Michael Rose - A Guide to Non-Cash Reward: Learn the Value of Recognition; Reward Staff at Virtually No Expense; Improve Organizational Performance

A Guide to
Non-cash
Reward

Michael Rose

Publishers note

Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and authors cannot accept responsibility for any errors or omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or the author.

First published in Great Britain and the United States in 2011 by Kogan Page Limited

Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses:

Michael Rose, 2011

The right of Michael Rose to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.

ISBN 978 0 7494 6096 9

E-ISBN 978 0 7494 6097 6

British Library Cataloguing-in-Publication Data

A CIP record for this book is available from the British Library.

Library of Congress Cataloging-in-Publication Data

Rose, Michael, 1953

A guide to non-cash reward / Michael Rose.

p. cm.

Includes bibliographical references.

ISBN 978-0-7494-6096-9 -- ISBN 978-0-7494-6097-6 1. Incentive awards.

2. Performance awards. 3. Employee motivation. I. Title.

HF5549.5.I5R67 2011

658.3225dc22

2010036666

Typeset and eBook by Graphicraft Limited, Hong Kong

Printed and bound in India by Replika Press Pvt Ltd

For my parents, Felicity and the late Harry Rose

Contents

I would like to thank the 10 organizations who agreed to feature as case studies, and in particular the individuals in those organizations who were so generous with their time. In addition, individuals within the Ministry of Defence, the Cabinet Office and the Metropolitan Police were very helpful in explaining the public recognition systems they operate.

KPMG LLP not only feature as a case study, but were kind enough to review the tax section of the book. Simply Thank You were particularly helpful in providing information on using a third-party provider. The Gallup Organization were generous with their help and support.

As this book has been developed from one I wrote in 2001, Recognising Performance, I would like to thank the CIPD for publishing the first book. I would also like to acknowledge Oxford Brookes University, where I did the original research from which that first book grew and this second book has developed.

Michael Rose is an independent reward consultant through his company, Rewards Consulting Limited, www.rewardsconsulting.co.uk .

Michaels most recent corporate role was Director of Total Rewards for Aon, covering the UK and EMEA. He has also held a number of other corporate HR and reward roles and has a decades experience as a reward consultant with KPMG and Arthur Andersen.

Michael has an MA in HRM, is a Companion of the CIPD and an Associate of the CII. He was Vice President Reward for the CIPD 20068 and was voted Compensation and Benefits Professional of the Year for 2009 by Employee Benefits magazine.

Michael writes and speaks extensively on reward and HR issues. His first book, Recognising Performance , was published by the CIPD in 2001 and reprinted in 2003.

michael@rewardsconsulting.co.uk

Brains, like hearts, go where they are appreciated.

ROBERT MCNAMARA

At the heart of this book are two simple ideas. Organizations should:

• recognize the great things people do; and
• use more non-cash awards to help recognize and incentivize people.

Each of these connected ideas can deliver huge benefits for the organization at little or no additional cost. They are both pretty simple ideas, but if you get it wrong it can cost you more than not doing it in the first place. So this book will help you get it right.

gives a definition of recognition and incentives and summarizes their relationship with non-cash.

FIGURE 0.1 Non-cash awards and prizes

There are two other definitions that we should get out of the way, as they are used a lot in this book: cash and non-cash:

• Cash is what it says. It may be paid through payroll or it may be a cheque. Tax may be paid by the individual or by the organization. But once the individual has it, they can do whatever they like with it.
• Non-cash is any tangible award or gift that is not cash. It might be small and low in value like a bunch of flowers or a box of chocolates, or substantial and valuable like a flat-screen television or holiday to an exotic location. Non-cash also includes vouchers, which are close to cash but not quite the same.

For many reasons that I explain in the first chapter, I believe it is particularly important to use non-cash to support recognition programmes.

Incentive plans, on the other hand, are predominantly cash based, but can be made more effective by using non-cash as well. A study that offered either cash or non-cash incentives of an equivalent value found that the group who received non-cash awards performed twice as well as the group who received cash. But the cost was the same.

Recognition programmes typically reward behaviours that are linked to the desired organizational culture. They aim to increase employees motivation and engagement in a sustainable way. Incentives are directly linked to job performance ie specific outcomes.

Prevalence of recognition programmes

In the USA recognition programmes are much more common than in most other countries. A 2008 World at Work survey found that 89 per cent of organizations had recognition schemes, a slight increase over the data from similar surveys since 2002. While the use of recognition programmes in the UK is some way behind the USA, there has been an increase over recent years, as can be seen from a recent CIPD survey summarized in .

TABLE 0.1 Prevalence of recognition programmes in organizations reporting in the CIPD annual reward survey for 200810