Rewards Retention Essay Example

Rewards Retention Essay Effectiveness of Reward Programs on Employee Retention Organizations are Intent on keeping the right people In the right position. When quality employees are obtained, it is important to retain them long term without loss to another agency, especially a competitor. Even in todays environment of high unemployment and sluggish economy, attracting and retaining talented employees is a top human resource concern. The cost of employee turnover is significant In the business world. Unless an employee is a low performer, the exit of a worker is a cause of concern. It is expensive to recruit and train new hires while efficiency is also Ewing lost during the orientation period. It takes time and attention away from productivity to train new employees. New employees are also more likely to make mistakes and work more slowly. Workplace focus on retention can help reduce these high turnover costs. Boucher Glenn (2012) found in a study from 1992-2007 that businesses spend one-fifth of an employees annual salary to replace that worker consistent across different pay levels. The typical cost of turnover was 21 percent of a workers annual salary. Jobs with specific skill sets, such as physicians or executives, ND jobs that require higher levels of training and education for specialization have even higher turnover costs. Jobs with low wages and minimal benefits, such as the hospitality, hotel/motel and food-service industries have the highest voluntary quit rate. While the very-highest paid employees are the most costly to replace, the costs remains significant due to the high volume of turnover for those jobs with low earnings (Boucher Glenn, 2012). As human capital declines with the retirement of baby boomers, Holloway (2006) says retaining high performers is even more essential. We will write a custom essay sample on Rewards Retention specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Rewards Retention specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Rewards Retention specifically for you FOR ONLY $16.38 $13.9/page Hire Writer A Fortune 2000 company can spend up to $6,000 to hire a single employee. Chafer (as cited by Butler, 2008) says that eighty percent of employees make the decision to stay or leave a job within the first six months of employment in a new position. The first six weeks are a pivotal period that influences what workers think about the Job. Thats why it is Imperative for a strategy for employee retention to begin with the onboard process. Employee engagement from the Initial startup period is even more important to retention than getting them enrolled in the 401 (k). Businesses should make it a priority to invest in motivated employees who are driven toward success to decrease attrition and increase retention (Butler, 2008). Gearing Conner (2002) describe how HOC a hospital management company, approached these issues. The trend noted by the study was that seventy percent of employees who left a hospital quit within the first six months of employment. The management company had the same concerns of the expenses involved in recruiting new replacements. The conclusion drawn by HOC was that the cost of replacing an employee amounted to 100 percent of the employees annual salary. To address this problem, they organized a retention strategy. One of the propositions of the strategy was to make employees feel they were of value to the hospitals. Department managers Implemented a plan to display more Interest In employee development activities and roll out positive Input about their performance by way of recognition. The study proposed that basic needs for Job satisfaction include rewards in the form tools to do the Job well. They found that these key needs have to be met for employee retention and satisfaction along with clear communication of goals that need to be achieved (Gearing Conner, 2002). It becomes apparent that salary is important, but many other factors can be Just as big an influencer on employee satisfaction and retention. Vive (2008) notes that relationships with supervisors and co-workers, opportunities for growth and development, and doing work that is personally satisfying and fulfilling are important indicators for retention. Although aware of these motivating factors, many businesses continue to build incentive programs around bonuses with little focus on monetary components of employee commitment. Being aware that money is not the only contributor to happiness, other reward programs and efforts should be considered to improve employee retention. Ester (2012) has a perspective that since the economic downturn, many companies financial status has been stagnant providing less opportunity for bonus rewards. This is leading to more rewards and recognition programs that involve monetary accolades and incentives to retain and engage employees. Todays workers consider comprehensive benefits packages, bonuses and financial rewards as an expected compensation and not an additional reward or incentive. Youll (as cited by Ester, 2012, p. 9) says, Its hard to get people to appreciate things that they think they are entitled to. Its the nonentities stuff that people really like. He encourages employers to show appreciation through perks and rewards they will remember for the rest of their careers that creates feelings of loyalty. Rosalie (2005) reminds employers that it isnt hard or expensive to say thank you or good Job. Gene Years require an increased level of validation in their Jobs. Although they rank salary and benefits as their top two priorities, Gene Years crave open dialogue between managers and employees. If they are performing a good Job, they want feedback and advancement. They have expectation of constructive criticism and only one to two years of paying dues to get promotion opportunities. When performing well, they desire additional responsibilities and the increased salary that comes with that. This kind of encouraging environment that doesnt stifle professional growth is a strong motivator for this generation to remain loyal in a Job (Rosalie, 2005). A survey of 1,500 employees in various work settings described by Robbins Judge (2013) found that recognition was the most powerful motivator. Robbins Judge also purport the position that praise is free, making recognition programs advantageous. Decreased budgets make nonofficial incentives attractive to employers as a retention initiative. Simple acts such as complimenting employees in front of other people can make workers more enthusiastic about their Jobs. Rewards at work are both intrinsic and extrinsic in nature. Rewards and recognition programs lend to intrinsic motivation through emotional responses while financial compensation is an extrinsic motivator. Although it might seem that bonuses tied to performance would be an obvious motivator, Robbins Judge propose that it could backfire. The reason is that intrinsic interest is diminished in the process. Decided (as cited by Robbins Judge, 2013, p. 265) says, Once you start making peoples rewards dependent on outcomes rather than behaviors, the evidence is people will take the shortest route to those outcomes. So it is critical to find ways to reward desired behaviors and that offers career development opportunities. They present Ducky awards to employees for helping out a colleague or helped reach company goals. Leaders at Agent send a rubber duck trophy that can be displayed as a source of pride on their desk. Then twice a year, top performers and their spouses are sent for a meeting at an opulent resort in wine country to reward their con tributions to the company. When employees achieve certain company goals, they get the opportunity to attend this conference as a popular motivator. Youll (as cited by Ester, 2012, p. 9) says, It was a great way for our partners to see what their spouses or significant others are doing every day at work and meeting the people they talk about. Essentially, when employees reach the established goals, they have increased the company profits enough to offset the cost of this conference. Salary and wages are the main reason people go to work every day, but using motivational trips and conferences as extra rewards for achievement adds a huge morale boost to the work milieu (Ester, 2012). Generation differences must be taken into consideration when designing a rewards program. Merrimack (2013) points out that there are four distinct generations at work presenting the need for tailored programs customized to career stages. This multiple generational workforce can make it a challenge to implement rewards programs with value for each distinct expectations, values and needs. Wilson (as cited by Merrimack, 2013, p. ) says To stay competitive, companies have to redefine their total rewards programs to motivate, attract and retain employees at every stage within their career and with somewhat divergent demands from their employer. The 2013 Top Five Global Employer Rewards Priorities Survey from Dolomite, the International Society of Certified Employee Benefit Specialists (SPICES) and the International Foundation of Employee Benefit Plans conducted a survey that found 56% of all employees ranked Job security among their top three concerns. 30% viewed Job security as their number one concern (Merrimack, 2013). For older workers, detriment holds a greater concern th an younger workers. Obviously, those closer to retirement are more concerned with their ability to afford retirement than workers with more working years ahead of them. Employees employed outside of the United States were less concerned with their future retirement than with their current economic security. It can be difficult to prevent rewards and recognition programs from becoming mundane and commonplace. The perfunctory employee of the quarter photo and crystal statue for years of service comes to mind. These non-monetary measures are intended to improve morale, but can become stale. Hart (as cited by Holloway, 2006, p. 88) says, The buck is not the be-all and end-all. Retention is directly tied to recognition. People Join companies, but they quit their managers. Employees want to be recognized, and money is not always the most important thing. Money cant provide attention from colleagues and superiors that meet an emotional need. Formal recognition programs pay for themselves in the long run through increased employee satisfaction and reduced turnover (Holloway, 2006). A 2004 Gallup poll reported that 65% of employees received no recognition for work, contributing to a connects that cost the U. S. Economy about $300 billion in 2000. Successful recognition programs are rewarding and meaningful for both the business and the achievement. As Hart points out, Tacky trinkets Just dont cut it (Holloway, 2006, p. 88). Before starting a rewards program, establish a benchmark for behaviors that are to be recognized. As with the generational consideration, different types of employees will also value different types of rewards. For example, medical professionals value paid continuing education courses more than a gold watch but an environmental service worker might appreciate a gold watch. So ensure to tailor the extra perks to what is most beneficial to various segments within the organization. Holloway also encourages consistency across various departments or divisions of the company. Especially significant with recognition activities is the fact that appropriate presentation is more important to employees than the gift itself. Workers appreciate the way their supervisors put a meaningful effort in the recognition. The best awards are accompanied by a good presentation by their bosses. Even a small token gift can be made memorable if sincerity is expressed during the presentation (Holloway, 2006). When an employee ties a good memory from his or her boss to a small gift, the significance tied to it takes on great important and relevance. So even if a reward is of small value, a supervisor has the ability to overcome that fact by visibly and publicly presenting the reward to the employee. Even in this time of little expendable resources for such programs, small, inexpensive efforts can go a long way in increasing overall employee satisfaction and retention (Holloway, 2006). Another way to get a big bang for your buck is to instill employee discount programs. These provide a valuable benefit that larger organizations can offer to help increase loyalty, satisfaction and retention. When implemented as a component of a work/life balance program through Human Resources, it can be an expensive measure that has far reaching effects. Savings provided to employees helps supplement income. The partnership with businesses who agree to such a discount program provides the benefit of more customers to these businesses. Employee discount programs can take many different forms, most commonly percentage discounts, a set reduction in prices, or special upgrades or access (Riggs, 2012). Tabor (as cited by Riggs, 2012, p. 24) says, The best thing about having an employee account program is that its a universal benefit, and in our years of experience weve had every type of employee from executive level to the security guard utilize the program. Working Advantage and Abeyant are two examples of rewards programs provided by Riggs that are widely utilized by corporations. Components of both programs include tickets to entertainment, sporting events, dining, travel and theme parks as well as local merchants. The group buys tickets in high volume to obtain discount prices and then in turn offers the reduced priced tickets to employees of the organizations in partnership with them. This is a measure to provide real value that helps stretch paychecks. The Human Resources department is largely responsible for announcing and distributing awareness of such programs. Email is generally the most utilized method of distribution. Some organizations use membership cards or savings guides (Riggs, 2012). Abeyant, which is used by Community Health Systems, sends a monthly email newsletter that is distributed by Human Resources throughout the workforce to advertise ongoing, seasonal, new or limited-time additional incentives to promote loyal thinking and overall happiness about employment for the agency. It is a small measure to help influence employees to remain happily employed rather than risk losing often used discounts. Ester (2012) mentions the obvious fact that social recognition programs are more prevalent among larger more profitable companies. 5% of companies in the United States have some sort of social recognition program where general workforce input votes non-managers into recognition awards. In a period of weak economy and climate of uncertainty, employers are reanalyzing these types of programs. Decreased profits lead to small budgets and more cost effective alternatives to reward employees. Organizations are readjusting across the board merit increases and raises in an effort to focus on the most deserving for rewards. Recognition is a key to continued engagement of employees. Rather than wait months for the next annual performance review and resulting merit wage increase, its a great way to recognize employees immediately after achievement of goals while encouraging other employees with the example (Ester, 2012). As cited by Ester, 2012, Selene says, Mimi get more mileage out of a dollar of recognition than a dollar in a base pay increase. In order to gain he best effectiveness, it is imperative to focus on the employees who drive business goals on a daily basis and go above and beyond normal work. The most deserving workers who exemplify company culture and desired behaviors are who should earn the social recognition. Keep an eye out for the ones who volunteer extra hours or attend after hours events and support the organization in unnoticed ways. Managers should specifically detail the steps to achieving the rewards and communicate that clearly among the workforce. There must be a balance between monetary rewards and monetary financial incentives to achieve the best retention results. Peer to peer recognition should become commonplace and a regular occurrence (Ester, 2012). Community Health Systems has implemented expectations where managers regularly round through each department and manage up employees who are found to be overachieving. Employees who are managed up, receive a thank you card from the CEO of that particular hospital. This is a daily part of the culture and activities of managers throughout the system. It appears that people have go to work to support themselves financially, but the pay itself is not what leads to a satisfied employee. Employees have an intrinsic need to feel appreciated and desired. Its not just about the money. Delicious Wagner (2011) found that increased compensation does not automatically decrease intrinsic motivation within employees. A companys culture contributes to overall employee satisfaction thereby resulting in increased retention. In order to be truly happy, employees need recognition that surpasses their paycheck. Simple appreciation for a Job well done goes a long way. Gearing Conner (2002) suggest that organizations will have the best opportunity for employee retention if they hire people who actually desire increased responsibility with no expectations of additional pay. This type of employee has intrinsic motivation for organizational success with happiness at the thought of promotion later. Care needs to be taken to strategically establish recognition and rewards programs and not Just randomly set out a staid employee of the month program. Steps need to be taken to design and implement the best rewards programs in order to get the best Determine the desired result. 2. Determine the behaviors required to get that result. 3. Reward desired behaviors long enough for the behavior to become ingrained. An example of this type of rationale is Community Health Systems High Reliability Organization system to increase safety for patients within the hospital. Part of this system involves S. A. F. E. Wherein each letter of the acronym is focused on and trained for each quarter of the year. First quarter is Support the Team, second quarter is Ask questions, third quarter is Focus on the task and fourth quarter is Effective communication every time. Throughout implementation of each phase, a 5 to 1 method is utilized that facilitates catching and rewarding five safe behaviors to every one coaching of unsafe behaviors. Studier Group teaches healthcare organizations owe important it is to measure clinical results often enough that rewards and recognition can be bestowed quickly after the behavior occurs. Being able to see progress in patient satisfaction quicker helps employees stay focused and motivated in health care. To assist in building a culture around service, it is suggested that hospitals should create a reward and recognition team that works closely with senior leadership as an internal resource for ideas. The idea is that these teams will create, identify, fix, and provide positive influences. An integral part of this culture is to optimize clinical outcomes through discharge phone calls to harvest reward and recognition. Asking patients if there was anyone who did an excellent Job or if there is anyone that should be recognized is an opportunistic way to facilitate reinforcement of desired behaviors with employees. The theory behind this is that recognized behavior gets repeated (Studier, 2003). Studier (2003, p. 50) says, When we hear a patient say someone did a good Job, we have to push for specifics, because were creating a template to align the behaviors of all staff members to match Bobs behavior with Mrs.. Hall. Being able to catch employees in the process of behavioral wins quickly with immediate recognition and reward helps hardwire the desired actions throughout the organization. Tyler (2011) emphasizes the importance of focusing on the behavior that led to the desired resul t more than the desired result itself. For example, reward for wearing safety goggles. Wearing safety goggles results in fewer accidents and injuries, which is the desired result. Employees are more likely to continue the behaviors after the reward program ends. But to address long term engagement and retention issues, incentives are less valuable. Tyler suggests that a simple thank you is more effective for these goals supporting the efficacy of Community Health Systems practice of expecting managers to regularly send thank you cards to outstanding employees. Implementation of a behavior-based incentive program is the most effective means for long term results. Eremite (as cited by Tyler, 2011) recommends recognizing as many people as possible with small rewards rather than Just a few with large rewards. Tyler described a personal rewards online program that involves gift cards for restaurants, online retailers or golfing vacations hat could either be redeemed immediately for $25 or $50 or employees could accumulate rewards for future larger purchases and save up for larger amounts. Robbins Judge (2013) agree that rewards should be linked to performance. Employees should be able to perceive a link of contingency on performance.