Transition from Rewards to Recognition – an Unfinished HR Goal

What comes to mind when we talk about employee motivation as a function, especially in an organizational context. We raise all our brows at the HR department as it is their onus, however the real question is whether HR willingly or otherwise got led into the quagmire without having to labour appropriate space for motivation. This is anyways an altogether different subject matter which we will not discuss now. However, we will lend some thoughts on the journey HR has traversed in addressing motivation, as one of HR’s deliverables.

The first thing that addresses motivation is creating an urge among the workforce to do something more and in return provide them with incentives. So, the journey of motivation has started through incentivizing better performance, be it higher outputs, more sales or better quality. While this appeared simple for organizations considering the Maslow Theory of ‘Hierarchy of Needs’, this soon met its limits and new ways had to be evolved to address the complex modern work organization.

Evolving Performance Management System and how organizations are making the best of it

Slowly designing a reward scheme tailored to the needs of the organization and integrating with other HR processes became the responsibility of HR. It became important for HR professionals to naturally align it with existing or specially designed HR deliverables. The most appropriate one emerged to be the Performance Management System (PMS), earlier called the Appraisal/Performance Rating Process, which has gone through several refinements to take care of subjectivity in Assessment.

Accordingly, starting with performance planning to set SMART objectives to monitoring & review of achievement accompanied with rating became the recipes of a good PMS that ensured a credible basis for Rewards.

It has been argued by several experts, spearheaded by the OP proponents in India, like Prof. Uday Parikh and Dr. T V Rao, that more emphasis should be given on enhancing employee capability rather than on rewards to secure the desired performance. I presume that this led to the need to address the job design, work organization and the very culture that permeates the way people relate to each other and how conducive is the organizational climate to support the desired level of performance, leading to focus on OD (Organization Development) as the possible remedy.

Organizations and HR Conferences devoted discussion on whether PMS should be an instrument of ‘Rewards’ or ‘Development’ and soon many progressive organizations seemed to have struck a balance by marrying both in their PMS. So, rewarding employees for their superior performance came to be an accepted reality with PMS being tinkered from time to time to make it sharper in fixing objectives linked to the company’s goals with the objective of designing a credible basis for Rewards.

Rewards and it’s unseen limitations

The rewards, as we see them today, are largely linked to achievement of pre-set objectives, individual performances, decided annually, and rewarded in the form of an annual increment or lumpsum performance bonus or both. However, many issues remain unanswered. Increasingly, work in an organization entails a team working with shared and distributed responsibility.

Does our reward system consider Group/Team contribution & achievement? Organizations have attempted project bonuses on successful completion of team assignment, but does it replace individual rewards, which some consider as antithesis to team accomplishment. This is especially true when, according to company policy, only X% of employees can be rewarded for team performance; what happens to collaborative working then?

The world of sports seems to have found a more ready answer, when in a doubles tennis or badminton, both the Partners receive the same trophy or cash award. So, both – Team contribution and Individual excellence are rewarded appropriately. Similarly, Sports like Cricket or Football constituents of both winning prizes which are shared by all and individual prizes like the Best performer or Man of the match. The question here lies whether this model can be adopted in the world of business performance?

A debate over ‘Is Rewards good enough Recognition’

There is of course a growing debate over, ‘Is Rewards good enough Recognition’ of what an employee has contributed, especially when it may not be in the fulfilment of her/his identified performance objectives. If recognition is making a person feel valued by the organization, what are other means to make an employee feel recognized, if reward has its limits?

Some organizations have provided the orientation of non-Monetary acknowledgement as part of their recognition scheme, while retaining monetary rewards linked to performance on achievement of certain objectives. While Recognition by its very nature must be and in fact has been open acknowledgement of achievement, Rewards, by its nature remain confidential. The issue remains wide open; whether rewards really make an employee feel Recognized in the absence of open acknowledgement?

This is not all: be it rewards, or recognition both have been organization specific in the sense that the person is felicitated within the organization for the work done in the organization, barring achievement in the Social, Literary or Sports arena. Increasingly, for the Millennial world including their work life resides outside the four walls of the organization. With job hopping they connect to their work fraternity outside the organization, not necessarily at the expense of the organization. This raises the question on what they will value more, being recognized by members of the organization, who are part of their transient world or the social media or such other social fora of the larger world to which they belong.

How many organizations have thought of reaching out to their world, outside their organization, to recognize employee’s contribution and what mechanism exists, if any, to tap this amorphous world to which the organization does not necessarily belong, but the employee whom they wish to recognize, belongs?

The Covid and its impact on work organization has queered the picture of Rewards further by the ‘Agile Organizations’ reorienting their evaluation to short-term objectives with a focus on continuous feedback and developmental agenda, undermining Rewards.

So, friends we have a lot of unfinished tasks in HR to grapple with in the space of rewards and recognition. While there are no easy answers, so are the options. The purpose of this article is not to hold a solution, but to raise those issues with the belief that the ingenuine brains in HR and business leaders will explore, reinvent, and evolve mechanisms to suit the changing needs, if not challenges!!!

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