Global Rewards & Recognition Program White Paper

January2006

Version3.1

  1. Introduction
  2. Purpose:

The purpose of this document is to demonstrate the link between employee engagement and recognition programs, evaluate programs and their successes in comparable organizational settings, and propose launch of an investigation and conceptual design of a company-wide, global recognition program for Accenture.

1.2.Scope:

The proposed program would establish a globally-branded recognition framework, which would be locally relevant across workforce profiles, cultures, performance categories, and generational segments. The program is intended to apply to all employees of the organization and its wholly-owned subsidiaries and would be based on behaviors and/or attributes directly linked to organizational objectives.

  1. The Case for Recognition
  2. Employee Engagement

Employee Engagement is the state of emotional and intellectual commitment to an organization or group. It is a by-product of an organizational climate that promotes shared assumptions, values, visions and beliefs about an enterprise and its function in the marketplace. It produces behavior that will help fulfill an organization’s promises to customers, and in so doing, improve business results. It is related, but not equal to, employee satisfaction and commitment to stay.

Engagement is highly correlated with key business metrics, including productivity, retention, sales growth, customer satisfaction, and Total Shareholder Return. Improving Engagement has direct, positive impacts on business metrics.

2.2.The Engagement Model:

2.3.Drivers of Engagement:

In studies of over 1,700 companies, Hewitt has categorized impacts on Engagement into 6 categories. Every organization has unique drivers and patterns for the greatest drivers of employee engagement, but trends show that Career Opportunities tends to be one of the top 3 drivers having a positive impact on Engagement in a vast majority of the companies studied. By the same token, Work Tasks and Intrinsic Motivation are cited as two of the top 3 drivers having a negative impact on Engagement in over 90% of the companies studied.

Hewitt research has shown that employers with an Engagement score of >60% enjoy a Total Shareholder return of 24%, those with Engagement scores between 40%-60% have a Total Shareholder return of 9%, and those with a score below 40% have a Total Shareholder Return of -3.4%. Overall Accenture engagement is measured at 38%.

2.4.Accenture Engagement Drivers:

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2.5.Recognition’s Link to Engagement:

Recognition is a direct positive driver to employee engagement as identified by the MCA analysis. Recognition has also been shown to engender affiliation/inclusion and perceptions of senior leadership’s commitment, thus indirectly influencing the top positive driver and top negative engagement driver indirectly.

  1. What is Recognition?

Recognition ranges from informal programs to formalized strategies that identify and reward behavior or attributes. Effective recognition programs translate corporate goals into individual employee action and in the process reinforce and align values and priorities. The most successful strategies are clearly linked to known organizational goals, are easily understood, visible, and involve a mix of types of recognition. Recognition programs range from simple verbal or written praise to exclusive, high-value awards for demonstrated performance.

3.1.Types of Recognition

Social: reinforcing behavior verbally or through intangible actions. The use of social recognition can extend to publish accounts (on a company website) that elevate the degree of recognition, reinforce the desired behavior across the constituency, provide role models for the organization, and in the process promote and reinforce best practices.

Symbolic: acknowledgement of achievement through a physical reward that is personalized to the recipient.

Tangible: rewarding achievement through the use of physical rewards or a selection of physical rewards that they can share with others.

3.2.Recognition Spend

Recognition programs are usually administered in addition tototal rewards plans (base and incentive pay). They are not successfully used to compensate for inadequate or uncompetitive base reward strategies. Research indicates that typical spend on recognition programs range from .5-3% of payroll, with most companies surveyed spending between $200-700 per person.

3.3.Benefits of Recognition

Pervasive, Relevant and Continual

Aside from its impact on employee engagement, recognition serves the purpose of compounding a performance culture through its inclusive and continual nature. Recognition programs can be highly relevant and personalized, focusing on specific segments of the performance spectrum, motivating different behaviors from and within each group, e.g., retention focused on top performers and discretionary performance from average performers. Continual allocation and utilization throughout the year keeps the employee value proposition and total reward package top of mind and also reiterates that performance is valued day to day, not just at annual review time.

Flexible—Implementation and Phasing

Recognition programs can be as simple as defining desired behaviors/attributes and enabling a culture of recognition through verbal or written praise. Once the culture of recognition is in place and the organization is enabled through technology and training, more sophisticated and higher cost/reward programs are layered onto the existing framework.

Simple

Recognition programs can be easily enabled and reinforced through simple tools and technology, generating the most effective utilization. The tools also support diagnostics and analytics, allowing continual tracking and reporting of key metrics.

Customizable

Once the behaviors have been identified for recognition, the recognition component can be customized to be locally relevant across employee groups, cultures, demographic segments while supported through the same branded framework and infrastructure.

Retentive

A recent Robert Half International study indicates that lack of recognition was cited as the second most prevalent reason for leaving an organization, after limited chances for advancement. Numerous studies have proven that people don’t leave companies, they leave their direct managers. Effective programs provide are an additional tool for managers to more effectively train, inspire and nurture others.

Motivational

Recognition programs help focus an employee’s inherent motivation by reinforcingdesired behavior and rewarding discretionary performance. Recognition also communicates the standards of performance and creates visible role models.

  1. Types of Rewards

Tangible rewards can be broadly categorized into cash and non-cash rewards. While employee surveys typically suggest that cash rewards would be most valued, post-implementation studies reveal that non-cash rewards of equal or lesser equivalent value had the most impact on motivation and were more memorable and therefore had more enduring value.

4.1.Cash vs. Non Cash:

A NorthwesternUniversity study indicates that non-cash awards are perceived as more effective motivational tools for reinforcing organizational values/culture and motivating specific behaviors by companies. Non cash programs are shown to have greater visibility and staying power (i.e., an employee remembers the award that might have otherwise been lost in a paycheck).

Employees perceive non-cash rewards as separate and distinct from cash pay. Redeeming non-cash awards does not compete with his/her sense of economic responsibility and requires no justification. As a result the earning event is more pleasurable, has greater positive impact and results in personal trophy value. These psychological triggers result in a higher motivational impact for the sponsoring company. The same or greater impact on engagement can often be achieved at a lower cost to the organization. Cash awards, on the other hand, tend to be perceived as “what was due” rather than “what was earned.” (2002 Incentive Federation Survey on Incentive Practices)

  1. Recognition Programs Best Practices

In a survey of recipients of the Malcolm Baldrige National Quality Awards, the Corporate Leadership Council noted several commonalities among world class companies, in that their recognition programs:

  • Link to business strategy, vision and quality
  • Focus on employee input and peer recognition
  • Use multi-layered programs within a system
  • Recognize both individuals and teams
  • Reward results rather than activity
  • Link rewards to performance
  • Use a strategic blend of tangible and intangible rewards
  • Utilize an intensive and personalized communications strategy
  • Include measurement and accountability
  • Track utilization within the organization

5.1.Defining Rewards

5.1.1.Flexible

Workforce demographic changes such as the increase in diversity, reflected in nationalities and ethnicities, the rise in alternative household structures and the rise in generational diversity requires a reward and recognition strategy that is not a one size fits all. Rewards need to be flexible enough to appeal to different employee generations and geographies.

5.1.2.Relevant

Maritz Incentives conducted a survey in September 2004 and of the 1,002 respondents, 73 percent agree that they prefer to choose from a variety of awards rather than receive a pre-selected item.The most successful programs have reward offerings that are:

  • Immediate
  • Proportional to the achievement
  • Desirable to the recipient
  • Visible
  • Personally Meaningful
  • Enabled

Successful recognition programs not only align behaviors with organizational goals and deliver rewards for that performance, they are also enabled through the use of technology, communications and branding strategy, and training on what behaviors to recognize and how to best deliver recognition that is personally meaningful.

  1. Case Studies

In the research conducted on competitor and client companies who have implemented such programs, the following results were achieved:

Company / Objective of Program / Impact
Global High-Tech / Create a culture of engagement and recognition
Improve loyalty and increase employee satisfaction scores /
  • 56% participation
  • Employee “Attitude Survey” scores improved an average of 30%

Utility / Increase employee satisfaction and change corporate culture /
  • ROI of program 5.25:1

Financial Services / Increase employee satisfaction /
  • Reduction in turnover and recruiting costs of $1.7 m for a pilot population of 1500

  1. Existing Recognition Programs at Accenture

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  1. Recognition at Accenture
  2. Driving Engagement

The first step to designing a reward and recognition program is to start with the end in mind. In order to design an effective rewards and recognition program, we need to identify the measure we want to drive. In this case, we can address several needs through recognition.

  1. Institutionalize performance factors and instill them as a part of the culture

Through continual reinforcement, we can convert behaviors that are measured once a year into day to day ones that drive company performance. We can also leverage this focus on performance factors throughout the year to quickly on-board new managers in high-growth markets.

  1. Move middle performers

Our total reward strategy rewards and recognizes the top 30%. Through recognition, we can encourage average performers to give discretionary effort and act as top performers in achieving more short-term goals and reinforcing top performance behaviors.

  1. Employee Engagement

As stated above, recognition has a positive impact on overall employee engagement.

  1. Retention and connection

Studies also demonstrate that when employees feel recognized for their achievements, retention is positively impacted.At Accenture, engagement has been distilled to 4 characteristics of work that employees feel positively about: Careers, Connection, Compensation, and Balance. We know that employees do not leave companies, they leave managers; recognition gives managers and leadership a powerful tool to help employees feel positively about their relationships with their direct managers and that their contributions are recognized, engendering a sense of connection.

8.2.Defining Behavior

Secondly, we need to identify the behaviors that we are recognizing. These should be aligned with organizational values, be easily understood and recognized by the targeted segments, and widely communicated. They should also align with workforce profiles and be applicable across employee demographics. In order to underscore the performance culture and reiterate the importance of the success factors that we have identified as critical to organizational performance, we recommend utilizing Performance Factors by workforce and level as behaviors for recognition.

8.3.Rewarding Achievement

We propose recognizing the desired behavior through a framework of recognition tools. At the most inclusive level, a technology solution is created to enable 360 degree recognition. The system allows any employee to access and send a recognition card to another employee, with a copy to his/her manager or career counselor recognizing demonstration of one or more of the desired behaviors. We would expect an 80% participation rate at this level.

At the more exclusive level, managers are allocated points which they can award for achieved behaviors to their direct reports or indirect reports, which the recipient can redeem for tangible rewards. We expect recipient rate to be 60% at this level.

Finally, a third tier of recognition can be layered on to create visible role models in the organization. This mechanism for rewards would be higher cost and exclusive, applicable to less than 2% of the eligible population.

8.4.Branding and Communications Strategy

Roll-out and pre-communications are an important part of the program launch, not only building enthusiasm, but also overcoming employee skepticism about reward programs that have not delivered on expectations in the past. An important element in the pre-launch communications is demonstrating leadership’s commitment to recognition as a part of our everyday performance culture.

The successful launch of a recognition program will involve a branding and communications strategy that clearly communicates what the program offers, why we are committed to recognition, how to participate in the program, and how we will measure its success.

Launching the program is only the first phase in what must be a comprehensive strategy. Regular communications will be integrated in the on-going maintenance of the program to drive utilization and further instill the performance mentality through pervasive communications of the performance criteria. A Maritz 2004 study concluded that 66% of participants who received weekly communications were happy with their programs, compared with only 33% who received communications at the launch of the program. Communication mechanisms that are highly targeted, personalized and event driven have the greatest aggregate impact and are key components to sustaining awareness and utilization. Additionally, feedback communication loops will be built into the program to pulse survey and collect employee response.

8.5.Training

As part of the launch and on-going communications strategy, we will develop a training module to instruct managers on the importance of recognition, how to give recognition both inside and outside the program, and how to utilize the tools and analytical capability of the program to motivate teams and individuals. Web based tutorials that give managers an opportunity to review both the strategic purpose and administrative mechanics of the program at their own pace and on a just-in-time basis are more effective in driving immediate adoption, ongoing utilization and long term satisfaction.

8.6.Technology

A recognition portal will manage, track, and enable the giving and receiving of recognition awards. It will facilitate redemption of awards, as well as provide management and leadership analytics and diagnostic tools to measure the utilization and distribution of recognition awards.

8.7.Design

Design of a recognition program will involve a cross-representational steering committees and project team. Development of the design will be in conjunction and with the input of the People Advocates. The project resource estimates are as follows:

Program Sponsor: Ellyn Shook

Role / Function / FTE
Program Lead / Responsible for overall program design and implementation / .5
Program Manager / Responsible for overall work plan, vendor relations and coordinating cross-functional team / .75
Program Resource HR / Aids in the design and implementation of the program / .5
Marketing & Communications Manager / Responsible for overseeing communications and branding of the program / .2
CIO Manager / Responsible for integration of technical platforms and standards / .2
Vendor Team / Responsible for the design, specifications, and build of the program and technical infrastructure / 3
People Advocates / Responsible for representing employee input to the process / As needed

8.8.Implementation

A phased implementation would begin with enablement of an inclusive, 360 degree recognition mechanism in late FY06, followed by the implementation of a reward point system in Q2FY07. A third phase of the implementation would introduce an exclusive award for fewer than 2% of the population, involving a retreat or career development opportunity with senior leadership in FY08.

8.9.Funding and Cost of Set Up

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8.10.Measuring Success and Return on Investment

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  1. Project Proposal and Timing

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