The Power of Recognition

Effective employee recognition boosts performance—but what makes a program effective?

May 8 2013 by CJ Prince

2. Align recognition with corporate values.

CEO Dan Roitman founded his ecommerce company, Stroll, in a dorm room in 2000, just before the dot-com crash revealed that a whole slew of technology companies had incentivized all the wrong behavior. Since then, Stroll has grown at warp speed—at a compounded annual rate of 70 percent since 2002, with the goal of getting to $1 billion in revenues by 2020. Ever mindful of those early lessons, Roitman has made it a priority to align all rewards and recognition with the company’s values. “You really have to be very careful about making someone do something just for money versus getting them to do something because it’s the right thing to do,” he says.

Of course, they do both, but all forms of recognition are based on an employee’s fulfillment of one of the company’s values. Close to 50 percent of bonus potential is tied to each employee’s values scorecard, which measures how engaged each is with those values. As for non-monetary rewards, Roitman allocates a sizeable training and development budget to top groups and puts top performers into executive coaching. He also personally sends handwritten notes to standout employees and regularly awards gift cards. Although Roitman admits it’s been challenging to measure ROI for rewards, he notes that turnover is almost nonexistent.

3. Publicize and promote it.

For FedEx Freight, employee motivation is a critical component because employees are the face and the brand of the business. “So we have to focus on our employees and their ability to go out there and represent the brand and to feel empowered to make decisions on the fly to satisfy customers,” says FedEx Freight President and CEO William J. Logue.

To that end, the company has numerous, high-profile recognition programs designed to single out employees and make them feel a sense of ownership, including the “Five Star” award to recognize enhanced service and profitability. There are also those prizes that demonstrate teamwork: the “Bravo Zulu,” an on-the-spot achievement award of “quick cash” bonuses, theater tickets and/or dinner gift certificates, and the annual “Purple Promise” award dinner recognizes employees going above and beyond in the field to deliver superior customer service. Divisional CEOs are expected to attend awards ceremonies.

Each recognition program and award is tied to a corporate initiative. Safety, for example, is paramount for the delivery company. Each year, FedEx Freight participates in the national truck-driving championships, and those employee drivers who qualify based on exemplary safety records are paid to go to the national competition for several days with their spouses. “And then we take that messaging and push it back out there because those drivers, when they get back home, they talk.”

Logue measures ROI primarily through positive employee satisfaction surveys. “When you see good results there and you know you’re promoting the programs and employee satisfaction levels are strong, then you can tie the good productivity and service performance back to those locations that have really high employee survey numbers.”