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Do employee reward programs actually work?

Researcher aims to quantify value of employee engagement efforts

Suppose you were named Employee of the Month, complete with a plaque and your name in the company newsletter. Would it make you more likely to stay with your employer if a better job came along a month later?

Whether you answer “yes” or “no,” your response reveals something about your occupational satisfaction and how you perceive the overall climate of the company you work for. And it points to a larger question that human resources managers have pondered for a long time: Do reward and recognition programs actually increase employee engagement?

“There’s a growing body of research on employee engagement, but most of the reported findings are questionable due to methodological shortcomings,” says Haemoon Oh, dean of the College of Hospitality, Retail and Sport Management.

Oh and his research team plan to shore up the reliability of such research by conducting a series of experiments with hundreds of employees this year, then follow up with a national survey of several hundred different employees to see if the research findings match the survey responses. The project is funded by the Incentive Research Foundation, which seeks to advance the science of motivation.

“Of course, we have no strong prediction going into this. The research might show there’s not much causal relationship [between recognition and reward programs and employee engagement],” Oh says. “Lots of factors contribute to job satisfaction, including salary, perceived self-organization fit, organizational support, workplace stress, intrinsic job satisfaction, learning and growth opportunities.”

What that means is the effectiveness of a particular reward and recognition program with Worker A might depend on whether that person is happy with general working conditions. At the same company, Worker B might be an engaged employee and might also be very career minded. Winning an Employee of the Year award won’t keep that worker around if there are no career development opportunities.

Oh is dubious of the long-term effects of any recognition and reward program. “Those rewards have a short life,” he says. “They’re not going to keep a person in the company for long if they’re not happy. If they think collegiality is horrible or that leadership is distrustful, an award or bonus isn’t going to help retain an unhappy worker.”

Having a more empirical understanding of the effectiveness of reward and recognition programs is important, Oh says, because disengaged workers cost employers money through lost productivity, accidents, turnover and customer mistreatment.

“Our aim will be to show how influential recognition and reward is in deepening employee engagement when other organizational conditions are held constant,” he says, “and how the role of recognition and reward changes when the employees’ general organizational and occupational satisfaction/dissatisfaction is taken into consideration.”

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