Reaping the rewards - JSE MAGAZINE

Reaping the rewards

Implementing an incentive or recognition strategy has become key to retaining staff and keeping them motivated

Reaping the rewards

Employees shrieked with delight when they discovered that their office had been transformed into a giant ball pit overnight. A video clip of them diving into the sea of 250 000 brightly coloured balls that had swept across office chairs and desks has gone viral. ‘To do a great job you have to love what you do,’ said their boss, Lee McAteer, in an interview with the Manchester Evening News. ‘What better way of showing your appreciation than making people work out of the world’s largest adult ball pit?’

The co-founder of Invasion, a British company for travel and gap-year experiences, believes in motivating staff by creating a fun work environment. In the past, he has organised surprises such as edible treats (a food truck dispensing bacon sandwiches on-site and an ad hoc delivery of McDonald’s desserts) and has sent high-performing staff to Disneyland and WrestleMania. McAteer also personally took a group of top employees to New York and Las Vegas on a party-fuelled trip he has described as ‘mental’ and ‘crazy’.

Companies are coming up with ever-quirkier rewards to attract, motivate, nurture and retain staff members. Sometimes these are linked to their core business, such as German automotive parts supplier Hella, which lets high-performing employees borrow a sleek BMW i8 or drive a racing car on the Hockenheimring Formula One course.

Others are not directly related to the specific industry but aim to improve employee loyalty and work performance through company-wide perks. These range from free dry cleaning, haircuts, healthy lunches and weekly car washes at work to fully paid ‘pawternity’ leave (for staff adopting a dog or cat). Some even pay for female employees to have their eggs frozen (as offered by Facebook and Apple). Recently, a New York-based online retailer made headlines for its company-wide policy of contributing up to US$20 000 towards employees’ weddings.

While there’s unlimited scope for imagination, the company culture, budget and wider economic context set the tone for the choice of incentives, rewards and recognitions. As such, many of the more gimmicky ones don’t translate well in the local context of an emerging economy in Africa. ‘We find in South Africa the staple diet for incentives and rewards consists of gift cards, travel and online shopping,’ says Camron Pfafferott, general manager at the Rewards Factory. ‘Rewards should meet the aspirational as well as the practical needs of employees and often also those of their families,’ he says.

‘Our research shows that when given the choice, the local workforce tends to gravitate towards practical rewards such as prepaid electricity, fuel cards and vouchers for groceries and fast food, as well as cellular airtime and data. This applies throughout all professional levels, from workers at the bottom of the pyramid, right up to the C-suite at the top.’

Having a total rewards strategy that includes non-cash benefits and staff recognition is paramount for talent management and business growth, especially during tough economic times. ‘We find that in a down-cycle, companies pour more money into sales incentives,’ says Gustav Lammerding, marketing director at Uwin Iwin – an SA-based incentive solutions provider that now also has a UK presence. ‘They rather cut their marketing budget and try to increase their sales. Any incentive programme is a long-term investment that, when effectively implemented, can produce phenomenal results. Some of our case studies show 20% to 30% sales growth.’

Over the past 20 years, there’s been a dramatic jump in the number of companies using non-cash rewards, according to the Incentive Research Foundation’s 2017 Trends Study. ‘The considerable shift to 77% of US jobs now being service-focused and the positive correlation of employee engagement measurements to stock price increases have supported this shift.’

However, designing a successful rewards strategy is increasingly complex, particularly in SA with its volatile economy, regulatory and political uncertainty as well as numerous variables within the culturally diverse and multi-generational workforce.

Pfafferott says that these variables include an employee’s life stage, cultural background, aspirations and the context within which they are required to carry out tasks. From the employer’s side there are ‘variables of industry, company culture, leadership narrative, organisational strategy and   additional layers of complexity – which do not easily lend to a one-size-fits-all approach’.

Even more than ‘a list of cool benefits and perks’, many employees crave a sense of belonging, says global HR consulting firm Mercer. The company has identified a strong desire for personalisation of the employee experience in its 2017 Global Talent Trends study, which revealed that ‘97% of employees want to be recognised and rewarded for a wide range of contributions, not just financial results or activity metrics – but only 51% say that their company does this well. A new rewards paradigm is needed. Fair and competitive pay and opportunities for promotion are top priorities for employees this year, which is not surprising given the climate of uncertainty and change’.

Communication is essential because ‘lack of clarity around rewards at the next level can lead people to believe there is no path forward’.

This also applies to performance, where employees want additional benefits for high performance as well as clear performance ratings to see how they are progressing. ‘Employees in South Africa value when their performance is compared to that of their peers,’ says Mercer. ‘Employees are seeking the security of tangible and predictable rewards, which is not a surprise given the perceived uncertainty ahead. However, this is not reflected in HR’s plans – only 28% say rewards competitiveness will be an area of focus in 2017.’

Lammerding believes a successful rewards programme should boost staff loyalty towards the company and its brands. ‘We try to go cashless where possible, as people tend to use cash rewards to pay bills and top up their salary. It’s quickly forgotten and doesn’t carry any trophy value for the brand.’

Branded cash is a slightly better option, because it’s still flexible but creates more affinity to the brand than actual money, he says. So even if employees buy groceries or other basic necessities using the branded cash card, they may think ‘brand X has helped me buy this’.

Some rewards providers have developed digital platforms that work like a banking system, which allocates and manages reward points that have a rand value. Employees receive points for meeting performance or behavioural targets, which they can use to buy vouchers or goods in a virtual mall. The points can be saved for bigger purchases – such as in the case of the sales employee who saved their rewards for three years to eventually buy a car.

That’s the kind of ‘trophy value’ traditionally achieved by luxury travel rewards. Four out of five employees would choose travel over cash incentives, according to a survey by the Society of Incentive and Travel Executives.

‘We try to build affinity to the brand from the inside out by creating extraordinary memories that employees will carry with them forever,’ says Lammerding. This could be an ultra-luxury trip to Russia, Vietnam, the Indian Ocean islands, or – in the case of Uwin Iwin – Finland. Their client’s top-performing employees will be able to dine in a castle made of ice, stay overnight in a glass igloo with a view of the northern lights, swim in the Arctic Ocean wearing dry suits or participate in a car rally on ice.

Meanwhile, Pfafferott suggests that companies should provide smaller, more frequent rewards for a broader workforce instead of sending only a few individuals on luxury travel incentives. ‘Motivate more people more often,’ he says.

This ties in with a global move towards group-based rewards for teams or departments rather than individual employees as a means to create a feeling of inclusion and encourage teamwork. A drawback of this approach is that it doesn’t distinguish between high- and low-performing team members and may reward those who don’t merit it.

HR strategies often include non-financial recognition, such as ‘employee of the week’ or ‘top employee’ awards that honour excellence in certain categories. Peer-to-peer appreciation is also on the rise and likely to appeal to millennials because it’s frequently tech-based and on mobile platforms.

Ultimately, it’s up to each company (and their budget) whether they want to transform their offices into an adult ball pond, present staff with branded cash or send top performers to exotic locations. But every organisation should consider a way to reward and recognise their employees, motivating them to perform beyond what’s expected.

By Silke Colquhoun
Image: Andreas Eiselen/HMimages