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Points Based Recognition Programs Exposed

April 26, 2011 by  

The “traditional” way to recognize employees is through service awards, commemorating a milestone anniversary for years of service with a company…5 years, 10 years, and so on. In recent years there has been a push towards incentive recognition. In this article, I will expel some of the claims you may have heard and enlighten you to the truths about incentive awards, performance based recognition, and points programs. I’ll admit, in doing research I found it difficult to find information disputing some of the claims of the incentive industry. When you “Google”, you will come up with mostly positive articles extolling results. My caution to offer as you read…note the majority of these articles are written or the study funded by companies that are in the incentive industry…they have service and product they want to convince you on and sell. The money for the research comes from the companies that want to sell the service…my discerning mind warns me to be somewhat wary and read with a critical eye.  The truths and myths about incentive recognition are exposed.

What most incentive companies promote are points based gift redemption programs. The performance based rewards they promote are in the form of gifts that are redeemed by accumulated points that employees earn based on performance standards. These companies want to sell you gifts…that is how they make their money. If anything, they want to expand income from a client by expanding their involvement with a company from traditional years of service awards to also selling them on the idea of further business in supplying gifts for a points based program.

In reading white papers and studies, I’ve noticed that many imply that “traditional service awards” for years of service recognition are meant to motivate employees. This is misleading. I have never asserted that a service award program is to motivate employees. Instead, we feel a service award program works in tandem with an over-all effort made by the company to create a culture of belonging, investment, and “family” in an organization. Traditional service awards are one component of an over-all strategy. They have never been sold as a “motivator”. These published incentive articles use this assertion to weaken their competition (a service award provider) and steer you to their service and ultimately the expanded gift business they can promote.

In research, you will find studies about performance incentives. Be careful when reading data or assertions. There is much study on the effects of incentive performance “pay” (cash)…basically more income for more output. It is easy to study the return on investment in behavior. You will find though that the incentive industry begins to blur their references of “performance based” recognition and adopt the results of “inventive performance pay (cash)” to sell their ideas. In my opinion, this really is an “apples and oranges” situation and not a valid extrapolation. Cash performance rewards and gift performance rewards will not give the same results…the studies show cash yielding double the response of a gift.

Jerry Pounds has an interesting perspective which he writes about in his eBook, titled Incentive Programs:  Manipulative Quick-Fixes That Destroy Employ Engagment.  He talks of how companies endeavor to build “team” in their workforce.  In some ways, performance based rewards can actually work against the “team” goal.  Is the performance reward elevating the individual above the team?

I feel that there certainly are some areas where performance based rewards are applicable.  I feel these are situations when the performance of the individual is tantamount and the team has less importance…such as, health and wellness program that promotes individual weight loss, or a safety program when the need is to promote vigilance within the individual.

Another thing to be aware of in points based incentive performance programs…the employee earns points based upon performance parameters the company establishes.  The provider keeps the “bank” of the points accumulated by the individual employees.  The company also develops a gift selection catalog that can be accessed by the employee to cash in their accumulated points for gifts of varying “point” value redemption.  A provider will want to sell you “points” as the point is earned rather than when the points are redeemed.  They know that points based gift redemption programs are structured to incent people to earn points.  The high quality gifts are not attainable until you earn many points.  Rarely will a provider wait to earn their income until your employee redeems their points for a gift.  This would create a cash-flow dry period for them.  They cannot provide you services without income.  The implications of this for you is that you as a company have now expended money for not yet received product.  It becomes difficult for you to suspend or end the program any time down the road if you no longer can afford or feel it lacks merit.  At that time, your employees who still have “banked” points would be forced to cash in for “less than” gifts or will not even exercise their privilege.

Lastly, I believe the number 1 reason an employee leaves a company or there is poor performance in a team is because of the inadequacy of their immediate supervisor.  I feel that before a company embarks on a performance based reward program, they should first compute the cost.  Once a cost has been calculated, now instead consider how that allocation could be applied to supporting, training, and affirming the front line supervisory personnel…concern for their well-being both physically, mentally, and emotionally.  If your front line supervisors are happy and healthy…you will have a super engaged workforce!