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Rewards and Recognition:

Make a difference to the


talent in your organisation
Aniruddha Limaye
Ralsi Sharma

Whitepaper by Great Place to Work Institute


Presented to you by Edenred

Acknowledgements
We are thankful to all participant companies for giving us an
opportunity to study their Rewards & Recognition practices. We are
also grateful to these organisations for sharing with us the knowledge
and wisdom that they have developed with rigorous efforts over
many years.
We are also grateful for the assistance of the following individuals in
producing this report:
Authors:
Aniruddha Limaye

Director, Great Place to Work Institute

Ralsi Sharma

Project Manager, Great Place to Work Institute

Reviewers:
Prasenjit Bhattacharya

CEO, Great Place to Work Institute

Preeti Malhotra

Practice Head, Great Place to Work Institute

Divya Martyn

Project Manager, Great Place to Work Institute

Project managed by
Ralsi Sharma

Great Place to Work Institute

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Executive Summary
Workforce today is more articulate about their needs. Employees
desire the best of everything competitive salaries, comfortable &
aspirational lifestyles, job security, career enhancement options,
work-life balance, and so on. Competition for talent is ever
increasing and organisations need to have well-defined
philosophies and strategies to help them develop innovative ways
of tapping intrinsic motivation of employees by engaging their
hearts and minds. While many organisations are struggling to
make sufficient progress in this direction, there are organisations
that have institutionalized robust practices and effective processes
in different people practice areas that go a long way in positively
impacting employee perception. Indias Best Companies for
Rewards and Recognition was conceptualised to recognize
companies who are leading the way in the area of Rewards and
Recognition for us learn from.
This white paper aims at sharing our understanding of effective
and innovative rewards & recognition practices.
Methodology of the Study:
While employee responses to the entire Trust Index Employee
Survey was used as a qualifier, the employee responses to eight
statements related to rewards and recognition in the TI Survey
were the key factor in determining the winners of the study.
Standard deviation in employee responses to these statements
was used to gauge the consistency and universality of the
employee experience. Since practices drive employee perception,
rigorous evaluation of Rewards and Recognition practices in the
participating organisations was also carried out to make the
evaluation comprehensive. Employee perception (captured
through TI Survey Scores) carried 2/3rd weight and assessment
of practices in the area of R&R carried 1/3rd weight in determining
the winners.
Major findings and key insights:
1. Effective rewards and recognition practices need to reflect a
companys culture (basic values & beliefs) and integrate well
with the nature of its business, strategy and goals.
2. Absence of fairness significantly hurts employee perception
and efficacy of R&R practices. Absence of fairness is evident
by factors like
a. Insufficient external parity,
b. Inadequate internal equity
c. Lack of impartiality in assessment,
d. Lack of clarity of desired actions & results which will be
rewarded, and
e. Inadequate transparency on how and why some employees
get rewarded.

b. does not require big budget,


c. can be provided not only by the organization and its senior

leaders, but also by peers and juniors,
d. can be more proximate to the actions and results, and

hence strongly reinforcing,
e. can be done frequently
Most companies are not utilizing the potential of recognition
sufficiently.
4. Empowering and encouraging people managers and peers to
provide recognition makes recognition practices more
effective.
5. Involving employees while deciding on varied ways in which
rewards and recognition can be provided, instead of taking
unilateral decisions makes R&R programmes much more
effective.
6. Using rewards and recognition, particularly recognition, to
drive desirable behaviours and efforts, not just the results
which go beyond sales performance or customer satisfaction,
make R&R practices more impactful.
7. Making rewards and recognition more individualized or
personalized, without violating the essence of fairness to
match with the individuals preferences and personality make
the rewards and recognition more meaningful and motivating.
8. Setting realistic, achievable and line of sight goals drive
success. Rewards for goals that seem unachievable do not
motivate.
9. It is necessary to strive to strike a balance between driving and
rewarding individual results and team performance because
only focusing on individual achievements and rewards/
recognition can harm team work and collaboration, while only
focusing on team achievements without encouraging and
rewarding individual excellence can affect individual drive and
productivity.
Based on these findings, it would be prudent for organizational
leaders to examine to what extent they their existing and proposed
R&R practices are in line with these finding to make them impactful.

3. Recognition practices (which are essentially non-monetary)


represent great unutilized potential, as recognition:
a. can be given both publicly and privately,

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Contents
1. Introduction to the Study

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2. Understanding Rewards & Recognition

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3. Great Place to Work Institutes philosophy of Rewards & Recognition

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3.1 Thanking & Rewarding


3.2 What does GPTW include in its definition of Rewards and
Recognition?
4. Importance of Rewards and Recognition

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4.1 Objectives that an effective Rewards and Recognition program


seeks to fulfil
4.2 Characteristics of most positively perceived Rewards and
Recognition programmes
5. Methodology of the study

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6. Rewards and Recognition at Best Workplaces

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6.1 Philosophy & Strategy


6.2 Execution Expertise
6.2.1 What to recognize and how to make the recognition
heartfelt?
6.2.2 Recognition as the way of life
6.2.3 Transparency and communication
6.3 Methods for recognising and rewarding
6.4 Budgeting for Rewards and Recognition
6.5 Measuring effectiveness
7. Current Challenges

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8. Key learning

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9. Conclusions and way forward

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1. Introducing the Study: Indias Best Companies for


Rewards and Recognition 2012

Great Place to Work Institute is primarily known across the globe


for the Workplace Studies it carries out. It conducts the studies to
recognize best employers and has tie-ups with leading media
partners across the globe in over 40 countries, including Fortune
Magazine in the US, The Financial Times in the UK (& European
Union) and The Economic Times in India.
Organizations for this study are assessed on three parameters:
Trust, Pride & Camaraderie, which are further broken into various
dimensions and sub-dimensions.
Great Place to Work Institute has also been instrumental in
helping numerous organisations in their journey to become a great
workplace. One of the ways in which this has been made possible
is by creating and sharing intellectual capital and practical wisdom
that resides in the best workplaces. We, at Great Place to Work
Institute, have done this in various ways like providing best
practices reports, conducting learning events, etc.
To ensure that above mentioned parameters are experienced by
employees, an organisation needs to undertake ahost of activities
and institutionalize a number of practices. They do so in 9 People
Practice Areas, namely Hiring, Inspiring, Speaking, Listening,
Thanking, Developing, Caring, Celebrating and Sharing, through
which people managers in the best workplaces enable their
employees to experience the organization.
It is evident that the workforce today is much more articulate about
their needs and wants the best of everything competitive salaries,
comfortable lifestyles, job security, career enhancement options,
work-life balance, etc. Acknowledging this fact, companies now
need to have well-defined philosophies and strategies which will
help them develop innovative, intrinsic ways of motivating and
engaging with their employees. While many are struggling to make
the difference, some organisations have institutionalized robust
practices and effective processes that go a long way in impacting
employee perception.

solutions. Edenred operates in 38 countries, and has become a


major player managing rewards, recognition and incentive
programs for corporate organizations and public institutions.
Mr. Prasenjit Bhattacharya, CEO Great
Place to Work Institute in India says:
This Study is an attempt to study what
the best workplaces in this area do
differently and to encourage more
organizations to improve their rewards
and recognition practices. The study
has brought focused insights in this
important area for organizations who
want to use the power of appropriate
rewards and recognition to create high
performing organizations.
Speaking on the association of Edenred and Great Place to Work
in this study, Mr. Sandeep Banerjee,
CEO and Managing Director, Edenred
India said: For over 50 years, Edenred
has been committed to its vision For
an Easier Life and has developed
innovative solutions that enhance
employee well-being & performance
of organizations. We are at the
forefront of work-life benefits, rewards
and loyalty solutions in India. Taking it
to the next level, Edenred along with
Great Place To Work Institute has
established this benchmark study to
honour those organizations which have set an example by creating
programs, practices, elements and dimensions that define their
intent to reward and recognize their employees. This study salutes
the business and leadership that has championed programs in
order to maximize the effectiveness of rewards and recognition,
which is a space we closely associate with and have over 50 years
of experience in, globally.

Considering the above, it is the need of the hour to celebrate the


achievements of such organizations and provide a wider platform
to share their best practices. One practice area, recognized in
multiple studies as an important lever for engaging employees is
rewards and recognition. With the objective of recognizing
organizations with outstanding rewards and recognition practices,
Great Place To Work Institute, in collaboration with Edenred, has
launched a first-of-its-kind study called Indias Best Companies
for Rewards and Recognition. This platform will encourage a
number of organizations to create an effective program addressing
the entire employment value proposition of remuneration,
benefits and careers.
Edenred, previously known as Accor Services, is the international
leader and Indias foremost in work-life benefits, rewards & loyalty

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2. Understanding Rewards and Recognition (R&R)

Rewards and Recognition, these days, is a familiar concept and is


being used by most organisations as a tool for employee
motivation. Understanding what motivates an employee has
always been a key challenge for managers, but considering the
importance of it for an organizations success, one has to
continuously attempt to understand it better. With human capital
gaining prominence over financial capital in the recent times, it
becomes all the more important. Today, the competitive advantage
of a business is determined by its people. Hence, the use of
Rewards and Recognition is becoming more and more critical.
Rewards and Recognition are many a times considered synonyms:
however they are greatly different. Recognition mostly refers to
non monetary ways of saying thank you and can take the form of
thank you notes, pins, plaques, award ceremonies, company
products, gift vouchers, employee photograph in the company
newsletter or on the wall of fame , to name just a few. There are
unlimited ways to say thank you for doing the right thing and
they are not necessarily expensive. They cater to the psychological
need of the employees of being appreciated and have high intrinsic
value.

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Rewarding aims at strategically designing ways to compensate


employees for their efforts and contribution towards the
organisation. It motivates by fulfilling employees desire for
monetary gain. This allows employees to receive a share in the
financial gains made by the organization through their contribution.
Great Place to Work Institute studies rewards and recognition
through the employee survey using statements related to this
aspect and through its culture assessment tool both of which are
administered to thousands of organizations every year. The
Institute uses the term Rewarding and Thanking respectively for
Rewards and Recognition. According to the definition in the study
by Great Place to Work, rewarding assesses how an organisation
shares the fruits of peoples efforts generously and fairly with them
whereas thanking focuses on the way an organisation recognizes
and appreciates good work and extra levels of effort and strives to
create a climate of approval and positive reinforcement.

3. Great Place to Work Institutes philosophy of


Rewards and Recognition

Several years of research by Great Place to Work Institute has


established that a great workplace is a place where employees
trust the people they work for, have pride in what they do, and
enjoy the people they work with. Creating a great workplace has
many benefits. From a managers point of view, a great workplace
is where people achieve their organizational objectives, give their

personal best and work together as a team/family all in the


environment of trust.
To ensure such an experience at the workplace, organisations and
their managers need to focus on the following nine areas:

1. HIRING

Focus is on hiring for potential and character of the person, rather than primarily on skill set. New employees
are welcomed and assimilated into the team with orientation programs, personal sponsorships, and the like.

2. INSPIRING

Employees learn and understand how their job has meaning for the organization and for society, beyond
earning a salary and making a profit for the business.

3. SPEAKING

Management goes to great lengths to be open and transparent, offering access to information across the
board, enabling and encouraging employees to contribute beyond the scope of a narrowly defined job.

4. LISTENING

Special open systems for incorporating peoples ideas, for including people in decision-making, and enabling
them to air their concerns and grievances.

5. THANKING

Recognizes and rewards good work and extra levels of effort; strives to create a climate of approval and
reinforcement.

6. DEVELOPING

Focus is on nurturing individuals gifts to foster personal growth and development as well as offering jobspecific training.

7. CARING

A multiplicity of systems and programs are put in place for creating a caring environment for the individual and
his/her family.

8. CELEBRATING

Celebrations of both personal milestones and company successes are built into the way people work
together.

9. SHARING

Employees share in the fruits of their labour in a variety of ways; rewards are equitable and egalitarian in
nature.

Great Place to Work Institute has also found that all people
practices and programmes in great workplaces have most of the
following characteristics, which make them effective and positively
perceived universally by employees.

d. There is generosity and human touch in actions under these


practices.

a. The programmes use variety to deal with different situations,


and different kinds of needs of their employees.
b. They have an original and unique twist that enables employees
to strongly identify with these practices and initiatives and draw
pride.

f. All programmes are well aligned with values, culture, strategy


and goals of the organization to enable all employees to pull in
the same direction, creating additive impact.

e. The practices are individualized and fit the context well.

c. They are inclusive and cover the largest number of employees


across functions and hierarchies from those who deserve to be
recognized or rewarded.

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3.1 Thanking and Rewarding (Sharing)


Thanking helps the organisation fulfil employees need of
appreciation, positive reinforcement and recognition. Thanking not
only acknowledges employees for their loyalty to the organization
but helps cultivate a climate of appreciation by sincerely
recognizing good work and extra effort frequently and in
unexpected ways. This is done through creating a wide variety of
recognition programs, encouraging peer recognition, presenting
awards for performance, service, safety at individual or team
levels, recognizing employees for demonstrating company values
and appreciating mistakes as learning opportunities.

offering competitive wage/salary/bonus packages, sharing the


fruits of peoples mutual efforts generously and fairly, and to
distribute gains widely with all, through profit sharing, bonuses or
other incentive plans and providing opportunities for wealth and
ownership sharing. It also ensures that employees understand
how their performance relates to the organizations success and
their compensation.
These practices in an organisation motivate employees to give
their personal best and promote the feeling of working together as
a team.

Rewarding helps in the fulfilment of the need to be fairly rewarded


for their capabilities, efforts and contribution. Rewarding aims at

3.2 What do we include in our definition of rewards and recognition?


Rewards and recognition is a wide concept and is increasingly
being re-defined to include not just traditional ways of thanking
and compensating employees, but also newer areas like physical,
and emotional well-being of people (Total Rewards). Some of the
areas included under Rewards & Recognition are:
1. Assured compensation/salary
2. Special or annual increases in assured compensation/salary
3. Increases in compensation and benefits on account of
promotions/grade change/position enhancement
4. Performance based variable pay/incentive/bonus, etc., that
may be monthly, quarterly, half yearly, annual or even long term
5. Performance based retention rewards
6. Rewards in cash/kind for specific actions/behaviours/efforts
and contribution/results

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7. Public and sometimes even personal recognition/appreciation


for desirable actions/behaviours/efforts and contribution/
results
8. Wide range of benefits & perquisites (particularly the ones
which are beyond those statutorily mandated)
9. Long term wealth sharing mechanisms such as stock grant,
restricted stock units grant, phantom stock grant, stock
options grant, discounted stock purchase scheme, etc.
The Institute has been studying these practices in various
organisations across several industries. It is with this understanding
and knowledge that Great Place to Work Institute has
conceptualized the study in Rewards and Recognition.

4. Importance of Rewards and Recognition in the


organisational context

The purpose of rewarding and recognizing, as we all understand,


is to tell employees that their contributions are valuable to the
organisation. It matters to employees because they feel validated,
important and respected.
Studies show that there is a statistically significant relationship
between reward and recognition and motivation and satisfaction
respectively.
Our annual study has revealed the following statements to be
among the key differentiators between the best workplaces and
other workplaces. They are:
People here are paid fairly for the work they do;
We have special and unique benefits; and
I feel I receive a fair share of profits.
Differentiating Statements are derived by comparing percentage
difference in the scores of 25 Best Workplaces for each statement
in the Trust Index Questionnaire with the scores of good and
average workplaces (who get placed in the bottom 25). The
differentiating statements have the highest percentage difference
between the scores of best and the others when compared with
the scores for other statements. These statements represent
issues or aspects that are at the core of employment relationship
and are difficult to do very well consistently, even for great
workplaces.
The analysis of employee comments across participating
organisations in the Best Companies to Work For in India Study
- 2011, to an open ended question asking, What will make your
Organization a better place to work, showed that salary and
promotion were some of the key themes that employees wanted
their organisations to improve upon.
Studies by other researchers have also revealed that if rewards or
recognition offered to employees were to be altered, there would
be a corresponding change in work motivation and satisfaction.
Oosthuizen (2001) has stated that it is a critical function of

managers to motivate the employees successfully and influence


their behaviour to achieve greater organizational efficiency. Flynn
(1998) has argued that rewards and recognition programs maintain
high spirits among employees, boosts their morale and creates a
linkage between performance and motivation of the employees.
A 2005 Watson Wyatt Worldwide study has found that companies
with an effective recognition program realized a median return to
shareholders that is nearly double that of companies without such
programs. A study conducted by the Society for Incentive and
Travel Executives has found that properly constructed rewards
and incentive programs can boost employee performance by up
to 44%. Another study has estimated that employees who are
extremely negative or actively disengaged cost the U.S. economy
between $250 and $300 billion every year, simply in lost
productivity. Rath and Clifton have found that 9 out of 10 people
report being more productive when they are around positive
people, who are more inclined to appreciate and recognize.
According to Andrew (2004), commitment of all employees is
based on rewards and recognition. Lawler (2003) has stated that
prosperity and survival of organizations is determined by how their
human resources are treated. Most organizations studied have
shown to have made significant progress by implementing a wellbalanced rewards and recognition program for employees.
Deeprose (1994) has stated that the motivation of employees and
their productivity can be enhanced through providing them
effective recognition, which ultimately results in improved
performance of organizations. According to Broad (2007), tangible
incentives are effective in increasing performance for tasks not
done before, to encourage thinking smarter, and to support both
quality and quantity of goals to be achieved. Incentives, rewards
and recognition are the prime factors that impact employee
motivation. Motivation also has a direct effect on the innovation in
an organisation. This presupposes that organizations provide
recognition not only for achievements but also for efforts.

4. 1 Objectives that an effective rewards and recognition programme seek to


fulfil
All effective programmes of rewards and recognition seek to fulfil
three objectives:
1. They positively reinforce and sustain desirable actions and
behaviours among employees, which in turn lead to sustained
excellence in performance.
2. They help to retain best talent that the organization requires for
its growth and continued success.

3. They help the organization to attract best/suitable talent from


the talent market, whether it is raw talent out of the best
educational/professional institutions or talent pool of outstanding
experienced professionals.

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4.2 Characteristics of the most positively perceived rewards and recognition


programmes
Our research indicates that the most critical characteristics of
effective rewards and recognition programmes are the fairness,
equity and justice inherent in these programmes. This sense of
equity is both internal within the organization and external with
respect to comparable organizations operating in the marketplace.
There are three aspects of equity and fairness which are relevant
here. The absence of these three aspects hurts the effectiveness
of rewards and recognition programmes significantly.
a. Distributive Justice: The proportion in which financial resources
and gains/profits of the organization are distributed between
various stakeholders such as promoters/owners/investors/
shareholders, managers and employees at different levels in the
organization, belonging to different divisions/functions/locations,
etc, define distributive justice. If some stakeholders are
disproportionately rewarded (in the eyes of the other
stakeholders), then the effectiveness of the rewards programme
can suffer. Another aspect of distributive justice, as well as
procedural justice, is that differentiation in rewards and recognition
reflects true and significant differentiation in performance and
contribution.

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b. Procedural Justice: Answers to the following questions indicate


whether requisite procedural justice exists, the absence of which
hurt the effectiveness of the programmes - For what actions/
behaviours/efforts and results/contribution/performance are
rewards and recognition provided? Are only results rewarded and
recognized, or do they apply to sustained efforts as well? How
fairly, transparently and correctly are efforts and results measured?
Does everyone get sufficient opportunities to perform and to be
recognized and rewarded? How does the organization ensure that
results achieved through wrong behaviours and non-performing
people dont get rewarded or recognized due to favouritism,
nepotism and organizational politics?
c. Interactional Justice: This is about the human element of
fairness and justice which forms the capstone of effective rewards
and recognition programmes. Do the recipients of rewards and
recognition (and even those who dont receive rewards at any
point in time) feel the sense of being appreciated and thanked
genuinely from the bottom of the heart by those who are in a
position to reward and recognize?

5. Methodology of the study

All organizations participating in Indias Best Companies to Work


For Study 2012 were invited to participate in Indias Best
Companies for Rewards and Recognition. A total of 76
organizations who applied for this Award were finally considered,
following the laid down process.
Organisations from all major sectors and across 11 industries
participated in the study.
A rigorous evaluation methodology was followed. To be eligible to
be one of Indias Best companies in Rewards and Recognition, it
is not enough to have great looking rewards and recognition
practices on paper - a significant majority of employees must
consider it so. This was verified by the Institute by administering an
employee survey using its well established Trust Index
Questionnaire.
If an organization crossed this first hurdle, a closer analysis was
made based on their employee feedback, in particular their
employees response to the statements related to rewards and
recognition in the employee survey. These were:
Everyone has an opportunity to get special recognition.
Management shows appreciation for good work and extra effort.
People here are paid fairly for the work they do.
I feel I receive a fair share of the profits made by this organization.
Additionally, the employee response on a few more statements
was also looked at to ensure that there is good degree of
satisfaction amongst employees as far as the procedure of arriving
at decisions related to rewards and recognition is concerned.
Statements related to benefits and promotions, which also form

the part of the Total Rewards Package at most best workplaces,


were looked at. Therefore, following additional statements were
used for evaluation apart from the above mentioned core
statements.
Promotions go to those who best deserve them.
We have special and unique benefits here.
Managers avoid playing favourites.
Performance of employees here is fairly evaluated.
We also looked at the standard deviation in the responses by all
respondents from an organisation for each of the above 8
statements to gauge the consistency and universality of experience
across the organisation.
Alongside, a detailed study of the rewards and recognition
practices in each organisation was done to get a comprehensive
view of how an organisation is performing in this area.
The study revealed many things that organisations are doing to
recognize and reward their employees. However, the proof of the
pudding is in the eating; therefore whether the rewards and
recognition practices in an organisation are effective can only be
established if the employees are also experiencing the same.
Therefore, the employees response to the related statements on
rewards and recognition was the important determinant of who
would be the winners in this category.

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6. Rewards and Recognition at best workplaces

6.1 Philosophy & Strategy


Philosophy here refers to a system of values or beliefs with which
an organisation operates and the strategy refers to a plan of action
designed to achieve what it values.

laterally, from the industry. Thus these organisations would need


to align their compensation strategy accordingly. Most
organisations resort to the following strategies to attract and retain
best talent from the available pool:

Philosophy forms the basis of the goals that an organisation sets


Competitive Pay: The organisations evaluate the positions
systematically and attempt to place them within a pay structure
that is competitive nationally, within their industry, and within
the local community.

Differentiating performance & being competitive:


TPG Software differentiates outstanding performers
from the rest in terms of compensation, promotions,
rewards and recognition. Increments sanctioned to
outstanding performers are about 50% more than an
average performer in fixed compensation. Another
committed component is added as Performance
Bonus - 50% of the fixed increase of the average
performer is sanctioned additionally to the outstanding
performer at the end of the year.

Equal Pay: Paying each employee without regard to race,


caste, language, religion, colour, national origin, ancestry,
mental or physical disability, age, gender, gender identity and/
or expression, sexual orientation, veteran status, pregnancy,
medical condition, marital status, or other basis protected by
law.

Moreover, TPG Software has aligned its Performance


Review & Appraisal Cycle in a manner that they are
able to revisit compensation & designation of its high
performing employees every six months and take
corrective-preventive measures if required, without
unnecessary delay.

Apart from being competitive, equitable and egalitarian as far as


paying employees is concerned, an organisation needs to ensure
that it differentiates between performers and others.

Semi-Annual Total Rewards Review

Set a clear benchmark for the average level of compensation


within the organization across job families, job levels, functions
and businesses and expected level of performance, which
determines pay competitiveness in the industry.

Determine bottom-line goals of the company and tie peoples
pay to the goals: This help an organisation to reward for
performance that directly contributes to its business objectives.
This is done by introducing the aspect of variable pay linked to
achievement of business outcomes. Ensuring the line of sight
of the goals/business outcomes is of key importance to make
the programme effective. Line of sight here refers to the direct
control/ability of (each) employee to influence the achievement
of business goals through his/her abilities and efforts.

Qualcomm also conducts full reviews for all


employees twice a year. In addition to strengthening
the ongoing dialogue between managers and
employees which helps achievement of goals, this
approach provides the company an opportunity to
maintain a competitive position in the market.
Components of each review cycle include opportunity
to earn a merit increase, performance based bonus
rewards, stock awards as well as a promotion.

for itself. The rewards and recognition philosophy of an organisation


in turn will be based on its talent management philosophy.
Organisations have different philosophies for talent management
as expressed through their rewards and recognition programmes;
for example, many organisations believe in hiring at entry levels
and grooming these employees for leadership roles. On the other
hand, there are organisations that prefer to hire experienced talent

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Pay for Performance: They reward each employee on the


basis of performance and the achievement of objectives, and
provide incentives for individual growth and contributions
through merit increases, bonuses and stock options.

Some basic fundamentals that organisations seem to apply are:

Intel:
Employee Bonus program (EB) is a variable-pay program for all non-commissioned, regular Intel employees worldwide.
The Employee Bonus (EB) plan is designed to align the business groups at Intel around the Corporate Strategic Objectives.
It is paid out annually and is calculated based on three equally weighted components: Absolute financial performance,
relative financial performance, operational performance.
The components of the EB calculation enable an employee to create a line of sight between his contributions and company
profitability. The target amount increases at higher grade levels thereby placing more pay at risk for employees who more
directly influence the achievement of financial and business goals.

The following band-wise break-up at Music Broadcast shows how the ratio of individual and organisation performance varies with
bands, keeping in mind the line of sight of business goals:

Bands

Organization Achivement

Individual Achivement

B1

50%

50%

B2

25%

75%

B3

0%

100%

Most of the organisations studied depend on the external


benchmarking to ensure the competiveness of the compensation
packages offered by them. Organisations take help of the
compensation consultants for this purpose. The benchmarking is
not limited to salary but benefits and other kinds of rewards also.
Some organisations have also worked out other ways to get
relevant data to stay competitive as far as the compensation is
concerned.
TPG Software felt that compensation reports that it got were far
away from reality when compared to feedback that they
themselves got from the candidates interviewed for recruitment
(whose compensation their Talent Acquisition team had verified
against authentic documents) and at the time of exit when they
moved on to other organisations. Hence, it decided to make
benchmarks from primary data collected from the above two
sources to be used to strategize and structure the compensation
every six months. The talent acquisition team provides the
compensation & benefit data captured from the candidates
interviewed during the previous six months, which is further
validated, analyzed and acted upon in order to be ahead of
competition.

When TPG Software compared this trend with latest reports on


Gen Y traits and expectations, it didnt find an alignment. It
realized that introduction of variable pay for younger generation
people will only cause disappointment to them without any major
gains for the company. The organisation has majority of its
manpower in the age group less than 30 years. Thus, it decided
to introduce variable pay only for people who are at managerial
positions drawing salary in excess of Rs.10lakhs per annum.
To ensure the quality of overall experience that can be provided to
employees at the organisation, the best workplaces now are
looking at the concept of total rewards. This concept helps
organisations to articulate the rewards and benefits that
employees enjoy in the organization, apart from competitive
compensation. Intuit, Intel, American Express, Qualcomm and
SAP Labs are the names of a few organisations that have
proactively identified and articulated the aspects that contribute
to the total rewards experience of employees.

Most companies in the IT sector have the aspect of variable pay,


pay for performance or deferred salary for people at all levels
ranging between 5% and 20%.

13

At American Express, each component of the Total Compensation


plays an important part in enhancing the organizations Employee
Value Proposition. It also reviews programs under each of these

categories periodically to ensure that they continue to remain


focused and relevant to deliver to employee needs, support its
business objectives and remain competitive in the market place. It
regularly reviews market pay across different talent pools to create
internal ranges that reflect market reality and enable it to compete
effectively for talent. The Performance Management Program also
provides a strong input into Base Pay where merit increase to pay
are linked to performance, irrespective of the pay positioning.
Intels Total Compensation and Benefits Philosophy, or T-Comp
Philosophy is a holistic approach that aligns company, employee

To ensure the same Qualcomm has what they call as QCards.


These are a quick and easy ways to send ones appreciation to
fellow co-workers for displaying values.
The QCard is an electronic greeting card intended to recognize
contributions and behaviours which represent Qualcomms culture
of innovation and leadership. These behaviours are summarized
as the CDMA behaviours (Qualcomm is the inventor of CDMA
protocol [Code Division Multiple Access], a channel access
method used for radio communication):

Creating and Innovating

Doing Whatever it Takes


Makes things happen
Takes initiative

Achieving Excellence in our people and in our industry


Exceptional management or leadership
Demonstratingteamwork
Enhancing effectiveness and efficiency

Idea generation
Creative processes
Innovative thought

Mastering Technology

Demonstrates and applies expertise in their field


An organisation needs to clearly identify the culture that is required
in the organisation for its business to succeed and see how their
rewards and recognition practices would promote the same.

Reliance Commercial has identified what it calls DNA


for success. Thus, it rewards every year The DNA
Employee. He/she is the one who exhibits the
behaviors which reflect the organisation DNA (value
system). It is instantaneous appreciation &
recognition on display of DNA behaviour. Six DNA
behaviours are as follows:
Entrepreneurial Mindset
Ownership and Commitment
Speed & Execution
Integrity
Respect & Dignity
Pride & Passion
Each one of the above is further detailed out to make
employees understand what is expected under each
of these.

6.2 Execution expertise: Making the


strategy work
and stockholder interests. It provides employees with incentives to
focus on meeting or exceeding business objectives. The programs
purpose is to attract, retain and reward the people responsible for
the companys long-term growth and profitability.
To ensure that rewards and recognition systems at an organisation
are effective, it needs to have programs that reinforce company
values and goals and encourages employees to act in line with
such goals whilst also emphasizing the importance of achieving
these goals.

14

A strategy is only as good as its execution. One can have the very
best strategy, but if not executed well it will be ineffective. Ineffective
implementation will not only lead to wastage of money and efforts
but is also capable of having negative impact. To implement a
total rewards plan, a broad range of aspects need to be
considered. It includes understanding objectives, defining metrics,
designing the plan to measure and track achievements against
the defined goals and metrics and deciding on the types of
rewards.

6.2.1: What to recognize and how


to make recognition/appreciation
heartfelt?
Recognition has been found to have direct impact on the kind of
behaviour reinforced in the organisation. Therefore, it is always
necessary for organisations to think through the areas for which
they want to reward/recognize their employees. It is also of utmost
importance that the organizations clearly define the metrics for the
same so that the desirable outcomes are achieved and can be
tracked and shared. Organizations should be wary of unwittingly
encouraging or tempting employees to behave and act in an
undesirable or unethical manner to win an award.
Some of the areas commonly recognized and rewarded in
organisations are:

Outstanding sales performance


Delivery excellence: in time, within budget
Years of service

The categories in which companies reward employees depend on


the nature of business of the organisation. The alignment of these
systems with organisation strategy is what helps the organisation
to achieve the desired impact of their rewards and recognition
programmes. For example, the R & D organisations have rewards
related to patents, product organisations have rewards associated
with product innovations, and there are awards to incentivize
sales, etc. Organisations also recognize areas like customer
service excellence, team excellence, innovations and ideas that
have lasting impact on the business.

Reliance Commercial gives Award for being the Best


Collaborator. Best Collaborator is a person who
brings all people together to arrive at a solution
ensuring business continuity & decision. He/she
bridges the communication gap thereby creating
win-win situation for all. This behaviour encourages
team working among various stakeholders, creates
more positive outlook, greater acceptability of
decisions & process requirements, provides greater
clarity in communication and helps in getting
informed decisions within timelines.
TPG Software: Best Debutante Award: Most
promising new Joiner(s) during the Year is
recognized, appreciated and awarded for quickly
adapting to TPG Softwares culture by getting well
connected to people across the organization
irrespective of project or work assigned, and by
contributing with innovative and creative thoughts
which prompt everyone to think differently.
TPG Software: Managerial Excellence Awards: For
demonstrating excellent managerial qualities leading
to effective implementation of 6 Bs (Buy, Borrow,
Boost, Build, Bind, and Bounce).

STAR CSR VOLUNTEERS at SAPLabs

Aditi Technologies Recognizing teams for


fulfilling the business goals and adding
positivity to the culture

Based on involvement, enthusiasm and


overall impact in the CSR activities. This
award carries Rs. 50,000/=, which the
employee can choose to contribute to an
NGO of his/her choice.

Customer Centric Team


For high CSAT, Repeat business, high billing team
Fastest Growing Team
High revenue growth & team expansion
Fantastic Team
Most vibrant, Energetic team that creates a very
positive environment

Best workplaces proactively identify areas that have high impact


on sustainability of the business success, and which tend to get
missed out during the normal course of business. By implementing
practices that recognize achievements for a variety of reasons,
organisations provide an opportunity to many more employees to
get appreciation and recognition.
Some such innovative areas are:
Collaboration, Effective Managers, Best new comers, Social
volunteering

Intel:
TRUE BLUE Partner Award for Being a solid partner
to the business.
360 Degree Award is something given out to
individuals for effective stakeholder management.
Rolling Bat/Rotating Flag to commend employees
who have added value to the business and this bat/
flag is rotated on a quarterly basis.
The Technology Submission Award Program is
designed to help fuel ICAPs Technology Licensing
Groups (TLG) licensing business by encouraging
blue badge employees to submit proposals for
suitable licensable technologies.

15

Organisations now also understand that recognition should not be


limited to achievements only. Thus, they have devised mechanisms
and provided employees with a platform to praise efforts. The
following matrix from American Express shows how the
organisation provides a clear picture to its employees about what
actions and behaviours are desired by the organization which it
will reward and recognize.

Its about making employees feel great on being


recognized at Intuit. The following recognition
practices exhibit its generosity and thoughtfulness.
Each type of recognition keeps in mind the nature of
achievement.
Celebrating the service anniversary The reward is
in the form of e-mail and cash Spotlight Award from
Brad Smith, CEO. In addition the employee gets a
goody bag here at the India Development Center
that includes a crystal memento, Rs. 1,000/= Flipkart
voucher and a box of chocolates. Intuit also sends a
bouquet of flowers to the employees home on their
service anniversary.

Rewards and Recognition programmes in organisations have now


extended their boundary to include other stakeholders, over and
above their employees, whose contribution is critical to the
organizations success.
Rewarding Contractors:
In addition to rewarding the permanent employees, SAPLabs
India also rewards its contractors and vendors. They have a
Vendor Recognition Program where the top 2 vendors from
each service area are rewarded every year. They also rewarded
their bus drivers for exemplary work.
An important aspect of execution is recognizing and rewarding in
such a way that every employee feels valuable and is proud of the
achievement. The spirit behind it should come alive. Togetherness
and timing are also critical for effective recognition. It is, therefore
an important challenge to ensure a good balance between
promptness in recognizing and doing it in such a way that it
becomes a proud moment.

Intel has clearly articulated it objective behind


following a tiered approach to rewarding, ensuring
that it rewards:
at the right time - not waiting for too long after the
accomplishment
for the right reason - ensuring we are rewarding
the desired behaviors
in the right way - choosing the appropriate forum
in combination with the right level of reward monetary, parties, recognition
in a visible manner such that an opportunity to
share learning is created
Intel has Hall of Fame to publicly recognize High
performing instructors

16

Scott Cook Innovation Awards


It rewards through a statuette, recognition on the
Innovation Wall of Fame, dinner with the executive
team and a travel award, including an expense-paid,
three-day, trip anywhere in the continental United
States. Theyre also allowed to dedicate time to
work on a project of their own creation. This can be
either half their time for six months or full-time for
three months. It is given by Company co-founder
Scott Cook.
Annual Awards - All-expense paid trip to destination
of choice.

Organisations now are also investing a lot of effort in ensuring the


rewards are individualized. They understand that these rewards
will be valued by the employees most when they cater to their
personal needs/styles. Organisations also involve family members
and significant others at the time of recognition to add personal
touch and provide the family or partners a sense of belonging.

Best Practice - Connecting with family:


TPG Software lays a lot of emphasis on connecting
with the families of the employees being recognized.
All the award schemes try to convey the organizations
respect, recognition and importance towards the
employees family. All the prizes won by BrickRedians
in routine daily/ weekly events are carefully chosen
to suit the personalized needs of the families of the
employees. Similarly all the awards offered to the
awardees are aimed at offering something unique to
the family members, which a common salaried
person will certainly love to have but may not be able
to buy it. Also, the compensation has a component
of Leave Travel Assistance (LTA) and Mediclaim
which is family focused towards entertainment and
medical exigencies respectively.

The best part of recognitions on joining anniversary celebration at TPG Software is that every gift is personalized to suit
the needs of the anniversary girl/boy which Team HR arrives at by informally studying the lifestyle and interests of every
BrickRedian to procure the gift accordingly. This brings immediate smile on the face of the employee being awarded
with high level of excitement shared by the family members when they get to know about the award.
Moreover, the Steering Committee (senior leadership team) while choosing and nominating people for awards,
deliberates on the following factors: a. Match the reward to achievements b. Match the reward to the person c.
Measures of achievements in the light of award
TPG Software also provides its employees flexibility to choose their compensation structure and increment cycle.

6.2.2 Recognition as the way of life: creating a chance for all to be recognized
Organisations now understand the power of recognition and
appreciation. They understand that it requires a lot of effort on the
part of employees to continuously contribute towards
organizations success. It is the recognition or words of praise that
give an employee the push to go on. Gone are the days when
recognition had a top down approach. Organisations now are
creating platforms for all to recognize each other, which includes
peer to peer and junior to senior recognition. Organizations employ
multiple broad-based recognition programs to encourage
achievement and to sustain a culture of customer focus and high
employee involvement.

Mission 2012 allowed BrickRedians (TPG Software


employees) to delegate tasks considered important
by them to their senior management. The senior
management sincerely stood accountable to achieve
the upward delegated targets that they are in best
position to achieve and posted progress on a
dashboard on a regular basis for people to comment.
This provided an opportunity to the managers to get
recognition from their juniors.

Apart from its periodic or recurring rewards and recognition


programs, JM Financial Services regularly launches contests to
encourage healthy competition between teams/locations to boost
sales, encourage learning and collaboration. The following
contests were launched in the last calendar year:
1. Race Against Yourself
2. Predict the Index
3. Work in Pairs

4. T20 Dwitiya
5. Mission Thailand
6. SIP 7500 to Thailand

Institutionalizing the culture of recognition!


TPG Software
An Appreciation Tree is placed at the office entry
and exit gate. As people enter and exit from the
office gate, the appreciation leaves pasted on the
appreciation tree reminds them to look back and
paste an appreciation slip for their colleague in
recognition of extraordinary work done by them.
Sharing success stories of BrickRedians by CEO/
COO in All Hands Meetings
Managers write personal notes about good
performance through e-mails or paste slips
Managers hold morale-building meetings to
celebrate success
When discussing ideas with other people, peers
or higher management, managers make sure to
give credit to the person who came up with the
idea/thought

Aditi Technologies runs periodic contests and


events (Cubicle Decoration based on Business
Themes, Usage of new tools from the IS Team,
Quality Team Quiz, Sports, Cooking Competitions,
etc.) that bring in active participation from
employees, who are rewarded for their outstanding
contribution.
Organizers of various events, including housekeeping
and external service providers receive kudos from
the management for events well done.

17

Employee Appreciation Month: American Express believes that its


always a good time to say thank you, applaud and show
appreciation for the great work done every day by colleagues or
leaders. However, many a times an organization can lose focus on
this important aspect when so much is happening. Thats what
Employee Appreciation Month at American Express is all about;
purposefully putting Recognition in the spotlight! In November
2011, globally, the organisation focused on R&R through
RewardBlue. The entire month celebrated recognition across
businesses, across markets. Felicitation ceremonies were
organized for winners and high achievers. Also highlighting the

month were a series of contests and prizes to encourage


employees to recognize and thank their peers using RewardBlue.
Throughout the month, employees who used RewardBlue to
recognize deserving colleagues entered the contest to win a
RewardBlue Everyday Giveaway.
RewardBlue, the wide online Reward and Recognition platform at
American Express is one-stop shop for recognition worldwide.
Seventy five percent of its global employee population has
received recognition through RewardBlue.

6.2.3 Transparency and communication play an important role in the


effectiveness of the rewards and recognition system
Rewards and Recognition motivate employees for results only if
they are perceived to be fair. It is found that the perception of
unfairness associated with Rewards and Recognition discourages
employees. To be transparent, organisations need to ensure
constant and comprehensive communication around rewards and
recognition. Use of intranet and e-mail for communication related
to rewards and recognition is a common practice. Best workplaces

SAPLabs: The company portal has elaborate


information on all policies that impact employees.
The information on the portal is always up to date
and is easily accessible. Quick links are provided to
employees that are easy to remember (e.g. /go/
equity-331 for share plan).
It also conducts a People Week across the globe.
The objective of this initiative is to communicate to
employees various HR and Learning Programs
available in SAP. There were talks held on important
topics and demo pods done which addressed
important programs with live facilitators on standby
to handle direct employee queries/suggestions.

differentiate themselves by using additional methods like posters,


teasers and newsletters for the same. Extensive information about
Rewards and Recognition is provided during the induction process
in these organisations. The best workplaces also conduct periodic
training/education sessions to equip managers and employees to

Qualcomm has a Recognition website that provides


employees a central place to learn key tips about the
power of recognition, and provides links to all recognition
tools, has guides for presenting awards and provides links
to the courses given through Qualcomms Learning
Center that are related to employee recognition. To help
mangers and peers execute the recognition in the most
appropriate manner it provides Dos and Donts, which
are as follows:
Do:
Make it special by presenting the certificate in person

18

use various rewards and recognition methods effectively. Intuit


uses videos and online tutorials to educate employees about
rewards and recognition.
TPG Software makes effective use of Display Boards and
Workstation Decorations to share information about recognition in
a creative way. Intuit uses local events, online tutorials and videos
for communication.
To create the kind of buzz and excitement that these rewards and
recognition deserve and to attract the attention of employees,
these organisations come up with creative names and brand
these rewards and recognitions programmes through their
constant communications.
RewardBlue, as mentioned earlier, is an internal American Express
brand. This branding remains consistent across all markets and is
delivered through multiple channels. Messages are delivered
through the American Express Corporate Intranet, brand signages
are used throughout major offices, during celebratory events, and
leadership training and communication. Typically using imagery
from the system, such as an eCard, eButton or an image of Blue
Awards to create a sense of familiarity, RewardBlue has fun and
engaging aesthetic. American Express also organised RewardBlue
Day in India, which is a nationwide launch event on RewardBlue. It
had participation from leaders & team members. The events
highlights were actual lifesize dashboards to say thank you to
colleagues through actual cards & e-buttons. The thanks and
awards received can be displayed by an employee on their virtual
dashboard on the RewardBlue tool!

Use the nominees preferred name


Be sincere and reflect on what the employee did
Mention how the contribution benefited you and/or the
company
Invite others as appropriate
Dont:
Send certificates through inter-office mail
Show up unprepared
Use inappropriate humor
Generalize the contribution

Music broadcast has given creative names to various categories of rewards


that it has:
Cheers to Peers: Peer recognition
Sher of the Month Significant contributions towards the achievement of the
organisation vision
Jaldi 5 New comer recognition

19

6.3 Methods used to recognize and reward


To ensure that an organisation is able to serve the needs of
different segments of employees and to differentiate between
various categories of rewards, an organization needs to have
several methods for recognizing and rewarding. Commonly used
methods for recognition are giving certificates, trophies, cash,
vouchers, etc.The use of variety of methods helps an organisation

going stock awards every six months as part of the semi-annual


review cycle. Qualcomms annual award receipt rates, and value
delivered, are above market and often exceed the market 75th
percentile at every organizational level (i.e., non-exempt,
professional, management and executive-level employees).

Use of social media platform for recognition:


At TPG Software, managers personally congratulate
people for doing a good job. They do so by writing
personal notes about good performance on Intranet/
LinkedIn, Facebook, etc. Employees, this way, can
share their achievement and proud moments with
wider set of people.

American Express has an appreciation tool called


eThanks. Employees say that these tools make
recognition fun, spontaneous and creative. eCards,
eButtons, and airThanks are social networking tools
that create great work conversations. They require
no approvals and there are no limits to recognizing.
You can use them over and over again.

to be more personalized by customizing a reward according to the


individuals need. Personalizing or individualizing also helps in
enhancing the overall experience of the employees. Best
workplaces are using methods like salary increase, bonus award
and Restricted Stock Units (RSUs), holiday packages, extra
leaves, etc., to recognize efforts as well as contribution. Many of
these rewards are broad based and designed to promote the
sense of ownership. Here are some more methods/ways to
recognize/reward employees, which are being used by
organizations.
A highly rated employee stock award program:
Qualcomm offers restricted stock units to employees. All
employees, including those who are non-exempt, receive
Qualcomm stock awards when they are hired as part of the job
offer package. In addition, employees are eligible to receive on-

A generous Employee Stock Purchase Plan (ESPP):


At Qualcomm all employees are eligible to participate in
Qualcomms Employee Stock Purchase Plan (ESPP). The program
enables participants to contribute between 1% and 15% of their
salary through regular payroll deductions and use that money to
purchase shares of Qualcomm stock twice a year at a minimum
15 percent discount. Currently, approximately 73 percent of
eligible employees participate in the ESPP globally. Over the past
year, approximately 58 percent held their purchased shares for
more than two years from the beginning of the Offer Period.
Intels equity program is unique in that it touches employees at all
levels and seeks to share the companys success and wealth
creation across its employee base. Intel has offered its employees
a broad-based stock program. Intel employees acquire a stake in
the long-term growth of Intel and can potentially benefit from the
capital appreciation.

6.4 Budgeting for Rewards and Recognition


Considering the importance of Rewards and recognition, more
and more organisations are planning a separate budget for it.
Various approaches used for budgeting are:
External benchmarking, following the industry norm.
Per person basis.
Establishing a certain number of programs based on the
objectives to be achieved. To estimate the number of people
that would like to reward/recognize and estimate reward value
for each individual category.
The budget for the Rewards and Recognition system is also
arrived at based on trend analysis of previous years and the
number of awards given out as a ratio of headcount.
An increment on the last year usage and disbursement: Total
number of winners last year, total reward amount/winner,
Administrative cost, Cost of Trophies/souvenirs, etc., are used
to prepare budgets. Apart from increasing the last years
spending by a percentage, organizations also consider the

20

changes in employee numbers, new locations, new award


categories being planned for introduction during the coming
year, as well as the logistics of covering an increasingly expanding
population.
At JM Financial, the R&R budget is based on:
Cost of the event organised in the previous financial years
Number of awards decided upon
Inclusion of new concepts or modifications in the Awards based
upon feedback from Business Heads
Most organisations look at the budget as a percentage of total
staff cost. The range of budget is between 0.1 % and 20% of the
total employee cost. It not only depends on how much an
organisation is willing to spend on Rewards and Recognition, but
also on what elements an organisation includes as part of this
budget ranging from rewards amounts, variable compensation to
health and wellness expenditure, etc. For example, SAPLabs

spends nearly 15% of its total employee costs on rewards,


recognition and benefits. Intuit invests more than $1 billion in Total
Rewards for their employees worldwide, of which service
anniversary and performance recognition budget stands at
approximately $8 million.
Supervisors and line Managers are provided a budget for informal
rewards. At American Express, the global R&R budget is set at a
companywide level, which is further allocated to each LOB based
on their respective employee populations. Each leader is
accountable for their budget and must manage it responsibly. On

RewardBlue (Amex reward platform), the budget is capped at


0.5% of the total payroll costs.
It is also important to give careful thought to the demographics of
the target audience while planning the budget. For example, if
your service program is targeting a group that makes six figure
salaries, the award must have either a significant symbolic value or
be a fairly nice award in order to get their attention. Similarly, if the
target is Gen Y employee then the reward item should trendy and
in line with their lifestyle and personalities.

6.5 Measuring effectiveness


Measuring effectiveness of the initiatives and programs is the key
to ensuring that an organisation gets right outcomes for the money
and efforts that it invests on the process of recognizing and
rewarding employees. In the absence of such measures there is
possibility to lose focus of the objective with which an initiative/

TPG Software finds itself assured of the effectiveness


of its practices by
Increase in Customer Satisfaction & Retention
Client Appreciation and better rapport
Lower Attrition Rate: especially of the high
performers
Improved Productivity: Reduced delivery time
Reduced Absenteeism rate
Higher Employee referral,
Greater use of peer recognition
Minimal time required for new joiners to be
productive.

program was started, and thus, it may not add the expected
value.

systems help to gauge employee reception, understanding and


buy-in for reward systems. This critical feedback can help
managers make adjustments necessary to drive improvements
and avoid unforeseen undesirable behaviours and actions that
negatively impact corporate goals and the organizations culture.
Feedback taken from employees through various other channels
also helps understand the effectiveness of the rewards and
recognition programs. Employees have the opportunity to share
their feedback through forums like HR Open Houses, skip level
meetings, etc.
Fall in percentage of attrition is considered to be another significant
input that speaks about the overall culture of the organisation of
which appreciation and recognition are an essential part.
Some organisations have seen a decrease in turnover of
employees from identified high performance category post the
implementation of rewards in the category, which clearly exhibits
the effectiveness of system.
Intel measures effectiveness of Recognition through SAM (Self
Assessment Methodology) Survey. This survey is conducted once
in 1.5 years and looks at systems and processes to keep the work
site healthy and vibrant.

Informal feedback from employees and employee surveys are the


most common methods used by organisations to measure the
effectiveness of Rewards and Recognition Programs.
The usage of different methods to recognize also provides an
important input to organisations on how effective/useful the
employees are finding these methods.
In addition to measuring progress of employee performance
towards corporate goals, well-defined performance measurement

JM Financial: A measurement MIS based on the


deliverables like TAT, revenue generation, client
acquisition, etc., are maintained prior to the Reward
and Recognition activity. Similar MIS post the activity
is also maintained to measure the difference in terms
of performance.

21

7. What are the current challenges?

The way rewards and recognition are designed may sometimes


boost individual performance and achievement of short term goals
but may harm team work, collaboration and organisation growth
and sustainability in the longer run. On the other hand, team and
organisation level rewards may not motivate each employee to
contribute equally, and hence may affect individual productivity.
Following chart shows different levels of rewards and their
advantages and disadvantages:

Criteria

Incentives

There is need to clearly establish the importance of other rewards


like empowerment and opportunities to learn from supervisors
and other colleagues. At the same time organisations must
understand that using rewards indiscriminately is as bad as doing
too little; it leads to complaints and indifference. While heartfelt
non-monetary appreciation and recognition can retain sustained
effectiveness, primarily monetary awards can quickly lose their
impact or set up ever increasing expectations, which are difficult to
sustain. An organisation can go on spending without getting the

Advantages

Disadvantages

Individual
Performance

Sales commissions, piece rate


pay

Exerts most powerful impact on


Does not promote teamwork or ensure
individual productivity (30% increase) a commensurate increase in product
service quality/ organisation
development

Group
Performance

Gain-sharing, goal sharing and


team based incentive plans

Encourages team work and


collaboration which leads to better
overall output/outcome

Moderate impact on productivity,


particularly individual productivity (13 %
increase)

Organisation
Performance

Profit sharing, stock sharing,


including broad based stock
options, stock purchase
programme and employee stock
ownership plans

Increase shareholder returns and


company profits, longer
commitment, increased loyalty

Small increase in productivity - 6 %

Source: A study by SHRM

22

Rewards and recognition systems misaligned with corporate


objectives can result in behaviours that are not anticipated or
desired by the management. These unanticipated actions may be
personally beneficial to front-line sales representatives,
manufacturing floor managers or even senior executives, and yet,
they may move the company away from its overall goals or cause
systemic and cultural harm.

desired outcomes if the effectiveness of rewards programmes is


not measured proactively and accurately.

There are challenges associated with the kind of performance


management system chosen. For example, there are flaws with
forced ranking method (also called applying the bell curve) that
mandates managers to distribute ranks amongst their teams in a
certain ratio. It plays against those managers who are able to hire/
train and motivate their team members better than other teams in
the organisation due to fixed quota percentages. Another example
is organisations falling into the trap of implementing metrics, which
although push sales for a shorter period of time tend to lead to
negative customer experience.

Some of the challenges that were shared by the companies on our


list are:

Organisations are yet to devise very effective and pinpointed ways


to measure ROI on the budget used for Rewards and Recognition.
There is unavailability of hard data or well tracked patterns, which
can show tangible outcomes of Rewards and Recognition.

Managers are at times not comfortable in discussing and sharing


the not-so-good news with employees. Therefore, the challenge
of the organizations is to equip their managers to ensure that they
maintain a balance and become good/effective managers
instead of aspiring to be nice/populist managers. Managers need
to exercise due diligence in implementing the programs that
require their involvement. Diluting standards in the quest of

popularity can do a lot of harm. Managers who are recently


inducted need to be trained on the company philosophy and the
spirit governing its rewards and recognition programs.
Some managers complain that they dont get time to complete
the necessary paper work and it is difficult for them to manage
rewards and recognition formalities for a large team.
In some cases rewards programs do more harm than good when
people believe that they are being compared negatively to reward
winners, similar is the case with Incentive Pay (Pay for
Performance). If it is perceived by employees that many winners
have won their rewards more on account of favouritism, nepotism
and politics, then the programme is likely to have adverse impact
on morale, motivation and performance.
It is hard to balance between promptness and trying to make the
recognition individualized, especially keeping in mind the hectic
schedules.
The organisations which have global presence find it difficult to
balance between consistency/uniformity and local needs.

Creating a consistency across different teams and Business Units


is also a challenge. Many times different Business Units interpret
guidelines differently. Teams sometimes find themselves getting
constrained in applying creativity to the extent they would have
liked to.
For example, all award amounts in some companies are Geo
Adjusted, which implies different award amounts for different
countries based on cost of living/purchasing power parity and
compensation levels. When employees work in cross-geo teams,
such a policy can create a perception of discrimination among
employees. Here it becomes important to share the logic and
rationale for such a policy with employees in a persuasive way.
However, it is important to bear in mind the fact that if the
differences are unjustifiably high, the perception of discrimination
is likely to linger.
Outside challenges include managing vendor relationships, pricing
and being on top of fast-moving market information. Catalogue
systems also involve handling of many taxation and logistics
aspect.

23

8. Key learning from best workplaces

Rewards and recognition programs have the potential to produce


positive returns to shareholders. Research demonstrates that
such benefits will only be achieved through an effective program
that reinforces an organizations goals and values. These programs
should be thoughtful, should touch a large number of employees
and should be well publicized. Best workplaces have been able to
develop rewards and recognition programs that promote
organisation goals and values and reach out to a large number of
employees, sometimes even all employees. This has helped them
to sustain their organizations success through the discretionary
efforts that their employees put in.
The strength of a rewards system depends on the relevance/
appropriateness of the metrics (how well you have defined them)
and how accurately and transparently they are measured and
shared. Weight of the reward is equally important. If it is meagre or
unattractive employees tend to lose interest; on the other hand if
they are unrelated to performance, employees do not believe in
the fairness of the evaluation. The more attractive a reward, the
more robust the metrics should be to be able to drive the right
behaviours and follow more robust and transparent evaluation;
otherwise it can have more negative outcomes than positive.
There are numerous examples amongst best workplaces of their
ability to define effective metrics to measure performance, to
provide clear guidelines, to communicate the same widely through
various channels that can ensure transparency and fairness of
assessment, while offering substantial rewards.
For effective implementation of rewards system organisations:
Determine who will be eligible for each type of reward
Ensure that the new system has the support and ownership at
all relevant levels, particularly among people managers who
have to spearhead the implementation

The goal behind this is to create a payment that reflects the same
value to the employee given cost of living and average salary in
that country.
Organisations have institutionalized a variety of programs that
recognize/reward for a variety of reasons to ensure overall and
sustainable development of the organisation. The following are
some of the ways to promote behaviours that matter:
Link incentives to sales and service performance metrics to
preserve high-quality customer relationships
Patents to revenue from patented products to ensure meaningful
research & development
Link compensation with team performance to drive collaborative
behaviour
Team performance and team excellence are essential for
organizations to grow and prosper. To promote the same, linking
it with merit pay becomes essential. Teams start out with merit pay
criteria that are based 80 percent on individual factors and 20
percent on team performance factors. As a team matures and
peer support and approval acquire importance, it may move this
allocation to a 50-50 allocation, which ensures that merit pay
distributions hinge equally on team and individual performance.
Merit pay is zero-based, meaning that the allocation of merit pay
in one period is not predicated on previous allocations. Placing
merit pay on team activities helps ensure project teams, process
teams and task forces work toward common goals. Linking
compensation to teamwork and sharing establishes the proper
incentive structure to drive across the territory improvement.

To deal with the challenges of implementing the reward system at


the global level, rewards program leaders need to understand the
different cultures and local needs of various countries, while
designing programs that are consistent across the company and
provide value to employees.

The rewards and recognition ownership/implementation pattern in


the best workplaces shows that to ensure effective and widespread
reach, organisations should decentralize recognition. They need
to be able to institutionalize practices and rest the responsibility of
recognition with team leaders, peers and juniors rather than with a
distant authority or essentially the HR function. They need to
monitor implementation to ensure that there are no unjustifiable
differences in teams. They need to define right metrics of
effectiveness and measure and track them to ensure that
recognition has positive impact on performance.

American express uses the following information to make a


decision for each market:

Additionally, Rewards and Recognition practices at best


workplaces have the following features:

Exchange rates/purchasing power parity

All the standards and instructions for their rewards program are
lucidly documented with clearly defined objectives and
evaluation parameters and published through intranet,
dashboard newsletters, etc.

Establish the reliability and the validity of the performance data


that is gathered to determine who gets rewarded and how much

Cost of Living Index in each country

24

Average salary by country

Goals set, even if stretch goals, are realistic to motivate people


to perform

Develop standardized quality tools to measure cross-functional


team and manager performance

Creating a Balancing Act - Rewards are neither too few that


employees find it difficult to get them, and hence, are not
motivated aspire for it, nor too many that they become
commonplace and stop to excite people anymore

Link cross-functional team compensation to financial goals


which go beyond the traditional computation of profit. Thus,
incentive compensation links are forged with Economic ValueAdded (EVA), People Value-Added (PVA) and Customer ValueAdded (CVA) goals.

Deploy risk and reward compensation systems to drive


employee development, team sharing, and teamwork excellence

25

9. Conclusion and Way forward

Often when we, from Great Place to Work Institute, share robust
and effective practices from great workplaces, some members of
the audience tell us that their organizations also have the same
kind of practices. Their question is: Why dont our employees
(and consequently, Great Place to Work Institute), rate our
organization as a best workplace? We address this question
there, and it is important that we address it here as well.

importance of the rewards and recognition has been well


understood by many organisations and it gets the time and
attention it deserves. More and more organisations are looking at
total rewards as the concept to articulate the employee experience
that can be expected by employees in their organisation. However,
there is scope to structure budgeting and measuring effectiveness
further.

First of all, the similarities are deceptive because they are similar at
a superficial level. The differences come in when we examine the
details of what they do. The differences dont end there. They
become more manifest as we examine why they do what they do,
and how they do it. The great workplaces dont implement these
practices in a transactional manner. They are not copying
someone else because the idea seems appealing. They design
what suits their purpose and circumstances. The entire
organization, beginning with the top leaders, share a deep
conviction based on their values and beliefs that this is the right
thing to do. This ideological or philosophical underpinning provides
them impetus to implement their people practices in a heartfelt
manner and over an extended period of time, seeking feedback
and trying to improve the practices and the impact of what they
do. This conviction also imbues what and how they do it.

While the recipients of this award have shown us the way by


making some significant strides, there is always a scope to
improve and overcome challenges.

Great workplaces believe that their people practices and


organizational culture should be animated by a sense of fairness
and equity represented by distributive justice, procedural justice
and interactional justice (whether they say this in these words or
not!). Internal and external compensation benchmarking and
parity, generous and extensive profit sharing and wealth sharing
are examples of striving to achieve distributive justice. Robust and
relevant performance metrics, which are rigorously measured,
tracked and shared so that the right actions and behaviours, right
results and contribution, and therefore, ensure that right individuals
and teams are rewarded goes a long way to establish procedural
justice. The climate of approval and reinforcement and the heartfelt
sense of appreciation and gratitude expressed in personalized
manner by leaders, managers and peers convey the sense of
interactional justice.
The best workplaces try to introduce variety (of methods and
programmes) in their practices to enable them to deal with different
needs of employees and different situations; their practices have a
unique flavour or twist that their employees can identify with,
resonate with and feel proud about; their practices touch the
widest number and categories of employees and are not restricted
to a select privileged few; their practices are humane and generous
creating a gift like feeling among the employees who benefit from
these; and above all, their practices are integrated with their
organizational values, culture, strategy goals such that they create
an additive vector!
Studying various organisations clearly shows us that the

26

There is scope to find the right balance between encouraging and


rewarding individual excellence and encouraging and rewarding
team performance. There is scope to ensure that the means
(actions and behaviours) and the ends (desired outcomes) always
run hand in hand and one of them is not sacrificed. There is scope
to reward the short term performance as well as the long term
contribution. There is scope to better recognize, appreciate and
reinforce actions and behaviours that lead to the desired outcomes
and not just focus on rewarding and recognizing results. There is
scope to fine tune differentiation between the outstanding
performers and solid performers (who constitute a large
percentage of the employee population) so that while the
outstanding performers feel highly appreciated, motivated and
remain loyal, bulk of the population made up of solid performers
dont feel neglected or devalued, and thus, get alienated.
Measuring return on investment on rewards and recognition more
accurately will help organisations rationalize and reinforce the
need to recognize and reward. It will also help organisations to
choose from variety of options that are available for both measuring
performance and rewarding. However, the measurement should
not overshadow the philosophical and emotional aspect of why to
reward and recognize.
To sum up, rewards and recognition programmes must connect to
the emerging needs and expectations of the workforce and link
them with the companys overall goals and strategies to be
successful. There needs to be more research on the impact of
different types of Rewards and Recognition Programmes on
diverse employee categories to be able to provide different
strokes to different folks, without sacrificing the all important
sense of fairness and equity.

References

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27

Companies
Featured in this report

28

Aditi Technologies Pvt. Ltd.

Music Broadcast Private Limited

Industry: Information Technology


Business Description: Enterprise solutions, Mobile client
application development, Test and automation, Sustenance
engineering, Software product engineering, Consulting, etc
India HQ: Bangalore
Founded in India (Year): 1994
Ownership: Held
Employee Strength: 972

Industry: Media
Business Description: Radio Broadcasting
India HQ: Mumbai
Founded in India (Year): 1999
Ownership: Privately Held
Employee Strength: 334

American Express India Pvt. Ltd.

Qualcomm India Pvt. Ltd.

Industry: Financial Services


Business Description: Credit cards and Travellers Cheques.
India HQ: Gurgaon
Founded in India (Year) 1921
Ownership Subsidiary, Division, or Majority owned of another
Company
Employee Strength 6158

Industry: Telecommunication
Business Description: wireless devices and services
India HQ: Mumbai
Founded in India (Year): 1985
Ownership: Publicly Held
Employee Strength: 1683

Intel Technology India Pvt. Ltd.

Reliance Commercial Finance

Industry: Information Technology


Business Description: Micro-processors, Chipsets, Motherboards,
Adaptors- for Desktops, Laptops, Servers & Workstation,
Embedded, and Networking & Communications
India HQ: Bangalore Founded in India (Year): 1988
Ownership: Subsidiary, Division or Majority owned of another Company
Employee Strength: 3302

Industry: Financial Services


Business Description: Financing &Loans
India HQ: Mumbai
Founded in India (Year) : 2007
Ownership: Subsidiary, Division, or Majority owned of another
Company
Employee Strength: 956

Intuit Technologies Services Pvt. Ltd.

SAP Labs India Pvt. Ltd.

Industry: Information Technology


Business Description: Products for personal and small business
India HQ: Bangalore
Founded in India (Year): 2005
Ownership: Publicly Held
Employee Strength: 507

Industry: Information Technology


Business Description: Business Solutions
India HQ: Bangalore
Founded in India (Year): 1998
Ownership: Publicly Held
Employee Strength: 4132

JM Financial Services Pvt. Ltd.

TPG Software Pvt. Ltd.

Industry: Financial Services


Business Description: Investment Advisory
India HQ: Mumbai
Founded in India (Year):1998
Ownership: Privately Held
Employee Strength: 545

Industry: Information Technology


Business Description: Product development, Independent testing
and quality assurance service, Product Maintenance and support
India HQ: NCR
Ownership: Privately held
Founded in India (Year):2002
Employee Strength: 320

Edenred (India) Private Limited


2nd Floor, Camera House,
Majiwade Village Road, Majiwade,
Thane (W), Thane - 400 601
Ph: +91 (22) 2545 5500
www.edenred.co.in

Great Place to Work Institute, India


Unit no. 301, 302, 303
Apple Plaza, S. B. Marg,
Dadar (West), Mumbai- 400028
Ph: +91 (22) 6610 5544
www.greatplacetowork.in