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”
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

3

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 6 .

December 2003 7 . stock options and bonus Top objectives for recognition programs include motivating high performance. Recognition programs have grown over the years from informal “thank you’s” to plans with a written strategy and more defined budget. benefits. Workspan.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. reinforcing desired behaviors and creating a positive work environment.

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 9 .

Training magazine 10 . Recognition Management Institute “A Culture of Recognition.What is Recognition? “Recognition is any thought. word. BI Business Improvement Series 3 Ron Zemke. Building a System to Celebrate Great Performance” by Rhonda Sunnarborg.” 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 time—it’s a running dialogue with people. or deed towards making someone feel appreciated for who they are and recognized for what they do.” 3 1 2 “Making Recognition a Daily Event” by Roy Saunderson.

1999 HR Executive Review: Employee Recognition Programs Pfeffer 2001 study Hewitt Associates 11 2 3 .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.

including recognition of outstanding performance Hewitt Associates 12 .Evidence from Best Employer Studies Best Employers around the globe have cultures that emphasize recognition In the US: Fortune’s 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 organization’s culture and values.

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 13 .

General Characteristics Formal Cash Informal Non-cash   14 .

desire Match the reward to the achievement Communicate.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. Communicate. needs. Communicate! Be timely and specific Make sure each employee understands what they did to earn the reward 15 .

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 16 .

Achievements Recognized by Fortune’s 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 17 .

Awards Used by Fortune’s 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 18 .

Communicate: Develop Implementation “Tool-Kit”    Manager “how-to” Employee “how-to” Program communication 5. administration.Recognition Program and Design Process 1. award types. Measure program and continually improve 19 . 3. documentation & cost 4. 2. criteria. Develop strategy and objectives Gather feedback: From employees and managers Form design team and consider program design elements: Eligibility.

Reward and Recognition: Best Practices Examples   Southwest Airlines Other examples in handout include         Texas Instruments Siemens Gateway Sofitel TDK Merck Hewlett-Packard Xerox 20 .

Southwest Airlines   Industry: Airline Employee Size: 34. 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 21 .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.

Ceridian Reward and Recognition Programs    Objective Employee Feedback Process/Results Three-Tiered Formal Reward and Recognition Program  Intranet Demonstration 22 .

high performance. supporting Ceridian’s 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:    23 .Rewards and Recognition Objective:   Reward individual and/or team performance Recognize above-and-beyond contributions.

What do Ceridian employees say? Employee Opinion Surveys Employee Preferences Surveys 24 .

Total Rewards Satisfaction dropped from 59% (2001) to 47% (2002). 25 .And the survey says……   During the last Employee Opinion Survey. In 2003 our Preferences survey indicated that Total Reward was an area of opportunity.

What do the results mean? We decided to dig deeper…. 26 . including employees from cross-functional areas. Conducted four focus groups (3 employee and 1 manager) .

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 27 .

  28 . to all employees.Reward and Recognition Recommendations to be Implemented  Communicate the Reward and Recognition programs. to include the nomination and selection processes. 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.

and from employee focus groups.Rewards and Recognition      Our Rewards and Recognition program has been retooled to better enable each of us to recognize our employees performance and contributions. Enhancements include:    Two new non-monetary programs. Feedback from focus groups included the need to improve communication surrounding Reward and Recognition Programs. Ceridian Gift Card and Thank You Notes.500 to $2. which includes an electronic option President’s Circle increased from $1. We listened and enhanced Reward and Recognition Programs.000 and offers a trip option Communication tool developed 29 . The enhanced program was designed based upon feedback provided in our Employee Opinion and Preferences Surveys.

Three Tier Recognition Program 30 .

Ceridian Goals & Objectives  All formal award programs tie back to the same goals and objectives     Attract and develop enthusiastic achievers (e. 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 31 .g.

Tier One 32 .

Target. Walmart.g.) 33 . It can be used at any Cirrus Network ATM machine or at any retailer that accepts Maestro Point of Sale (POS) transactions (e. etc. Walgreens..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.

increments of $20) Location cCash card should be sent: * Employee’s Dept Number: ** Nominators Name: Who cCash card should be sent to: Describe the employee’s accomplishments that support the above checked (x) Ceridian Goals and Objectives: Employee’s Manager Approval: 34 . Check (x) the appropriate box or boxes.cCash Nomination Form The Ceridian Employee cCash Recognition Program is designed to support Ceridian’s vision of Changing the World of Work. 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: Employee’s Corp Code: Amount of Award: ($20-$500. which represent Ceridian’s values that the employee has supported. Complete only the blue sections of this form.

on the spot. There are two Thank You Card options available to all employees: 1. Hard copy thank you cards Electronic thank you cards 35 .Thank You Cards   Employees can send a quick. timely thank you. with a click of a button or the stroke of a pen. 2.

Hard Copy Thank You Card 36 .

000 electronic thank you cards sent!!!! 37 . and allow for many cards to choose from In 2005 there were 4.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.

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

39 .

If the box is left blank. 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. Send an electronic Gift Card to the recipient.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: Employee’s Dept Number: Employee Facility Code: Job Title: Employee’s Corp Code: You have three different mailing options to choose from. Please check the appropriate box below: □ 1. □ 2. 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. Send Gift Card to me. Mail the Gift Card to recipient to the Facility Code listed above. so that I can hand deliver the award to the recipient. □ 3. Employee’s Manager Approval: 40 . at the following e-mail address: _______________________________________ Note: You will be notified via e-mail when the electronic card is sent. Please forward this form to the Employee’s Manager for approval.

Tier Two 41 .

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. 42 .

Ceridian Stars What do Ceridian Stars Win? Winners will receive $200 in cash via Ceridian’s eCash program along with a desk recognition item. 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.  Process Improvement: Delivers world class quality (Six Sigma). Gateway to President’s Circle! 43 . managers.  Team Player: Promotes working together and is a team player within his/her functional area and across the organization. All non-sales Ceridian Star winners will also be included in the President’s Circle winner selection process held in January. peers and subordinates. passion.  Lives the FISH philosophy by choosing to bring energy. and a positive attitude to the job every day.  Leadership: Supports the organization’s strategic direction through behavior and example.

Tier Three 44 .

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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. 224 winners were awarded the President’s Circle. depending on the population size of the organization. and the selection is made.President’s Circle is the Premier Recognition Program Out of the 1. Note: Management takes repeat winners into consideration if award is warranted. Circle slots. and 4% of the total population. 46 . which is equivalent to 17% of the Stars Winners.332 Stars’ Winners for 2005.

President’s Circle Trip Selections Las Vegas New York City MGM Grand W New York Times Square 47 .

President’s Circle Trip Selections New Orleans San Diego Omni Royal Orleans Radisson Hotel Harbor View 48 .

President’s Circle Trip Selections Boston Orlando Sheraton Safari Resort Boston Marriott Copley Place And San Francisco! Renaissance Stanford Court 49 .

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