CONDUIT

Employee recognition as a competitive advantage with Generation Y

We've been talking a lot about the aging workforce here at CONDUIT, and the role recognition can play in retaining key talent.  But there's another side to this story.

Much has been said about Generation Y in the workplace - namely their sense of entitlement, relationship to authority, insistence on autonomy, and flexibility.  A recent NPR feature highlighted how important recognition and acknowledgement of accomplishments is to them.  And there's a lot of research out there to support these claims, including Jean Twenge's book Generation Me.  In essence, she states that the pampered upbringing of this segment of 32 million (born between 1976 and 1989) rendered a sense of self-importance which translates into an aversion to criticism, and a yearning for constant praise.

This recognition can take many forms, from supervisor-to-direct report, peer-to-peer, team-based, or organization-wide.  The more creative, the better the impact.  In all, ongoing recognition provides the extrinsic motivation that can sustain employee performance and engagement across an organization's value chain.  And, it's a key ingredient to Gen Yer's sense of self-fulfillment - which is a big deal for them.  But perhaps it's even a bigger deal for compaines, as Gen Yers tend to question their employers (norms, values, and culture) as much as they question the life decisions of their parents (behaviors, values, and practices).  As a consequence, the implications for retention and morale are quite significant.

Therefore, a company's people strategy should incorporate different types of recognition, and with greater frequency.  It behooves managers and the larger system in which these employees exist to acknowledge this tendency and relate to these workers accordingly.  Yet, we're finding that there's often a disconnect between knowing and doing.  Few firms are actually putting this practice to work, but the ones that do are realizing significant gains.  And the best part is that it doesn't cost much money.

So why isn't recognition being used more?  Well, it's hard to point the finger at anybody in particular, because it's really nobody's fault; yet, herein lies the source of the problem.  Traditionally, this responsibility has not resided within any one function in an organization.  But by formalizing, consolidating, democratizing, and promoting their recognition and reward programs to all-employees, companies are laying the foundation for a culture of recognition to be adopted and, most importantly, supported by every employee.  This inclusive, empowering spirit is what has fueled the popularity of sites such as myspace.com.

This trend is not only here to stay; it's on the rise.  Not only are Gen Yers the future of your organization, but this high-performing, high-maintenance group also values companies that are committed to their personal and professional development.  So firms that visibly exhibit such principles will become more attractive to prospective and current employees alike.  This helps boost brand equity to all internal and external stakeholders (including the all-powerful customer...see Can recognition help the CMO? blog from June 7), resulting in a true competitive advantage.

CHANGE INITIATIVES ARE MORE LIKELY TO COST MONEY THAN SAVE IT

While change can involve information technology management, strategic management, and/or business process, change initiatives generally fail to live up to their expectations. According to survey only 15% of the executives polled felt that their change initiatives were completely successful. 37% said programs were only moderately successful while 33% said the change program failed to deliver the economic expectations and could be deemed a complete failure.

Failure has no bias and is ubiquitous across the organization and is just as likely to compromise the effects of cultural or operational initiatives. Several studies confirm that change successes is the exception and not the norm; Only 20% of all reengineering projects succeed just 23% of all mergers and acquisitions make back their costs, about 43% of quality-improvement efforts make satisfactory progress and only 9% of all major software development applications make up their costs. Its also worth noting that 31% of all change initiatives get cancelled before completion and more than 50% result in cost overruns by189%. 90% of all "cultural" initiatives fail to meet expected results, including a whopping 70% of all mergers and acquisitions which failed to create the desired new business culture. This depressing record is consistently dismal in large scale efforts (enterprise wide) as it is at macro level (regional, territorial, or work group related).

Failure is costly on all levels. The majority of change initiatives examined failed to live up the incremental economic gains projected in their original business case used to request and justify funding. Perhaps more disturbing to the firms long term economic outlook is the impact on human capital. Employees who resist not only reject or minimize the use of the tool but their overall performance also declines. In the midst of change employees may reduce their commitment to the organization, have lower job satisfaction and higher absenteeism and eventually may leave the company but not before they socialize their dissatisfaction with coworkers and customers.

Studies including the findings of Jim Clemmer are largely representative of the prevailing research. Clemmer suggests that companies have too many priorities and that change initiatives are hampered by uncoordinated execution, poor infrastructure and process, a lack of true leadership buy-in, and "fuzzy" employee communications. He goes on to suggest that the lack of success has qualitative ramifications. Underperforming initiatives can compromise employee morale, negatively impact productivity, fuel employee turnover and jeopardize customer satisfaction. It is this list of ancillary unintended consequences that may prove to be the most damaging for an organization looking to gain an advantage in the marketplace.

So why is the track record so disappointing? Read my white paper (under Change Management) for more. Hint it;s the inability of most firms to use recognition as a strategic driver.