Demotivate with Employee of the Month Programs

Employee-of-the-Month type programs often end up demotivating employees.

Doesn’t it make sense that if you recognize your employees you will boost morale and improve productivity?

The answer to this question is “yes.”

The mistake that companies make is that they think that by selecting one special somebody on some formulaic basis, such as monthly, that they will provide that special person with a super boost and encourage others to aspire to be placed on that “pedestal.”

Research has shown repeatedly that the selection of a weekly or monthly special person fails to have the desired impact on the poor performers and frequently results in a loss of motivation and performance among the good performers.

A recent research paper titled, “The Dirty Laundry of Employee Award Programs: Evidence from the Field,” by Harvard Professor Ian Larkin, along with professor Lamar Pierce and Timothy Gubler sheds light on the issues surrounding these special recognition programs.

This research paper studied the effect of an attendance award program and identified the following problems:

#1 Once the rules of the program were announced, employees tried to game the system.

#2 Once an employee was disqualified according to the attendance rules, he/she had little interest in maintaining good attendance.

#3 The productivity of the good employees dropped 6% to 8% as these people were upset to think that management launched a program to reward others for the positive behaviors that they were already exhibiting without any extra reward.

#4 The overall productivity of the plant declined by 1.4% due to the fact that the top performers were now demotivated for a full 8 hours, as compared to the hoped for productivity increase of the poor performers, which the award program did not achieve.

The researchers concluded that by rewarding just one behavior (e.g., attendance) the company minimized intrinsic motivation of other positive behaviors such as productivity and teamwork.

HR POINTER: The fact is that the only effective form of recognition, specifically for non-sales employees, is the attention and non-monetary recognition that a manager provides to the behaviors that the manager wants his/her employees to regularly exhibit.

The problem with this “managerial attentiveness” approach is that it takes work and most managers don’t want to do the hard work that it takes to motivate a team. Most managers want quick fix, employee-of-the-month type programs to do the work that the managers don’t take the
time to do.

One of the flaws of the attendance award program noted in the research paper was that the company was rewarding people for what they should have been doing all along.

Another flaw with the attendance award program was that the company used monetary rewards, which have been shown to have a greater likelihood that employees will “game” the system to win. Research has shown that it is better
to keep money out of such programs.

If a company is going to have a reward program, it should be for performance that is over and above the expectations of a person’s job.

Finally, Larkin noted that companies may fare better when recognizing employees by sending an email to the entire staff or calling a meeting to recognize certain workers publicly in front of peers. He said, “You can’t put a price on that. The recognition of hearing you did a good
job and that others are hearing about it is worth more than money.”