Recognition Programs: Trends and Best Practices

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

Agenda

Economic Backdrop

Impact on Compensation Systems

Reward & Recognition Programs

Plan Design/Best Practices Ceridian Programs

Wrap-Up / Questions

2002 2005 The Business Environment

WorldCom
Enron Expensing of Stock Options Dilution At Unprecedented Levels

Oil Prices

Corporate Governance

Underwater Options

Pay for Performance

Iraq

Job Market

SarbanesOxley Act of 2002

Salary Increase Freezes Healthcare Costs

Stock Market Uncertainty

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 employees

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

Reward & Recognition External Data

2002 2003

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

Total Rewards Components

Benefits

Reward and + Variable Pay + Recognition

Base Pay

Total Rewards

Reward and Recognition Program Design

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

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 2

Making Recognition a Daily Event by Roy Saunderson, Recognition Management Institute

A Culture of Recognition; Building a System to Celebrate Great Performance by Rhonda Sunnarborg, BI Business Improvement Series
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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

The Conference Board, 1999 HR Executive Review: Employee Recognition Programs Pfeffer 2001 study Hewitt Associates
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2 3

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

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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 Cash Informal 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

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Outstanding individual/ team performance Anniversaries/ service Goal achievement Project completion Meeting/exceeding Patents/ innovative financial target ideas

Managerial/Professional Employees

Hourly/Administrative Employees

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Awards Used by Fortunes 100 Best Companies to Work For

Percent of Companies

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Communication Parties Cash Prizes Time Off Trips Stock

Managerial/Professional Employees

Hourly/Administrative Employees

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Recognition Program and Design Process

1. 2. 3.

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

4.

Communicate: Develop Implementation Tool-Kit

Manager how-to Employee how-to Program communication

5.

Measure program and continually improve

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Reward and Recognition:

Best 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 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

Key Characteristics:

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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 nonmonetary 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.
Changing the World of Work Values
Attract and develop enthusiastic achievers Delight customers for long term profitable relationships Deliver world class quality and productivity utilizing Six Sigma process improvement Live the FISH! philosophy

Employee Name: Employee Number:

Employee Facility Code: Job Title: Employees Corp Code: Amount of Award: ($20-$500, increments of $20) Location cCash card should be sent:

* Employees Dept Number: ** Nominators Name:

Who cCash card should be sent to:

Describe the employees accomplishments that support the above checked (x) Ceridian Goals and Objectives:

Employees Manager Approval:

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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:
1.
2.

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

Attract and develop enthusiastic achievers Ceridian HR Solutions Goals and Objectives Delight customers for long term Deliver world class quality profitable relationships and productivity utilizing Six Sigma Process Improvement Live the FISH! philosophy

Your Name:

Your e-mail address:

Your Facility Code:

Please complete the following information regarding the recipient of the Gift Card:

Employee Name: Employee Number: Employees Dept Number:

Employee Facility Code: Job Title: Employees Corp Code:

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.

Please forward this form to the Employees Manager for approval. Employees Manager Approval:

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Tier Two

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Ceridian Stars
Eligible Participants

All employees
Complete the Ceridian Stars Nomination Form

How does it work?

Ceridian Star winners will be selected on a quarterly basis.

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Ceridian Stars

What do Ceridian Stars Win?

Winners will receive $200 in cash via Ceridians eCash program along with a desk recognition item. All non-sales Ceridian Star winners will also be included in the Presidents Circle winner selection process held in January.

Selection criteria to determine winners each quarter

Delights the Customer: Demonstrates outstanding customer service by consistently going above and beyond the service expectations of customers, managers, peers and subordinates. Process Improvement: Delivers world class quality (Six Sigma). Team Player: Promotes working together and is a team player within his/her functional area and across the organization. Leadership: Supports the organizations strategic direction through behavior and example. Lives the FISH philosophy by choosing to bring energy, passion, and a positive attitude to the job every day.

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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