Rewarding stellar workplace performance requires more than boosting the numbers on workers’ paychecks. True employee engagement begins by establishing a strong corporate culture — and corporate culture has seen better days.
Gallup reports that employee engagement fell to a 10-year low last year, with only 31% of employees reporting they are engaged. The percentage of actively disengaged employees hit 17%, a level also not seen since 2014.
The Gallup survey measures 12 engagement elements. Those that saw the most significant declines last year were clarity of expectations, feeling someone at work cares about them as a person, and encouragement from someone at work to continue developing skills.
And then there’s the problem of the disengaged leading the disengaged; Only 31% of managers polled by Gallup reported they are engaged at work.
With apologies to Vince Lombardi, what the hell is going on out there?
A Mattering Deficit
This is a report on the importance and positive impact of rewarding workers with something more meaningful than cash. While it’s true that workplace recognition through awarding of merchandise, gift cards, travel, experiences and other cash alternatives is motivating, that strategy is doomed to fail over the long term if you cannot create an environment in which employees feel their work is meaningful.
“We’re not facing a ‘disengagement crisis,’ we’re facing a mattering deficit, and more apps, surveys, perks or pay increases won’t fix this. Only people can,” stated Zach Mercurio, a researcher and leadership development facilitator, in an article on workplace disengagement for Fast Company earlier this year.
Mercurio argues that employees can only feel their work matters when employers show that their workers matter.
“We can’t expect people to care if they don’t first feel cared for,” he said.
He cites a report from the Journal of Organizational Psychology that identifies three psychological states that predict engagement:
- Psychological meaningfulness – I and what I do matter
- Psychological safety – I can show my true self without fear of consequences
- Psychological availability – I have the physical and psychological resources I need to do my work
“When people feel like they matter to someone, they act like they matter, they ‘engage.’ A mistake many leaders subconsciously make is to assume that people only deserve value once they add value, but the opposite is true: People need to feel valued to add value,” Mercurio stated.
He recommends companies reskill their managers to develop three critical skill sets that he believes are necessary for cultivating a sense of mattering:
- Noticing – Seeing and hearing the details of what people are experiencing at work.
- Affirming – Providing meaningful gratitude for others’ efforts and providing meaningful
- Needing – Showing people that they and their work is indispensable.
Jacob Morgan, an author and speaker who focuses on leadership and the future of work, echoes Mercurio’s thought that better leadership training is needed to improve the workplace disengagement crisis. Managers continue to focus too much on task completion and deadlines while giving short shrift to inspiration and empowerment.
Providing natural leaders training on operational matters — processes, accountability, etc. — is the proper approach, not vice versa.
“We have too many managers that don’t know how to lead,” Morgan states in a presentation posted on YouTube late last year. “I think the problem is we have been taking people, promoting them to become managers, and then giving them leadership training. Instead, we should be taking the leaders in our companies and giving them management training.”
‘Severance’ Satirizes Disengagement and Workplace Perks
The workplace disengagement epidemic has been uncannily depicted in the Apple TV+ show “Severance,” a futuristic take on work-life balance and the meaning of work that has its fans dissecting each episode in podcasts and lengthy online discussions. The show’s premise involves a group of workers who, at the behest of a soulless company, opt to have a surgical procedure that separates their work selves from their lives outside of work. The show’s second season screened earlier this year.
Show creator Dan Erickson told The Hollywood Reporter he began writing the pilot episode of “Severance” while working a series of meaningless jobs, including one at a company that makes doors.
“Finding purpose in our work and our contributions to society is baked into us, and probably can’t be baked out,” he said. “That quality is exploited a lot, and we are often pulled into being completely identified by our jobs more than we would be naturally.”
Managers at the fictional Lumon Industries in “Severance” refuse to explain the purpose of the quixotic work that the Macrodata Refinement (MDR) team does. And talk about non- cash rewards! The company marks achievements with insultingly banal celebrations, such as melon bars, five-minute music dance experiences (MDEs) and, the highly coveted and oddly staged waffle parties. Other perks for reaching goals include erasers, Chinese finger traps and caricature portraits.
Elizabeth Spiers, a digital strategist and contributing writer for The New York Times Opinion section, wrote about the “infantilization” of office perks in “Severance.”
“They are shiny things designed to draw your attention away from the ways in which a focus on productivity and profits can be damaging to workers,” Spiers writes. “So when the company pats you on the head and offers you a tote bag or an occasional employee happy hour, it begins to feel like a bit of an insult.
“In the real world, the pandemic has deprogrammed employees of some of this indoctrination. They are starting to realize that toys are no longer an acceptable substitute for meaningful work, fair pay and adequate benefits.”
Finding the Motivational Sweet Spot
Having a clear understanding not only of what types of non- cash incentives motivate your employees, but what value is necessary to drive extra effort is vital. Research released earlier this year by the Incentive Research Foundation (IRF) gives corporate incentive users a better sense of how to achieve that clarity. (See the accompanying story, “Identifying Incentive Value Tipping Points,” in this report.)
Using the Van Westendorp survey method, a market research technique that is used to determine consumer price preferences, the IRF discovered various reward value amounts are necessary to motivate different groups of workers, in part based on their salaries. Not surprisingly, higher-salaried workers in financial and insurance industries require higher value incentives to become engaged in a program than lower-paid workers in retail sales.
Responding to our query about non-cash incentive and recognition use, Luke Siegel, founder and CEO of Raydoor, a supplier of sliding walls and doors, said, “Broadly, I have found that non-cash recognition can build culture and reinforce values all while ensuring people feel their work is seen and appreciated. We set budgets based on the value of the outcome we’re aiming to drive. Recognition doesn’t always have to be expensive to be meaningful – it just has to feel intentional. A well-timed thank-you, a creative award, or time off can go a long way when it’s tied to specific effort or success.”
Alexandr Korshykov. founder and CEO of DreamX, a Ukrainian UX/UI design and development company, said he has established a corporate culture in which top performers and team achievements are recognized with non-cash rewards because they go a lot further than cash in building strong relationships.
“People aren’t robots. They need recognition, support and a sense of purpose. Money is the foundation. But emotional connection and a sense of value — that’s what builds lasting relationships,” Korshykov said.
Brittany Truszkowski, a human resources professional who works at an Arizona law firm, echoed Korshykov’s opinion that non-cash recognition is more effective than cash in building a corporate culture that “people want to stick with.”
“We try to provide options outside of cash bonuses to motivate and recognize our team. Whether it’s a surprise team lunch after a busy week, offering staycations for employees who’ve gone above and beyond, or covering wellness perks like gym memberships, we try to match the reward to the moment,” Truszkowski said. “Even small things like posting team wins in Slack and publicly celebrating key players go a long way. People want to feel like their hard work is seen and appreciated in a way that feels personal.”
Acknowledgement and a Failure to Follow Through
Research from Gallup and Workhuman published last year shows well-recognized employees are 45% less likely to have left an employer after two years. Among employees who report receiving feedback and recognition from their manager at least once a week, 61% are engaged.
Gallup defines “high-quality recognition” as efforts that follow five essential pillars of recognition:
- Fulfills employee expectations
- Feels authentic
- Personalized to each recipient
- Equitable
- Embedded in the corporate culture
Of course, meeting most of these pillars is ideal. However, the Gallup report states that employees who receive recognition that satisfies even one of the pillars are 2.9 times as likely to be engaged as those who receive recognition that does not meet any of the pillars.
According to the Gallup/Workhuman research, company leaders acknowledge the positive impacts of non-cash recognition, yet inexplicably fail to follow through in many instances. Just 22% of employees say they get the right amount of recognition for the work they do. More than half (55%) of U.S. employees either do not receive recognition at all or do not receive recognition that satisfies any of the five pillars of strategic recognition.
This and a horde of other research makes it clear that recognizing employees beyond their paychecks has exponential benefits for companies that do it well. IRF research identified differences in what top-performing companies do regarding employee recognition. (“Top-performing” being measured in terms of revenue growth, strong customer and employee satisfaction, and low employee turnover.) It’s research that was last completed in 2020 and will be updated later this year.
Nearly eight in 10 (78%) top-performing companies have leaders who agree with the statement that rewards and recognition are a critical tool in managing the performance of workers compared to 51% of “comparator” companies that did not meet the top-performing criteria.
Importantly, the research also shows that top-performing companies measure ROI of reward programs more effectively than comparator companies.
In his article for Fast Company, Zach Mercurio reminds business leaders that making up for the “mattering deficit” can start with small steps, not grand iniatives.
“Addressing disengagement requires a commitment to relearning and scaling these essential human skills,” he said. “Leaders can start by making sure they take the time to make the next person they interact with feel noticed, affirmed and needed.”
