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The Value of Recognition

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Did you know that according to Offers.com (online marketplace for smart shopping) more than half of purchasing decisions (53%) take into account other consumers, recommendations, and that the main source of influence in the decision to buy (74%) are recommendations from friends and family, according to the IBM Greater expectations report?

Given the data, it seems clear that the recognition that customers grant has a direct impact on business results and steers the course for companies. José Manuel Casado, president and founder of 2C Consulting in his book "Direccion Asistida" (Power Steering) described the company as "a group of people united by a common goal". Based on this assumption, personal recognition must, therefore, impact and drive the results obtained by people and by extension, organizations.

So, it’s logical to think about the expediency of defining and including active recognition policies as a fundamental part of current HR policies. When establishing policies, what aspects should be recognized, who should do it, and how should it be done? Does it motivate the worker? Does it clash or complement some other practices traditionally done? In this article we will try to address all these questions.

Let’s focus on the what and who of the first question, the answer becomes clear: like for the company in which the best response is the one clients give, in the case for organizations, it’s the managers, partners, customers, suppliers, and others who are entrusted to recognize aspects to do with how employees perform daily (activities and results). The answer to how, we will develop a little later.

On the second issue, the motivational aspect of recognition, again using a quote from José Manuel Casado, "the greatest motivating force for someone is the recognition of their effort". In this vein, we can add that the need for recognition is a universal feature. Already, when Rome was founded, we find an illustrative distinction made between "Auctoritas" and "Potestas" (authority and power), inasmuch as the former is indicated to be preferable, since whoever enjoys authority enjoys social recognition from his peers and is sanctioned by his knowledge or personal abilities to lead a praiseworthy life. In contrast, "Potestas" is nothing other than the power emanating from position. Both concepts are included in the upper levels of Maslow's pyramid (social aspects, esteem - recognition, self-realization). Along the same line, William James, considered to be one of the fathers of modern psychology, stated that the fundamental psychological need of any human being is to feel appreciated and recognized.

So, it looks like motivation is something that professionals find interesting and desirable (60% of workers would like to receive more feedback on and recognition of their work, according to Gallup). This desire becomes a need for new generations and consequently, a key source of competitive advantage; millennials do not understand the typical no news = good news. On the contrary, they are so accustomed to the social exposure that social media brings into their lives that professionally they demand and request feedback and recognition (*)

Let’s next go into detail with the third question, which links the previously mentioned aspects to the practices companies currently undertake to motivate their employees. Today the results achieved by companies is impacted by the employee recognition, measured through performance appraisals.

The standard performance models (top down) are based on managers’ opinions who value a series of qualitative and quantitative aspects as objectively as possible. However, this is at the cost of a huge investment in terms of workload for the appraisers (Deloitte, with 65,000 employees, estimated this as 2 million working hours), as well as some degrees of bias and occasionally inconsistencies.

Additionally, these standard models tend not to consider two aspects that are proving to be highly relevant from the perspective of recognition and which would define the "how" we mentioned earlier:

  • The appraiser. Except in advanced models generally little implemented (360º, 180 º) only the manager does this, usually focusing heavily on "Potestas" (the boss appraises) and little on "Autorictas".

 

  • Immediacy. Precisely because of the high consumption of time that these appraisal processes generally entail, these processes are not done more than one or, at most, twice a year. These seem to focus more on a post-mortem analysis than on realistically developing workers and guiding their activity. They measure what they get, not what they do.

 

Going back for a moment to analyse the company, in recent years the NPS model developed by Fred Reichheld, a Harvard Business School graduate who started using it as part of his work at the consultancy Bain & Company, has gained strength. Using it for a single question, "How likely is it that you recommend this product / service to a friend or family member?", customers are classified by score into 3 groups: promoters, passives and detractors and decisions are made on how to act with each of them.

This very simple and useful model may lack precision and detail; in comparison with the cumbersome quality surveys many clients did not answer or did so without interest, it receives many more responses (whoever manages performance processes or whoever must appraise can clearly identify with this). However, this model has not countermanded nor eliminated the more traditional processes of setting, reviewing, monitoring and publishing expected objectives and results.

Going back to the company’s reality and performance to the area of employee performance and management, by analogy we identify two needs:

  • Set objectives and appraise results, both in terms of employee achievement and skills, so that decisions (incentives, bonuses, career...) taken are well founded and justifiable. This part mainly benefits the company and its processes.

 

  • Recognize and give value to the employee: if possible, in real time and immediately, in such a way that the employee can orient his or her actions, maintaining the things done well and identifying (and modifying) the ones that aren’t so good. This will primarily benefit the employee and will improve their engagement level (the most common feedback mentioned earlier). Bersin by Deloitte reveals that companies with engaged employees achieve 10% increases in customer ratings ... and 20% in sales!!!

 

Bringing both aspects into effect is the complex part (and even costly in time and resources) and would be rather unfeasible without input from technology. For performance appraisal and management by objectives, HR management solutions already implemented by many companies provide support for this process. However, what happens with real-time recognition?

Again, the answer lies in technology specifically in mobility. In the current digital environment, there are technology solutions that allow us to go one step beyond traditional assessment methods and undertake real-time actions to recognize employees, peers and collaborators simply and from anywhere. The "4 principles of the open world", transparency, empowerment, collaboration and sharing, are thus fully covered, given it is possible to do "private" (1-on-1 recognition) and / or public recognition actions, both of these aspects are gathered in Maslow's pyramid of needs previously mentioned.

Yet from a practical point of view, a bit like turning water into wine; ", we can get certain aspects of the employee’s performance to be measured through recognition policies (endorsements validating these skills ), while other aspects are measured by more traditional performance appraisal systems (in which the manager’s appraisal-opinion is critical).

It is clear then that the focus is on the combination of both models, which will ease the administrative burden and optimize internal processes, thus improving the perception of those involved and the value of the results, without losing the rigor, depth and time required for appraising other aspects.

By way of conclusion and to end with one last quote from D. Norton and R. Kaplan, "What is not measured is not managed." How about we measure, and thereby manage, easier, faster and with more opinions?

*Fuente: Engaging and empowering Millennials, PwC

Enrique Sala Pascual

Enrique lleva desde el año 2000 dedicado a la consultoría de RRHH, primero en Accenture y posteriormente en Development Systems. Ingeniero de formación y humanista de vocación, su actividad en múltiples proyectos durante estos 17 años le ha permitido observar la realidad de la gestión de RRHH en múltiples empresas, sectores e iniciativas. Desde su actual posición en Meta4 su objetivo es aunar la visión de Personas, RRHH y Negocios en búsqueda de “la respuesta”: ¿qué debe hacer RRHH para dar respuesta a las necesidades del negocio gestionando la parte “Humanos” de los Recursos?

Enrique has been an HR consultant ever since 2000, first at Accenture, then in Development Systems. An engineer by profession and a humanist by vocation, his work across numerous projects over the last 17 years has allowed him to observe HR management in many companies, sectors and initiatives. In his current post at Meta4, his mission is to fuse people, HR, and business together as well as to seek the answer to: what HR must do to meet business needs through managing the “human” side of “resources”?

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