Employee participation programs on the rise...
More memorable than cash say proponents
by Rob Stonehewer
February 2, 1998 - Strategy Magazine
Special Report: Premiums & Incentives

To improve morale and achieve higher productivity, companies are turning to teamwork and employee-participation programs. Self-managed problem solving teams, quality circles and programs that promote collaboration between managers and workers are gaining ground, with "empowerment" still the much used (and abused) buzzword of the 1990s.

Today, 80% of Fortune 1000 companies are adopting employee participation programs to help motivate staff throughout all levels of the company - not just in sales. It is big business in the U.S., where non-sales incentives make up 10.5% of the U.S. $23-billion incentive market (figures courtesy of The Incentive Federation).

If the 10% rule applies, then the Canadian incentive market should be worth a total of cdn$3.2 billion, of which non-sales incentives would account for $338 million.

So where is the money being spent? Here are three types of programs that can be targeted at non-sales employees.


Peer-to-Peer Recognition Programs

Many companies are using "peer-to-peer recognition" to encourage employees to immediately identify exemplary performance from their colleagues, whenever it occurs.

Each employee is issued a quantity of nomination forms indicating the necessary behaviour criteria, such as "showing initiative" or "resolving problems." The employee completes the form with a brief description of what the individual nominee or team has done to deserve recognition and submits it to a review committee, which then determines if it meets the selection criteria.

Once accepted, a copy is forwarded to the nominee and his or her manager, the employee's name is entered in a monthly sweepstakes and, at pre-determined levels, employees receive a certificate of achievement.


Employee Suggestion Programs

The old suggestion box may have gone the way of the dodo, but it has been replaced by a more effective system that helps to generate, evaluate and implement quality ideas to improve bottom-line performance.

Although it is still the individual employee that is ultimately recognized for the great idea, it is now up to cross-functional teams to determine the best suggestions that will reduce expenses, increase revenues, improve quality and productivity or enhance customer satisfaction. The team then goes on to research the concept, develop a business implementation plan, estimate the return on investment and present the idea to management.

Management evaluates the suggestion and responds quickly back to the team on the company's decision. If the idea is approved, it must be implemented promptly and awards issued to the team - with a bonus to the originator - based on the value of the suggestion.


All-Employee Performance Incentives

In most companies it is possible to measure employee performance across several areas, which can be "weighted" by means of a simple points system to reflect their importance to overall company objectives.

Employees can be measured based on individual, team or departmental performance in specific areas where they have direct impact, such as customer satisfaction and retention, product knowledge, number of calls, participation in training, safety record or attendance.

Based on their achievement, employees can, over time, earn sufficient points to select an award. While considerably lower in value than what might be offered in a sales incentive program (approximately 1% of salary), such an award can - when presented by senior management - go a long way toward improving morale and increasing motivation.

As with any incentive or promotion, it is essential that it be communicated effectively, with any achievements announced in newsletters, performance standings or presentations. It is also a great idea to recognize team or department performance with group events, which can be as simple as a beer-and-wings party at a local sports bar or - depending on the employee profile - as elaborate as a team-building event at a local resort.


Merchandise and travel awards outperform cash

Whatever program meets your objectives, offering the right rewards will be key to helping you achieve your goals.

Research by The Incentive Federation found that 63% of respondents use cash as an incentive reward. However, recent findings from the U.S. challenge the notion that cash is invariably the most effective choice.

Goodyear, for example, discovered some time ago that the half of its salesforce motivated with non-cash rewards outperformed the group rewarded with cash by 46%. And an incentive program for Mazda had the non-cash group exceeding its objectives by almost 16%, with the cash group trailing behind at just over 2%.

Remember, if you want employees to perform to the maximum, then make sure to incorporate a variety of reward options: desirable, brand-name merchandise, visible recognition awards, fun team-building events and, if the budget allows, the ultimate reward - incentive travel.

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Employee participation programs on the rise
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New evidence backs non-cash incentives
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