quarterly dashboard and take corrective action if needed.
4. Leaders are held accountable. Program metrics must be broken down into targets for each division, department, country leader, or group. Leaders must be held accountable for reaching their targets.
5. True social design. To reap the benefits of social recognition, organizations must have recognition program designs that encourage the mass mobilization of employees. Every employee should feel empowered to notice good work and express thanks for it.
Social Recognition Programs and Return on Investment
Research has found that engaged employees are associated with high retention rates, better financial performances, and higher levels of customer loyalty. Social recognition programs increase employee engagement, so it is logical that there is a connection between recognition and broader business benefits. Turnover, for example, is very costly for organizations. The cost of replacing an employee who quits ranges from 50 percent to 150 percent of one year’s salary. If a recognition program reduces turnover by as little as 20 percent, it would more than pay for itself. Another way that social recognition programs contribute to the bottom line is by stimulating employee engagement. This leads to greater productivity and higher shareholder returns.
Having a strong employer brand is an important part of recruiting. Organizations with such brands attract the right candidates, which reduces the costs of advertising and other recruiting-related marketing efforts. Employer brands are built on three promises:
1. Tangible attributes, such as pay.
2. Intangible attributes, such as company culture.
3. Reasons to believe, such as being on a “best companies to work for” list.