What's Happened to My Bonus?

Maintaining a motivating atmosphere may have just become much harder. Where bonus pay may be closely tied to sales growth, 'What's happened to my bonus'? is an employee question which, in the downturn, poses a particular dilemma for those responsible for serving the customer. Service needs to be stronger as the marketplace gets more competitive, yet morale and motivation on the customer frontline may well start to dip.

It is timely to take a close look at your total reward and motivation package to tune it to these straitened times.  It is the right time to reconsider how to best reward employees who have regular contact with the customer, and question the degree to which we are still motivating the right customer behaviours.

Evidence suggests that companies which succeed in fostering an engaging climate are those which put into practice a total reward and engagement strategy.  They succeed because they understand what reward is about, what will motivate their particular employees and they execute this understanding well.

Reward and Motivation

Reward is, of course, intended to motivate but sometimes it falls well short of the optimum.  Motivation is a complex process and almost certainly payment and reward will be only one important factor.  Motivation is multi-dimensional and there is no single universal answer, true for all time and all people.

Any financial reward must be part of a total approach to reward and recognition.  One of the authors conducted an extensive employee survey of motivators for a software company.  Countless surveys have found the same: that specific, positive attention to employees' wants and needs is worth a lot to many people. A letter from the Managing Director, a public recognition with a token recognition costs very little except management time and effort. Building society Nationwide has made it easy for managers to recognise its employees, through an online recognition system which allows employees to choose rewards from holidays to shopping vouchers.

Promote Clarity

Most successful companies make their total reward package very clear, so that people know how they are rewarded as part of a total package and how that reward is made up. Fairness of operating a rewards scheme is important and this justice and transparency is regularly demonstrated in those companies, by the actions of its managers.

First Direct believes customer focus means you must continue to work at understanding your employees and their needs, as well as those of the customer.  It uses employee focus groups, and one-to-one interviews not just with current employees but past ones too. It draws information from this data to reward in appropriate ways what matters and is valued by the employee. If you haven't in the last 12 months, are you still sure you have got the following up-to-date:

1. WHO are, and should you, be rewarding? - the organisation as a whole, groups or individuals?
2. WHY should they be recognised? -  e.g. for outstanding performance or improvement in service?
3. WHEN should this happen? -  on a one-off or on-going basis e.g. as part of a regular reward scheme or performance management system?
4. WHAT form should the recognition take - e.g. balance between financial and non-financial reward?
5. HOW should reward be administered - e.g. what should be the method of delivering the reward/recognition?

Review the aims of your reward package

It is valuable to clarify the key priorities, and how far they are still current. For example, is it primarily to foster commitment to service? is it principally to improve organisational or individual performance? Or perhaps it is to encourage flexibility or team-working, or to promote culture change?

Time spent clarifying what is required of a scheme is time well spent, since the outcomes will affect your judgement on whether it is still fit for purpose.  When examining incentive schemes, managers should consider carefully whether they should be rewarding the unit, teams or individuals. By rewarding the larger unit, employees are likely to become fully involved in meeting its key goals, including co-operation with other groups in the unit.  Rewarding teams encourages collaboration and achievement of team goals and has grown in popularity in recent years.  It can, however, be said to discourage recognition of individual effort; it works best in mature, easily identifiable teams which are inter-dependent for much of their work.

Rewards should be targeted but they need to take account of the complexity of customer service. Virgin Direct aims to include in its customer satisfaction measurement not just easier hard measures of customer satisfaction such as speed of telephone response, but soft measures such as enthusiasm.

Organisations that devise customer service reward and recognition schemes, should consider carefully the messages they send.  Pizza Hut rewards its employees on the basis of its 10 well-communicated values - customer focus, belief in people, recognition, coaching and support, accountability, excellence, positive energy, teamwork, openness and integrity. A software marketing company pays 70% of its commission to its telesales employees on an individual basis, but to promote team co-operative behaviour it also pays 30% on a team basis.

Expected improvements should not be rewarded at the expense of other aspects of the business.  For example, a roadside breakdown service organisation paid a bonus to call centre teams if they attained the advertised 90% of breakdowns reached in the hour.  This led to expensive contractors being called out.

To retain customer loyalty in a competitive market, DHL targeted improvement in the immediate work area and focused on three selected groups.  The individual making small suggestions received a token award and the chance of a draw for a holiday.  The work team had the chance to present the suggestion to top management and win a luxury holiday with a partner and the outstanding individual could be nominated by customers or those inside the organisation, again to win a holiday.

Simply importing a scheme from another organisation is unlikely to work well. An environmentally conscious wholesaler offered managers attractive incentive prizes.  These failed because of the team and egalitarian culture; managers were being rewarded as individuals not their teams. A large retailer introduced a service excellence scheme for all the front-line employees, only to find a groundswell of dissatisfaction from back-office teams. 

Challenging your Downturn Resilience

To assess the Downturn Resilience of your reward and recognition process, we suggest you answer these challenging questions.

• Is the reward system truly set to meet customer needs?
• Is the basis for reward clearly defined and sufficiently understood, and are incentives achievable, neither too easy nor too hard?
• Are the right customer behaviours being translated into rewards and recognition?
• Is the line management skill level sufficient for the scheme to operate as intended?

Underlying Fundamentals

Get buy-in through involving your employees

Secrecy in reward structures breeds lack of trust and poor respect.  Well-conducted employee surveys are a critical means to pinpoint areas to work on and strengths to develop.  They may identify areas outside financial reward.  For example an IT department of an insurance company valued its freedom, flexibility and interesting work far more than bonuses or length of service awards. 

Consult your customers

Ensure that you are clear what your customers value, otherwise you could end up rewarding the wrong things. 

Link to customer satisfaction

Bonuses are often linked to profit achievement, meeting personal service-related objectives, and some have a team as well as a personal component.  A UK drinks company links manager's pay increase to service as well as financial objectives.

To keep customer issues high on the agenda, Optical Express publicises letters which customers have written.  At one service excellence award winner a customer database is freely available to all employees listing customer compliments, perceptions and complaints.

Recognise the internal customer

Consideration should be given to rewarding supportive internal co-operation since many organisations neglect the needs of the internal customer to their cost. 

Taking Action

• Re-invigorate the manager's role
Managers have a key role to play in sustaining motivation amongst their team.  Successful service organisations provide   guidance, coaching and development to managers in leadership and motivation in different climates. 

Well-conducted and timely employee surveys are a significant means to challenge or confirm assumptions about motivation.

• Offer customised rewards
Reconsider whether you have the most appropriate recognition and reward for the individual and the team.  One service adviser commented that the most meaningful reward that she had ever received was when the departmental manager took time out to wash the service adviser's car as a personal thank you. Well-conducted and timely employee surveys are a significant means to challenge or confirm assumptions about motivation.

• Step up the positive feedback
Reinforce in your managers the need to give positive feedback to their employees.   FedEx rigorously champions managers as servicing their employees to service the customer.

This downturn puts the onus on the manager to offer responsive, employee-centred ways to motivate their teams. Failure to take action risks pay without performance.

Sarah Cook and Steve Macaulay. Steve Macaulay is a Learning Development Consultant at Cranfield School of Management, Sarah Cook is Managing Director of the strategic leadership and customer management specialists, The Stairway Consultancy. Sarah can be contacted by email on sarah.cook@thestairway.co.uk; tel. 01628 526535. Steve can be contacted by email on s.macaulay@cranfield.ac.uk; tel. 01234 751122.

You may publish this article in whole or in part. The only requirement is that if in print the article must state - article by Sarah Cook, Stairway Consultancy Ltd, www.thestairway.co.uk

If you use this article in whole or in part electronically, the requirement is that you inlcude the following code on the page:

The code should look like this:

Article by Sarah Cook of the Stairway Consultancy. Specialists in Leadership, Customer Services, Team Building and Personal Effectiveness.

If you do not do this you will infringe our copyright