Guest Blog: The Employee Rewards That Really Count

Image of Google gear showing extrinsic motivation at play as Employee Rewards

An internship at Google- examples of extrinsic employee rewards. Image by frakkin from Reddit

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Employee Rewards That Really Count

One of the biggest issues when it comes to designing a reward program for sales teams is that everyone is motivated differently.

Some people prefer extrinsic rewards – physical things such as vacations, bonuses, salary raises, trophies, or swag like the image above. Others would rather receive intrinsic motivation through recognition and public attention. Studies have been conflicted as to whether an extrinsic rewards system or an intrinsic motivational system is more effective. So how do you decide what to offer? How do you find out what your employees really want?

According to a report issued by the Incentive Research Foundation, the key to successful employee motivation is to have a well-designed program that equally emphasizes both extrinsic and intrinsic rewards.

In other words, offering raises, bonuses, and other forms of compensation is a great starting point, but a successful sales incentive program should go beyond that point.

The key to your employees finding value in the program might have nothing to do with the actual reward at all.

Extrinsic and Intrinsic Motivation

In a report published in 2007, Accenture compared sales program reward structures to Maslow’s hierarchy of needs. In that pyramid, compensation – through monetary or physical rewards – is the lowest on the scale. That means it serves the simplest level of a person’s needs – the need to provide for himself or herself and potentially a family.

Now, don’t take that the wrong way. Compensation is still valued; if it wasn’t valued, it wouldn’t be on the pyramid at all. But if all of your rewards are monetary or physical – things like tickets or restaurant gift cards – once a salesperson achieves that reward, he or she will likely lose motivation to continue on in the program.

We’ll skip the second level for now and come back to it in a moment.

The third level on the pyramid is esteem, recognition, and respect, which is equated with Maslow’s need for a sense of belonging. This should come as no surprise – public recognition is frequently used as a motivational factor for sales teams, with great success. This is higher on the pyramid, which means if an employee receives this as a reward, it’s likely going to hold a great deal of value as it serves a “higher need”in motivation.

But the step that comes in between compensation and recognition – that second level in Maslow’s pyramid – is one that is often forgotten and potentially the key to increasing the value of whatever rewards are offered, extrinsic or intrinsic.

According to Accenture, Maslow’s second-level need for feeling safe and secure is equated in the sales world as a sense of trust and assurance. This trust needs to be twofold. The salesperson needs to feel like he or she can be trusted to do the important work at hand. Likewise, he/she needs to trust that the compensation for said work is accurate and reasonable.

This means that the process that the salesperson goes through in reporting and tracking progress toward an end goal is critical to creating value in any earned reward.

For example, at the Canadian telecommunications company Telus Corporation, a simple adjustment in the way that salespeople reported information – as well as transparency in the way that rewards were correspondingly issued – resulted in a return on investment of 103 percent in the first year of implementation.

Because of the simpler reporting process, the sales team at Telus was able to spend less time doing paperwork and more time selling. And because of the added transparency of clearly defined goals and the ability to monitor where he or she stood in the process, productivity and motivation increased. The sales team trusted the rewards being issued were earned and not randomly conceived without verification.

This is where employee engagement software, or a gamification program, is especially beneficial. Many programs offer a wide variety of ways that an employee can track where he or she stands in the process of achieving a new goal or level. And because most platforms are mobile friendly, regardless of whether your salesperson is in the field or in the office, he or she can report progress across devices.

Another company that has successfully harnessed intrinsic motivation is SAP. The software company has an extremely dedicated online community called the SAP Community Network (SCN) that includes consultants, mentors, and other company-affiliated individuals. The network allows such individuals to share their technical knowledge, and help other users who are encountering issues. As of 2012, there were over 2 million members.

In order to encourage greater participation, SAP has been experimenting with different game elements on the site for over a decade. During this time, they’ve learned some valuable lessons about what their users truly cared about it. As it turns out, it’s not tangible rewards.

For a brief period of time near 2006, SAP decided to reward users who collected a certain number of points with company t-shirts. When this ultimately proved to be too logistically difficult to manage, the company decided to scrap the program and ask users how they wanted to spend the program’s remaining budget.

Surprisingly, there was almost no backlash against this, and the community decided to donate the remaining money towards the United Nations World Food Program. As it turned out, users didn’t really care about getting tangible (extrinsic) rewards for their contributions – what they valued was the social recognition (intrinsic reward) they received from being a top contributor. That’s why the site now displays both a lifetime point total and yearly point total for users – new visitors don’t feel as if they’ll never catch up, and long-term members can point to their continued involvement.

SAP now uses the community as both a resource for clients and a way to vet and recognize their best consultants. SCN point totals make up one of the factors in selecting new SAP Mentors, a highly coveted designation within the SAP community. By aligning their rewards with the internal motivations of their users and employees, SAP has successfully established a world-class community and product resource. Most importantly, they’ve avoided devaluing contributions by replacing internal motivation with external rewards.

When trying to improve workflow efficiency, or streamline internal processes, it’s tempting to take what seems like the most direct route – large prizes, usually consisting of physical goods. However, when trying to build a sustainable business model and instill best practices in your team, such rewards are often a distraction. Tying incentives to internal motivators means figuring out what actually drives your employees, and creating a holistic program to reward that. It isn’t easy, and it takes some time, but it creates far more value in the long run. In the end, that’s the type of program that will propel your company to continued success.

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