Recognition Programs: Trends and Best Practices

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Recognition Programs Trends and Best Practices

• Wisconsin Society for Human Resource Mgmt
• 20th Annual Conference
• October 13, 2006

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Agenda

• Economic Backdrop
• Impact on Compensation Systems
• Reward Recognition Programs
• Plan Design/Best Practices
• Ceridian Programs
• Wrap-Up / Questions

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2002 2005 The Business Environment
Expensing of Stock Options
Dilution At Unprecedented Levels
WorldCom Enron
Oil Prices
Pay for Performance
Corporate Governance
Iraq
Underwater Options
Salary Increase Freezes
Job Market
Stock Market Uncertainty
Sarbanes-Oxley Act of 2002
Healthcare Costs
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The More with Less Economy

• 2003 productivity 5.3 biggest increase since
  1965
• 1979-2000 Factory output doubled manufacturing
  jobs 2.3M
• 1980 GM assembled 5 million vehicles with
  454,000 workers
• 2003 GM assembles roughly same number with
  118,000 workers
• Productivity revolution second wave Services!
• American Express Rev 1.2 billion, with 9,000
  fewer employees.
• Sprint Rev up 4.3 with 11,500 fewer workers
• NWA 755 check-in kiosks each can replace 2 ½
  employees

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Compensation Systems Overview
Base Pay
Bonus
Rewards Recognition
Benefits
Equity
The other compensation component.
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Compensation Trends

• Average annual salary increases
• Companies focus on keeping their best employees
• Companies rethinking stock options
• Continued focus on cash incentives
• Benefit costs
• Increased focus on reward and recognition
  programs
• More open communication

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Reward Recognition External Data
2003
2002

• Recognition Program in Place? 84 87
• Nearly 9 out of 10 companies offer some sort of
  recognition programs for employees
• Reward and Recognition programs are generally
  less expensive than base pay, benefits, stock
  options and bonus
• Top objectives for recognition programs include
  motivating high performance, reinforcing desired
  behaviors and creating a positive work
  environment.
• Recognition programs have grown over the years
  from informal thank yous to plans with a
  written strategy and more defined budget.

Workspan, December 2003
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Total Rewards Components
Total Rewards




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Reward and Recognition Program Design

• What?
• Why?
• Characteristics of a Successful Program
• Plan Design Steps
• Best Practices Examples

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What is Recognition?

• Recognition is any thought, word, or deed
  towards making someone feel appreciated for who
  they are and recognized for what they do. 1
• Recognition can be a strategic tool for shaping
  behavior and moving an organization in a desired
  direction. 2
• Recognition is something a manager should be
  doing all the timeits a running dialogue with
  people. 3

1 Making Recognition a Daily Event by Roy
Saunderson, Recognition Management Institute 2 A
Culture of Recognition Building a System to
Celebrate Great Performance by Rhonda
Sunnarborg, BI Business Improvement Series 3 Ron
Zemke, Training magazine
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Why Focus on Recognition?

• Employees identify recognition as one of the most
  effective motivators1
• Even small increases in supportive practices are
  associated with decreased turnover and increased
  sales/profitability2
• Employees who feel that their organization values
  them are more likely to value their customers2
• Appreciation and/or praise are among the top
  three drivers of employee motivation and
  engagement across a variety of industries and
  companies3

1 The Conference Board, 1999 HR Executive
Review Employee Recognition Programs 2
Pfeffer 2001 study 3 Hewitt Associates
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Evidence from Best Employer Studies

• Best Employers around the globe have cultures
  that emphasize recognition
• In the US Fortunes 100 Best Companies to Work
  For
• All of the 100 Best Companies recognize
  employees outstanding performance or service
  using special awards and programs
• 50 Best Companies to Work for in Canada
• Best companies in Canada have people practices
  that communicate and reinforce the organizations
  culture and values, including recognition of
  outstanding performance
• Hewitt Associates

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Evidence from Best Employer Studies

• In the UK The Sunday Times Best Companies to
  Work for
• Best employers are quick to acknowledge the extra
  effort and hard work of individuals and teams
• In addition to tangible rewards, the best
  companies recognize the critical importance of a
  simple Thank You
• Employees of the UK 100 Best never doubt how much
  they are valued by their employers
• Hewitt Associates

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General Characteristics

• Formal Informal
• Cash Non-cash

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Characteristics of Successful Programs

• Senior management support and involvement
• Include employees/managers in design and
  implementation
• Keep programs simple and easy to administer
• Tailor rewards to individual interests, needs,
  desire
• Match the reward to the achievement
• Communicate, Communicate, Communicate!
• Be timely and specific
• Make sure each employee understands what they did
  to earn the reward

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Trends and Best Practices

• Rewarding teams and individual
• Realization that some employees value recognition
  as much as merit increases and bonuses
• Employees recognizing employees
• Greater use of informal/spontaneous awards
• Improved publicity of winners
• Biggest obstacle to success
• Communication
• Management support

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Achievements Recognized by Fortunes 100 Best
Companies to Work For
Percent of Companies
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Awards Used by Fortunes 100 Best Companies to
Work For
Percent of Companies
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Recognition Program and Design Process

• Develop strategy and objectives
• Gather feedback From employees and managers
• Form design team and consider program design
  elements
• Eligibility, award types, criteria,
  administration, documentation cost
• Communicate Develop Implementation Tool-Kit
• Manager how-to
• Employee how-to
• Program communication
• Measure program and continually improve

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Reward and RecognitionBest Practices Examples

• Southwest Airlines
• Other examples in handout include
• Texas Instruments
• Siemens
• Gateway
• Sofitel
• TDK
• Merck
• Hewlett-Packard
• Xerox

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Southwest Airlines
Industry Airline Employee Size 34,000
employees Annual Revenue More than 6 billion

• Reward and recognition are part of the culture
• Team of employees from across the country work to
  think of new ways to recognize and reward
  performance
• Over 13 different recognition awards
• Super Service awards
• Monthly winning spirit awards, department
  awards, celebrations
• Heroes of the Heart airplane
• Airplane painted with team name flies for one
  year
• Awarded to team whose dedication and
  behind-the-scenes work makes a genuine difference
  in customer service

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Ceridian Reward and Recognition Programs

• Objective
• Employee Feedback Process/Results
• Three-Tiered Formal Reward and Recognition
  Program
• Intranet Demonstration

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Rewards and Recognition

• Objective
• Reward individual and/or team performance
• Recognize above-and-beyond contributions, high
  performance, supporting Ceridians vision of
  changing the world of work
• Delivered as cash and non-cash awards
• Key Characteristics
• Unplanned and unanticipated
• Reflective of performance on significant work
  assignment or single noteworthy act
• Consistent with Ceridian business goals, such as
  process improvement, customer service improvement

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What do Ceridian employees say?

• Employee Opinion Surveys
• Employee Preferences Surveys

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And the survey says

• During the last Employee Opinion Survey, Total
  Rewards Satisfaction dropped from 59 (2001) to
  47 (2002).
• In 2003 our Preferences survey indicated that
  Total Reward was an area of opportunity.

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What do the results mean?

• We decided to dig deeper.
• Conducted four focus groups (3 employee and 1
  manager) , including employees from
  cross-functional areas.

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Top Issues from the Focus Groups

• Top 2 Issues for the Employees
• Base Pay
• Reward and Recognition
• Top 3 Issues for the Managers
• Base pay
• Shared Success
• Formal Recognition

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Reward and Recognition Recommendations to be
Implemented

• Communicate the Reward and Recognition programs,
  to include the nomination and selection
  processes, to all employees.
• Notify managers when one of their employees is
  nominated for a Star award (prior to selection
  process).
• Provide all employees tools to give non-monetary
  recognition.

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Rewards and Recognition

• Our Rewards and Recognition program has been
  retooled to better enable each of us to recognize
  our employees performance and contributions.
• The enhanced program was designed based upon
  feedback provided in our Employee Opinion and
  Preferences Surveys, and from employee focus
  groups.
• Feedback from focus groups included the need to
  improve communication surrounding Reward and
  Recognition Programs.
• We listened and enhanced Reward and Recognition
  Programs.
• Enhancements include
• Two new non-monetary programs, Ceridian Gift Card
  and Thank You Notes, which includes an electronic
  option
• Presidents Circle increased from 1,500 to
  2,000 and offers a trip option
• Communication tool developed

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Three Tier Recognition Program
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Ceridian Goals Objectives

• All formal award programs tie back to the same
  goals and objectives
• Attract and develop enthusiastic achievers (e.g.
  team player, leadership)
• Delight customers for long term profitable
  relationships
• Deliver world class quality and productivity
  utilizing Six Sigma Process Improvement
• Live the FISH philosophy

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Tier One
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cCash Recognition Program

• Who is eligible to participate?
• All employees
• Individuals and teams can be recognized
• How does it work?
• Complete the cCash Nomination form
• What can you win with cCash?
• Cash
• How does cCash work?
• cCash awards are presented to you in the form of
  an eCash card. It can be used at any Cirrus
  Network ATM machine or at any retailer that
  accepts Maestro Point of Sale (POS) transactions
  (e.g., Walmart, Target, Walgreens, etc.)

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cCash Nomination Form
The Ceridian Employee cCash Recognition Program
is designed to support Ceridians vision of
Changing the World of Work. Check (x) the
appropriate box or boxes, which represent
Ceridians values that the employee has
supported. Complete only the blue sections of
this form.
Describe the employees accomplishments that
support the above checked (x) Ceridian Goals and
Objectives
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Thank You Cards

• Employees can send a quick, timely thank you, on
  the spot, with a click of a button or the stroke
  of a pen.
• There are two Thank You Card options available to
  all employees
• Hard copy thank you cards
• Electronic thank you cards

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Hard Copy Thank You Card
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Electronic Thank You Cards

• Electronic Thank You Cards are available on
  Ceridianet
• Three simple steps to follow to send a co-worker
  a Thank You card
• Instant recognition
• No cost to Ceridian
• Cards can be printed
• New card selections can easily be posted, and
  allow for many cards to choose from

In 2005 there were 4,000 electronic thank you
cards sent!!!!
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Ceridian Gift Card

• Allows the recipient to choose from an array of
  gifts.
• Nominator can present a hard copy or send an
  electronic card.

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Ceridian Gift Card Nomination Form
Please complete the following information
regarding the recipient of the Gift Card
You have three different mailing options to
choose from. Please check the appropriate box
below ? 1. Send Gift Card to me, so that I can
hand deliver the award to the recipient. ? 2.
Send an electronic Gift Card to the recipient, at
the following e-mail address ____________________
___________________ Note You will be
notified via e-mail when the electronic card is
sent. ? 3. Mail the Gift Card to recipient to the
Facility Code listed above. Please include your
Personal Thank You in the box below, so that
your text can be printed on the Gift Card or
Electronic Gift Card prior to mailing the award
to the recipient. If the box is left blank, the
Gift Card will be mailed to you so that you may
insert your Personal Thank You on the Gift Card
and mail to the recipient.
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Tier Two
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Ceridian Stars

• Eligible Participants
• All employees
• How does it work?
• Complete the Ceridian Stars Nomination Form
• Ceridian Star winners will be selected on a
  quarterly basis.

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Ceridian Stars
Gateway to Presidents Circle!
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Tier Three
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Presidents Circle is the Premier Recognition
Program

• Out of the 1,332 Stars Winners for 2005, 224
  winners were awarded the Presidents Circle,
  which is equivalent to 17 of the Stars Winners,
  and 4 of the total population. The award
  includes
• Cash or Vacation Package for two
• Desktop Award
• Dinner with Manager and guest
• Certificate
• Each organization is allotted a certain number of
  Pres. Circle slots, depending on the population
  size of the organization, and the selection is
  made.

Note Management takes repeat winners into
consideration if award is warranted.
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Presidents Circle Trip Selections
Las Vegas
New York City
MGM Grand
W New York Times Square
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Presidents Circle Trip Selections
New Orleans
San Diego
Omni Royal Orleans
Radisson Hotel Harbor View
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Presidents Circle Trip Selections
Boston
Orlando
Sheraton Safari Resort
Boston Marriott Copley Place
And San Francisco!
Renaissance Stanford Court
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