Do Employee Recognition Programs Harm Productivity?

An employee incentive program might seem like a smart way to motivate underperformers on your team. But a workplace culture is a delicate environment and creating imbalanced competition could hurt productivity in the long run. Nonmonetary employee recognition can yield benefits for your organization, but it's important to ensure your incentive structure doesn't destroy morale among high performers.

Motivations for Employee Recognition Programs

What are your reasons for developing an official employee recognition policy? If your main goal is to inspire people to try harder, a rewards model could backfire and cause tension among different worker tiers. For instance, disengaged employees may only put in extra effort when there's strong incentive in place. And people who consistently perform at a high level often feel employee incentive programs unfairly favor newly motivated workers.

In one study at the University of California, Riverside School of Business Administration, researchers monitored an attendance-rewards program that gave qualifying workers at five industrial plants the chance to win a random prize drawing. The study showed that reward-motivated employees were more likely to revert to tardy behavior once they no longer qualified for incentives. At the same time, workers who were normally self-motivated exhibited tardy or absentee behavior more often, causing an 8 percent decline in productivity.

A key reason these programs fail is the glaring disconnect between employee and employer perceptions. To workers, employee recognition is about showing appreciation for meritable contributions, while many employers are focused on influencing employee behavior. Managers hope to get better results for their company by boosting organizational loyalty, competitive spirit and employee self-esteem, says Timothy Gubler, an assistant professor of management involved in the study.

While effective in the short term, a poorly planned rewards model may subtly undermine the point of singling out individuals for employee recognition. Most rewards are for specific measured results, and they completely overlook the initiative and commitment the most engaged employees bring to the table every day. According to Gubler, employees care about how they're viewed in relation to peers, so employee recognition must be perceived as fair to incentivize different groups.

Strategies for Success

You don't have to present nonmonetary rewards in the form of a competition. Pitting people against one another may spark ambition, but it's also a recipe for distrust and selfishness. Keep in mind, most organizational accomplishments are the work of a team, not one person. Instead of alienating an entire group by focusing on one outcome, show recognition for individual contributions that helped the company reach important goals.

Nonmonetary employee recognition can be as simple as an occasional thank you note or coffee gift card. Small gestures make employees feel valued and happy to stay with the company. If underachievers lack confidence or drive, try giving them opportunities to take a lead role on projects that leverage their strengths. Many disengaged employees are disinterested or feel their skills are being wasted. Putting them in a position to shine can reignite their motivation to do better.

If you're planning an incentive program, use feedback from employees to navigate the cultural landmines. Direct feedback can offer insight on policies that improve or kill morale. Has your organization succeeded or struggled with employee recognition programs? What steps did you take to remedy problems?

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