TOWERS WATSON turbocharging EE part 2.pdf

Turbocharging Employee Engagement

The Power of Recognition From Managers

Part 2 — The Circle of Recognition

Originally published by Towers Perrin

Like sports-car drivers, senior executives are constantly

looking for ways to generate more power. One of the

best ways to boost a car’s output is to turbocharge it.

Adding a turbocharger (which pumps heated air into

the cylinders) can increase horsepower by 30% to

40%. How can a company deliver a similar boost in

employee engagement? As we discussed in Part 1

of this two-part series, research that Towers Watson

conducted for O.C. Tanner in 2008 (see sidebar)

shows that employee recognition by supervisors and

managers can turbocharge employee engagement,

increasing it in some cases by as much as 50%.

the opportunity to excel and be appreciated, and that

the criteria and rules (formal or informal) must be clear

and fairly applied to all employees. Fairness isn’t just

a social nicety. Managers must follow a speci c set of

requirements to ensure fair and widespread availability of

recognition. The four key requirements for fairness are:

“

Frequent recognition is

— The consistency and equity of the

means by which recognition is delivered. People

believe processes are procedurally fair when they

can voice their opinions and have some in uence

over the outcome.

Fair outcome

like applause; it rewards

the accomplishment in

real time.”

— The degree to which a result

conforms to the individual’s personal sense of

worth or accomplishment. Distributive fairness is

heightened when people see the clear connection

between recognition and performance.

Fair treatment

Inclusiveness Creates the Opportunity

Part 1 described three requirements for effective

recognition by supervisors and managers: inclusiveness,

communication and trust. Inclusiveness begins with

frequent recognition opportunities. Can you imagine

a sports announcer who asks the crowd to hold its

applause until the end of the game? Of course not;

fans want to clap and cheer at every opportunity, and

the athletes want to hear their appreciation. The same

notion — at lower decibels — pertains at work.

Frequent recognition is like applause; it rewards the

accomplishment in real time.

— The consideration, respect and

sensitivity people receive when recognition is

delivered. Interpersonal fairness re ects how people

experience the emotional context of recognition,

whether receiving it themselves or witnessing others

being recognized.

Fair explanation

— The clarity of information

that accompanies the distribution of rewards and

recognition. The criteria for informational fairness

include reasonableness, candidness, thoroughness

and timeliness.

To be inclusive in their recognition of employees,

managers need to ensure wide availability of recognition

opportunities. This means that everyone must have

About the Recognition Study

The 2008 Global Recognition Study was

conducted by Towers Watson for O.C. Tanner, a

major provider of appreciation awards, training

and consulting. It covered 13 countries that

included major economies (Germany, Japan, the

United Kingdom and the United States), emerging

markets (Brazil, Russia, India and China) and

other selected countries that play an important

economic and sociopolitical role on the global

landscape (Australia, Mexico, Singapore, Turkey

and the United Arab Emirates). In total, the

research incorporated interviews with more than

10,000 individual workers.

Fair process

Most important of all, in giving recognition widely

and fairly, managers must do something that

seems obvious: not play favorites. It’s elementary,

but it remains a consistent concern of employees.

Worries about this clear violation of the rules of

fairness frequently emerge from surveys we perform

with individual organizations. In fact, data from the

2008 Global Recognition Study suggest that, even

in high-performing companies with robust cultures,

supervisors rarely score above 70% favorable in

avoiding playing favorites.

For recognition to be an effective engagement

driver, managers must clearly de ne performance

expectations and, with equal clarity, convey to

employees what shape the rewards for performance

will take. Research into the relationship between

employees and managers has shown that clear reward

contingency — making the “if you do this, then we

will do this” rules of recognition plain to everyone —

contributes strongly to an effective manager-employee

relationship. When employees receive appreciation

for their work, a factor called the norm of reciprocity

comes into play. It means that individuals who receive

rewards and appreciation for their performance

reciprocate with a sense of obligation to respond with

continued high performance.*

“

Trusting a manager means

having con dence that

the manager will keep the

employee’s well-being

at heart and recognize

performance when (but

only when) it is earned.”

Communication De nes the Context

and Sets the Ground Rules

Just as every car has tires, every manager and supervisor

competency model includes communication skills.

Like tires on a car, communication skills are basic

and necessary, but need to be de ned speci cally for

particular situations. In the context of recognition,

communication means more than just keeping

information owing. It means being unambiguous

about the connection between performance and

rewards of all types.

Moreover, among the fairness requirements we’ve

de ned, process-related criteria take on special

importance when supervisors communicate the rules

of contingent reward and recognition. Employees

expect those rules to govern the process at all times,

with no exceptions.

An Airline’s Recognition System

A major U.S. airline increased its emphasis on

the power of recognition by rst streamlining the

supervisor role so that supervisors could spend

the majority of their time leading teams, engaging

employees, and doing what is necessary to provide

excellent customer service and get aircraft off

the ground on time. Over time, the airline has

also refocused its criteria for promotion to

supervisor away from operational expertise and

toward social and relational skills. According to

the director of rewards and recognition, the

airline realized that it needed to avoid creating a

population of supervisors who understand the

technical aspects of serving customers and

keeping airplanes on schedule, but who have

less comfort in (and skill at) creating a productive

(and recognition-rich) work environment.

The organization will also support supervisors

in providing recognition by deploying an online

recognition tool. Using the tool, a manager will

be able to select a speci c business strategy

category within which to recognize employee

performance, order a token of recognition (a

plaque, for example) or print out a certi cate.

Company management will also be able to

track how frequently and consistently speci c

supervisors use the tool for recognizing

employee performance.

With these coordinated efforts — promoting

people who have proven relational skills, training

supervisors about the importance of recognition

and providing program support to implement

recognition activities — the organization aims

to make recognition from supervisors a key

contributor to improving the airline’s business

performance. The director of rewards and

recognition puts it this way: “Recognition by our

supervisors is not just an outcome of success —

it’s a driver of success.”

A speci c training module on recognition

and on-the-spot informal feedback has been

included in leadership training for operational

supervisors. The recognition module, along

with other leadership training content, has also

been incorporated into an online leadership site

targeted to supervisors and managers.

*Wayne, S.J., Shore, L.M., Bommer, W.H. and Tetrick, L.E., “The Role of Fair Treatment and Rewards in Perceptions of Organizational Support and

Leader-Member Exchange,” Journal of Applied Psychology, 2002, Vol. 87, No. 3, p. 590.

towerswatson.com

The Power of Recognition From Managers: Part 2 — The Circle of Recognition | May 2009 2

The second element in the communication category,

encouraging employee efforts to develop new and

better ways of doing work, takes the manager-

employee conversation to a higher level. When

employees are empowered to nd and implement

better ways to work, they have the latitude to de ne

the activities they perform and the mechanisms by

which they can do well. Control over the elements of

performance, in turn, confers greater responsibility for

results, enhances the opportunity for skill development

and makes recognition for achievements that much

richer. Other Towers Watson research shows that, for

manager communication to foster this kind of employee

self-determination, managers must do three things

consistently: be attentive (that is, willing to listen), be

receptive (willing to acknowledge the value of what

they hear) and be responsive (willing to take action).

The Circle of Recognition and Engagement

Opportunity and

Well-Being

Basic

engagement drivers,

turbocharged by…

Recognition

by Manager

for Performance

Which

produces…

Which

encompasses…

High

Performance

Inclusion +

Communication +

Trust

Yields…

Which

accelerates…

Job and Work

Environment

Which, when

focused through…

Employee

Engagement

Trust Provides the Emotional Foundation

Reciprocal trust — I trust my manager and my manager

trusts employees — establishes the emotional basis

for effective recognition. Trust denotes the faith we

have that another will act reliably in ways consistent

with our best interest. Trust entails a leap of faith.

It’s fast and simple to cross a chasm by jumping

from one cliff to the other. But it’s worth the risk only

if there’s a high, and highly predictable, chance of

success, and a good understanding of the rewards

that lie on the other side. It’s safer to take the long

way around and avoid the jump, but more costly in

time and effort. Hence, trust is a sensible strategy

when (but only when) we have a credible belief that

the risk will pay off. From the employee perspective,

trusting a manager means having con dence that the

manager will keep the employee’s well-being at heart

and recognize performance when (but only when)

recognition is earned.

Source: O.C. Tanner 2008 Global Recognition Study; Towers Perrin analysis

—

Managers plan work to focus on the most important

goals and break down department objectives into

clear responsibilities for each individual employee.

Hold people accountable for their results

—

Managers evaluate employee performance

accurately. When some employees perform below

expectations, supervisors deal with it effectively.

These seem like good practices to embrace under any

circumstances. Why do they have any special power to

increase trust and turbocharge engagement? Because

each factor, in its way, makes less daunting the leap

of faith that trust requires and renders the likely

outcomes more understandable and predictable.

“

Recognition, engagement

and performance form a

self-reinforcing system.”

Candid discourse, for example, helps people

comprehend the risks required and the rewards

available in their work. And when managers focus

effort on what really matters and translate goals

into actions each employee can take, they provide

a road map to performance — no mysteries, no

ambiguities, just a clear destination and a reason to

drive for it. Accurate performance evaluation and real

consequences for high and low performance let people

know where they stand against the agreed-upon criteria

for reward and recognition. The ultimate payoff closes

the circle: Performance produces results, outcomes

justify trust, and recognition for performance elevates

engagement.

Our analysis of the data from the 2008 Global

Recognition Study showed that trust of the manager

as a steward of employee well-being goes up when

managers:

— Communication

becomes truly personal. Not just an information

ow about reward and recognition criteria, but also

a frequent, honest, personal chat on topics like

individual performance, department and company

success requirements, and status updates.

Supervisors, in turn, listen to the opinions and

concerns of employees whenever employees have

something to say.

towerswatson.com

The Power of Recognition From Managers: Part 2 — The Circle of Recognition | May 2009 3

De ne clear and relevant performance targets

Engage in candid conversations

On the ip side, when employees perceive reciprocal

trust from management, they con rm that the

organization was right to empower them. To put

it bluntly, managers won’t empower people they

don’t trust. A manager’s trust in employees, in turn,

comes from con dence that employee decision

making will pay off for the organization as well as

for the workforce. And when employees believe in

management’s trust, they have a heightened sense

that recognition for accomplishments is deserved —

which makes it all the more powerful.

Tipping the Emotional Balance

Psychologists have identi ed a wide range

of phenomena that underscore how negative

events, feelings and impressions overpower

positive ones. Threats and losses (plummeting

investments, abandonment by friends, failure

to win the club golf championship) have greater

impact on the human psyche than gains and

victories (beating the market, making friends,

winning the championship trophy). Psychologists

call this the positive-negative asymmetry effect. 1

One social scientist has gone as far as to

estimate the relative weight of positive and

negative interactions in personal relationships.

He suggests that, for a marriage to succeed,

favorable interactions must outnumber

unfavorable ones by at least ve to one. 2

issues) to December of 2008. Factors such as

maximizing earnings and doing exciting work

also dropped in importance over this period,

corresponding to the changing economic and job

climate. Re ecting the asymmetry of emotion,

employee participants in one study mentioned

negative incidents involving managers 26% more

often than positive ones. Moreover, 82% of the

negative emotional responses were experienced

with high intensity, whereas 88% of the positive

emotional reactions carried low or moderate

intensity. 3

“

All other things being

equal, the organization

with turbocharged

employee engagement

puts itself in a strong

position to win the race.”

Recognition has a prominent place among

the manager actions that create uplifts. In

workplace research on the effects of manager

behavior, people report increased levels of

respect and admiration for managers who

consistently provide uplifts for them throughout

the day. People who experience this small

ow of positive events — a word of praise,

an expression of con dence, a tidbit of useful

information — also say they are motivated to

work harder and are more likely to go out of

their way to help their peers or take action that

supports the organization. Of course, the reverse

is also true. Managers who fail to recognize

employee success, or who are disrespectful,

arrogant or uncommunicative, create downdrafts

in employees’ emotional states. These yield

predictable and opposite results: lower job

satisfaction and more withdrawal behaviors such

as absenteeism and turnover. 4

In the current workplace, emotional asymmetry

manifests itself in the way downdrafts (events

that engender negative emotions), often created

by enterprise-wide and economy-wide factors,

seem to outnumber uplifts (workplace positives

that improve employees’ emotional states). In

particular, worries about job stability currently

dominate employee attitudes.

In a December 2008 Towers Watson survey

of employees’ views about the recession,

people reported that their number one concern

about work was having a secure position they

could count on for the long term. In fact, the

importance of job security rose signi cantly

in just the four months from August (when we

conducted an initial survey on key workplace

1 Baumeister, R.F., Bratslavsky, E., Finkenauer, C. and Vohs, K.D, “Bad Is Stronger Than Good,” Review of General

Psychology, 2001, Vol. 5, No. 4, p. 323.

2 Baumeister, ibid, p. 329.

3 Dasborough, M.T., “Cognitive Asymmetry in Employee Emotional Reactions to Leadership Behaviors,” The Leadership

Quarterly, 2006, 17, pp. 173, 174. Dasborough uses the terms “uplifts” and “hassles” to refer to events with

positive and negative effects, respectively.

4 Ibid, pp. 171, 172.

towerswatson.com

The Power of Recognition From Managers: Part 2 — The Circle of Recognition | May 2009 4

The Psychology of Recognition

As social scientists and neuroscientists study the

behaviors and attitudes of people at work, they have

uncovered some of the psychological and physiologi-

cal mechanisms that underlie the power of recognition

from managers. It turns out that recognition, engage-

ment and performance form a self-reinforcing system,

as shown in the diagram on page 3.

mood it creates, contributes to innovative thinking and

creative problem solving, both important contributors

to high performance. High performance, in turn,

produces the next round of reward and recognition,

which gives rise to engagement and innovative

solutions to problems, and the circle continues.*

In all economies, but especially troubled ones,

organizations need to recognize the engagement

power generated by this virtuous circle. It represents

one of management’s most potent tools for focusing

employees on what matters to the enterprise and

reinforcing the behaviors that contribute most directly

to strategic success. The most powerful car doesn’t

always cross the nish line rst, of course. Driver

skill enters the picture as well, as do road conditions

and a certain amount of luck. Likewise, employee

engagement isn’t enough, by itself, to create and

maintain a marketplace lead. But, all other things

being equal, the organization with turbocharged

employee engagement puts itself in a strong position

to win the race.

Recognition sparks feelings of engagement as well as

the belief that performance will yield reward. Reward

and recognition, and the events that signal them,

trigger the release of the neurotransmitter dopamine

from several sites in the brain. Research shows that

the effects of dopamine are particularly strong when

a positive event is unexpected — an unanticipated

award, for example, or impromptu public praise for

success on a risky project. When an employee has

met the de ned criteria for recognition, the moment

of recognition is expected — appreciated but not

unpredictable (particularly if the manager has met

the rules of fairness de ned earlier). But when a

manager surprises an employee — and her peers —

with unanticipated recognition, the emotional power

increases signi cantly. Dopamine, and the positive

*Ashby, F.G., Isen, A.M., Turken, A.U., “A Neuropsychological Theory of Positive Affect and Its In uence on Cognition,”

Psychological Bulletin, 1999, Vol. 106, No. 3, pp. 529, 531, 533, 534.

About Towers Watson

Towers Watson is a leading global professional services

company that helps organizations improve performance through

effective people, risk and nancial management. With 14,000

associates around the world, we offer solutions in the areas

of employee bene ts, talent management, rewards, and risk and

capital management.

Originally published by Towers Perrin.

towerswatson.com

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