We’ve seen the results at RedBalloon – according to our recent Hewitt Employee Engagement Scorecard – the 97% we received is far above the Australian average of 54%.
Like any growing business – we don’t have cash to splash… it is not cash that has caused this phenomenon. We practice what we preach here, but when I read a recent Globoforce report…. and they were saying the same thing.
A simple authentic ‘Thank you’ can deliver more to your bottom line that giving someone a cash bonus or pay increase. Here are some research findings:

  • “Spot Awards to employees resulted in 10 times greater return on investment than an increase in base pay”  McKinsey and Company Compensation Round Table 2008.
  • “Paying people a compliment appears to activate the same reward centre in the brain as paying them cash.” The Japanese National Institute for Physiological Services.
  • “Praising employees had the same impact on job satisfaction as a 1% increase in pay, which would equate to GBP5.2bil for UK businesses alone.” White Water Strategies.
  • “Non-cash incentives were 24% more powerful at boosting performance than cash incentives.” University of Chicago 2004.

This is known as ‘psychic income’.  This is the human need to below, for social acceptance, self-esteem, feeling good about them. Cash can not meet this psychic income need.
Fred Herzberg – the Organisational behaviourist, studied employees physical, comfort, security and social needs for years. The outcome ‘salary, supervision and working conditions would only prevent people from being dissatisfied – it does not create satisfaction.’ He continued ‘there is only one tool recognition that could bring employees to the point of satisfaction. Simply put it feeds the psychic income needs.’
We all know that ‘the need for looking good’ is a very strong behavioural driver.
Globoforce states ‘To understand the value of strategic employee recognition, one must define recognition appropriately within the total rewards package. The goal of total rewards is to achieve the highest return on investment with the optimal mix of rewards. Recognition is a critical component of that package, but is often forgotten by staff at all levels who typically only see pay, benefits and perhaps equity reflected in their compensation statements.’
At RedBalloon, we have found consistent ongoing communication essential with the reward and recognition programs that we run. People need to be educated about the total ‘work experience’ not just what they get. Having a good time at work, and being noticed at work by bosses and peers is a very powerful component to this.
Cash always forms part of compensation – even if it was intended as a gift. Cash delivers on the basic needs of life. Consistent ongoing recognition programs are psychological feeding.
I remember one of our now clients decided to give a cash gift to each of its 10,000 employees – this publicly listed entity, They said that ‘This was the single worst $10million investment we ever made – it went pear shaped. Those who were highly paid never noticed it in their bank accounts, those who were part of workplace agreements had shop stewards demand next years productivity bonus. But worst of all was the bitching and snide remarks ‘She was on maternity leave for most of the year – why should she get the same amount….’
Cash is a no-no if you want to make people feel great about themselves. I’ve said before ‘If you don’t capture their hearts and minds – no amount of cash will keep them long term.’
The trick now is, of course, to get people fully engaged, the only way to do that is to share the vision of the business. To ensure that people feel a part of what they are doing – and where the business is heading.
According to Globoforce “One of the only fool proof ways to bring the company mission and values to life for employees in a meaningful way is through a strategic employee recognition program…. by tying your company values and strategic goals or objectives with every recognition. This shows employees how their jobs and personal efforts influence the success of the organisation as a whole…..Employees at all levels need to actively look for behaviours, actions and attitudes in their colleagues, superiors subordinates that are deserving of acknowledgement. Even a simple thank you. When expressed frequently in a meaningful way, and tracked over time, saying thank you can transform a company’s culture into a culture of appreciation.’
If funds are tight and there are no Christmas bonuses to be had – still acknowledge authentically what people have contributed. A handwritten card, a gift they can share with family and friends… of yeah, of course, it could be a RedBalloon Day.

Grow & Scale Your Business by Naomi Simson

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