Using Rewards to Lead Engagement and Increase Performances

One of the biggest challenges facing HR professions is about offering rewards to employees that lead to more engagement and a positive environment thus increasing performance.

For more than 30 years Kenneth W. Thomas, Ph.D. has researched workplace motivation. He says rewards fall into two categories:

  1. Extrinsic
  2. Intrinsic

An in-depth definition of each is needed.

Extrinsic rewards are usually financial and/or tangible in nature. Examples would be pay raises, bonuses, and benefits. These are external to the work itself and their size and granting is controlled by others. An extrinsic rewards strategy has shown great success in the past. That success came at a time when intrinsic rewards were few and far between.

In contrast, intrinsic rewards are psychological in nature meaning employees get satisfaction from doing meaningful work and doing it well.

Thomas says workers in today’s age are asked more often to self-manage and use their intelligence and experience to accomplish goals laid out by their employers. That’s how workers today add value.

From there, Thomas said he and his research team found four key components of the self-management process.

  1. Purpose
  2. Purpose fulfillment
  3. Completed work
  4. Progress toward the purpose

When each component in the process is completed, there is a positive emotional charge.

“These positive charges are the intrinsic rewards that employees get from work, ranging in size from quiet satisfaction to an exuberant ‘Yes!’ They are the reinforcements that keep employees actively self-managing and engaged in their work,” Thomas wrote.

What classifies as an intrinsic reward? It’s a four-part answer.

  • A sense of meaningfulness – an understanding of the work and its importance.
  • A sense of choice - autonomy to choose how to accomplish their work and taking ownership of it.
  • A sense of competence – believing their performance meets or exceeds personal standards.
  • A sense of progress - a belief in the correct direction of the work.

All of these inform what Thomas and his partner, Professor Walter Tymon of Villanova University, call the work engagement profile. Each reward breaks down into three levels of engagement.

  1. High-range. The ability of the worker to experience all four intrinsic rewards intensely thus making them highly energized and engaged.
  2. Middle-range. The ability of the worker to experience all four intrinsic rewards, but to a moderate degree. As a result, the worker puts in a “fair day’s work,” but feels less satisfied.
  3. Low-range. These workers feel dissatisfied with their work. The work feels meaningless and pointless. This leads to a worker being cynical and resentful of their job.

When considering all of this information, look no further for success stories than American Express, Parkland Health and Hospital System, and Southwest Airlines.

American Express equally weights people achieving their goals and how they do it. By focusing on this, it creates an emotional response for the employee leading to more engagement.

Parkland is currently revamping and expanding their recognition efforts. They allow any employee to nominate another for going above and beyond to demonstrate a series of core values that include compassion, integrity, respect, collaboration, leadership, excellence, and stewardship.

“Our Employee Engagement Task Force will review and approve the nominations based on specified criteria. The honorees then receive a lapel pin for the value for which they’re being recognized,” Bhalla explained. “Once an employee is awarded all seven pins, they may join the Task Force committee to help review future nominations from a cultural perspective. They can become the think tank and ambassadors for determining recipients for various internal and external awards in the future.”

For Southwest Airlines, the company sees purpose as connecting people with what’s important to them. This translates to their employees being able to connect emotionally with the company and engage with it. In more basic terms, employees are able to make a difference and contribute to something they believe is bigger than themselves.

Learning and Developmental Rewards of Intrinsic Value

Thinking about the workforce today, it’s worth restating the search for more money is not the guiding light it once was. This is where Learning and Development play a part. It’s one of the most effective strategies to bolster employee engagement within a company.

“We believe in the 70-20-10 philosophy,” Rob Ollander-Krane said. He’s the Head of Talent Planning and Performance for Gap, Inc. “You can apply that to the idea of rewards.”

The 70-20-10 model for Learning and Development breaks down in this manner. It states 70 percent of an employee’s knowledge is gained from job-related experiences. 20 percent comes from interactions with others, and 10 percent from formal education. It was created in the 1980s by three researchers and authors researching the key developmental experiences of successful managers. Those individuals were Morgan McCall, Michael M. Lombardo, and Robert A. Eichinger.

Ollander-Krane said, “We want people to believe that it’s all about learning. We want people to get their satisfaction from having the opportunity to get better at what they love to do and to do it in a company that they are excited to be at; that they agree with and are aligned with our purpose.”

Studies by Bersin by Deloitte show companies with strong learning cultures lead to 30-50% higher engagement and retention rates. 80% of employees feel learning new skills would make them feel more engaged.

“You can pay people an equitable salary and then give them more money. That really does not drive them to engage,” Ollander-Krane said. “What drives and engages them are purpose, autonomy, and mastery.”

The Reward of Experience

According to Bersin by Deloitte, engagement scores improve by 14% when organizations put meaningful rewards programs in place. Those that have high-end recognition programs are 12 times more likely to have strong business outcomes.

To break this down, think back to the 70-20-10 rule. 20 percent focuses on learning from others, while 10 percent focuses on learning through a formal education setting, such as a classroom. And the 70 percent portion, it’s all about learning from job-related experience.

Experience in itself is can be both extrinsic and intrinsic.

To help further explain this concept, think of extrinsic as external and intrinsic as internal.

Female customer service representative rewarded by her boss

Courtesy:  Stock Photo Secrets

Skydiving or cooking classes would fall into the extrinsic rewards category. Rewards like that move into the space between the two categories when given, for instance, as a group reward. It is sufficient to say you build a rather strong bond with a fellow employee if you jump out of a plane flying a few thousand feet above the Earth’s surface.

Learning and development-based rewards are more geared toward the employee having the opportunity to grow; an intrinsic reward.

“The reward could be a training class or seminar, or a special project,” Wasserman said.

Some times that reward is less tangible, something already discussed.

Ollander-Krane says Gap Inc. believes in employee autonomy, an idea we’ve previously mentioned. Basically, Gap will give employees a goal to achieve, but will not give explicit instructions on how to reach the goal. The employee is given rewarded the ability to decide the journey taken to achieve the goal.

“To us, those are all rewards. Giving them an opportunity to learn and get better at their craft and creating ways for people to take risks and fail and get better as long as they find the insight in what they’re doing,” Ollander-Krane said. “Giving them some autonomy to choose the way feels, to them, like a reward.”