Rewards and Engagement: It’s All About the Consequences of Behavior

By Bob Kelleher

In business, as in parenting, you’ll find that you get the behavior that you measure and then reinforce.

If you claim that training and development is of strategic importance, for example, you have to state the end goal (to create alignment), measure it (to create accountability) and then have consequences (positive or negative) for achievement compared to those measurements. Rewards (bonuses, raises, promotions, perks, and the like) must be dependent upon an individual’s accomplishments measured against the goalposts.

Conversely, if an individual is out of alignment (in the case of training and development, if, say, a profit center manager is foregoing his training obligation in order to improve the “bottom line”), there must be a consequence (reduction in bonus, raise, or career advancement) if you expect behavior to change.

This is the essence of business actions speaking louder than words. The company’s actions must match up with what it is telling its employees if it wishes to create engagement rather than just “satisfaction.”

Money as a Motivator/De-Motivator

Some people in select functions such as commission-based sales, might be highly motivated by money. But in my experience, this is the exception. For the vast majority of people in any job, the more critical driver is achievement: they want to know that they are doing well.

As discussed throughout this book, transparency in measurement is in and of itself an engagement factor. For behavior change, employees need to know how they are personally performing, how their business unit or department is performing, and how that relates to the performance of the company as a whole. This is why I’ve become adamant about the need to introduce a balanced scorecard.

As a metaphorical exercise to introduce a workshop module on motivation, I will sometimes have senior executives work in teams to construct paper airplanes, and then participate in a contest to see which team’s plane will fly the farthest or stay aloft longest.

During the contests, you would be surprised to see these groups of often serious- minded, buttoned-down businesspeople excitedly cheering on their team’s effort. (Screams and high-fives are not at all uncommon.) Afterwards, I ask, “Why were you behaving like that over a paper airplane contest, knowing that you weren’t going to be paid any money or receive any prize if you won?”

Achievement IS a motivating factor

The answers I get, and the expressions on the group’s faces, indicate that this amusing little team-building game has demonstrated a truth that many bottom-line-oriented executives rarely think about: people don’t want to under-achieve.  Achievement – not money or prizes – is its own motivating engagement driver.

Of course, most employees would never explicitly admit that money does not motivate them. On surveys, ratings for “I am adequately compensated,” are consistently low across all industries, and with all companies. No one wants to give their company a license to cut pay or to reduce raises. But it should be noted that while money is not a primary driver of engagement, it can certainly disengage staff if they feel they’re being rewarded unfairly compared to others internally to the company or externally.

As a follow-up to the paper airplane exercise, I’ll often ask that same group of executives two questions: “If I gave each of you $5,000 tomorrow, in two or three weeks, would you be working any harder?”

Most, being honest with themselves, would have to say no. (Although at least one per session usually jokes, “Well, give us the money and we’ll let you know.”) Conversely, “If I cut your salary by $5,000 tomorrow, in two or three weeks, would you be less engaged?” In this case, it’s easy for the executives to see why there would be erosion in engagement.

Generally speaking, a good model for an engaged culture is to pay at or slightly above the midpoint in total compensation (and to offer the industry standard or slightly better in benefit programs), but to offer greater sharing in the company’s overall gains (whether that means larger bonuses and/or profit sharing).

The reasons this model works should be apparent by now: it reiterates the engagement theme of mutual commitment by the company and the individual employee. It not only says “When we win, we win together…” it proves it. Additionally, firms that cautiously manage their fixed payroll costs (i.e. base salaries) while allowing for greater upside in the variable component (bonuses and profit sharing), will better survive a “down” year.

Measurements as engagement tools

Measurement is key to showing that engagement leads to improved performance, and to strengthening that feedback loop. Historically, the gold standard of HR metrics has been voluntary turnover (and the information obtained in exit interviews) because, in contrast to many “soft” measurements, it is a quantitative data point. However, although this metric is important, it is assessing disengagement retroactively – it is trailing, not leading information.

While qualitative measurements are essential (more on this later), it is crucial to establish more proactive “hard” or quantitative data about the state of engagement at your company.

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This can consist of an increase or deterioration in employee engagement survey scores, in the number of employee referrals, in training and development participation, and in client satisfaction metrics, to name some powerful examples. These data points can then be compared alongside profit and growth numbers for a clear picture of their correlation.

Non-tolerance for non-conformance

Even in an engaged culture, there will likely be times when management will be faced with a tough decision about a top performer (whether that’s a top profit or sales producer, top client liaison, or top technical specialist) who isn’t subscribing to the same standards for engagement as the business.

When it comes to values and shared operating principles, firms need to take a no-tolerance position on non- conformance, regardless of who the non-conformer is or of his or her success in other areas.

If, for example, it is part of a company’s values and stated commitment to staff to give regular feedback, and a single manager consistently disregards the Communication Commitment directing how, when, and how often feedback is to be given, that manager is falsifying the company’s commitment. Consequences (or lack thereof) for such behavior will speak louder than words.

When consulting firm ENSR began to measure succession planning, we made it clear to our managers that we would hold them accountable for their responsibilities regarding performance reviews (one of our key qualitative metrics).

For years, getting them to complete, document, and submit their employee reviews on time had been a consistent problem. We’d tried rewarding those who hit their marks, but this was a classic case of money not being a motivator – the problem did not go away. Ultimately, we realized that our system lacked accountability in the form of consequences for non-conformance.

And amid some protest, we instituted a new policy: anyone who did not complete his or her reviews on time would not get a year-end bonus or pay increase. Response to the review deadline increased dramatically, almost immediately. (Of course, we then had to make sure that the measurement was “performance reviews done correctly” rather than just “done.”)

In this case, it’s important to recognize that while the consequences were monetary, the key to the new policy’s success was the measurement combined with the consequence, which defined the goal and the individual’s achievement relative to it. Although there may be some grumbling at first, persist in taking the hard line.

Rewards are the byproduct of successful achievement, but if there is no consequence for underachievement, there will be no behavior change. This is true regardless of what you are measuring, whether it is quality of service, mentorship, or engagement.

Excerpted from Louder Than Words: Ten Practical Employee Engagement Steps That Drive Results, by Bob Kelleher. Copyright ©2010 by Bob Kelleher. Published by BLKB Publishing, 7336 SE Tibbetts Street, Portland, Oregon, 97206. All rights reserved.

Bob Kelleher is an award-winning author, thought leader, keynote speaker, and consultant, who travels the globe sharing his insights on employee engagement, leadership and workforce trends. His newest book, Creativeship – A Novel for Evolving Leaders (BLKB Publishing, October 2012), tackles corporate malaise in a thought-provoking narrative which follows newly retired management consultant, Joe Daniels, in an exploration of what’s missing in business today.

He is the founder of the Employee Engagement Group, a global consulting firm that works with leadership teams to implement best-in-class leadership and employee engagement programs, workshops and surveys. He can be reached at rkelleher@employeeengagement.com.

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