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There’s so many different worlds /
So many different suns /
And we have just one world /
But we live in different ones (Brothers in Arms, Dire Straits)

One of the biggest challenges faced by HR professionals is to design Rewards and Recognition programs that help align individual goals with that of the organization. A well designed program helps to align individual tasks and achievements with the overall business strategy of the organization and also reinforces organizational values in everyday activities. Companies can thus gain competitive advantage in the market place if their Rewards and Recognition programs are architected correctly through a complete understanding of business goals, organization structure, organizational culture and tailored to meet individual psychology.

Key Influencers in designing Rewards and Recognition programs:

Having a program of some sort is better than not having any. Having a well-designed program that takes in account the organizational realities and goals is much better. Blindly copying what another organization does is always sub-optimal because in one way or the other each organization is unique with its own culture and objectives.

Having said that, there are three key areas that have a bearing on designing a Recognition program in most organizations. The Business Goals and Strategy, the Organizational Structure and the Organizational Culture. The business strategy determines what the entire organization needs to align towards while the latter two determine how easily and how fast the organization can realistically do so. A well designed program can help influence alignment and reinforcement of aspects that the leadership is interested in.

Business Strategy: This is typically a top down influencer. The business strategy of an organization is decided by its top management keeping in mind data points of past performance and the objectives of all stake holders. Typically, the goal is to gain a competitive advantage in the market place in the short term aligned with whatever the long term goal of the company is.

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The inputs that influence business strategy are typically the current macroeconomic environment and the company’s own assessment of its SWOT. A (good) business strategy will take into account a certain set of behaviors in the organization – innovation, service orientation etc. When HR can understand the assumptions made on these dimensions, the Rewards and Recognition programs can then be architected to positively influence those behaviors.

Thus if the company business strategy for the following year is to gain a competitive advantage by leveraging its world class customer service orientation, the employees are rewarded and recognized for living up to that particular company value.

Organizational Structure: Taking into consideration what kind of organizational structure is crucial to company performance has a bearing on the design of the programs. Any conflict between the program design and ground reality in this aspect can have disastrous consequences.

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If the company requires employees to largely work in cross-functional teams to achieve objectives, then setting up a program that celebrates individual performance will send the wrong signal. Architecting such a program ends up in individuals striving for personal glory, and this reduces the overall team motivation and performance.

It is also important to take into consideration if the organization is hierarchical or flat – especially so in designing the recognition component. The value associated with the recognition is heavily influenced by this aspect. Further challenges are in architecting this part in global organizations with employees working across different cultures. Even within a single organization what works in say the US may not work in India.

Organizational Culture: The organizational culture determines what the employees perceive that company stands for. There are two aspects to the culture: (a) the explicit – these are codified in the values of the company and (b) the implicit – these are derived by the employees on their own based on what they see happening around them every day.

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As a very essential first step, the senior leadership of the organization must explicitly state the culture they wish to inculcate in order to achieve business goals. And then they must demonstrate that by walking the talk. If explicit values talk about team work and what the team members see are diktats being issued without any consultations, the actual message being imbibed is very different from the one the management wishes to implement.

And at the end of the day behaviours that are rewarded are the ones that tend to become the dominant patterns. If individual glory through information hiding and obfuscation is what gets rewarded then you can talk about team work all you like but it won’t be practiced.

In correctly designed programs the explicit and the implicit aspects of the culture are transparent, congruent and followed universally within the organization.

These three key aspects must be taken into consideration while architecting the strategic aspect of any Rewards and Recognition program. In subsequent posts I will touch up on the operational aspects of a successful Rewards and Recognition program.

Related Material:

Post: FLIPping VUCA through Strategic Employee Recognition

Download eBook: Architecting a World Class Rewards and Recognition Program

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References and Acknowledgements:

This post draws heavily from Reward Systems that Reinforce Organizational Change, Gerald E Ledford, Edward E Lawler

 

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