How to judiciously design R&R based on business’ performance

When an organisation achieves a milestone, certain reward mechanisms ensure that all employees are rewarded

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The importance of a robust Rewards and Recognition (R&R) system in an organisation cannot be denied. After all, it is one of the major elements that keeps the employees happy and engaged at work.

However, there are different means of rewards and recognition adopted by organisations. From spot rewards, where an employee is rewarded instantly, to tenure-based rewards and ‘employee of the month’ recognitions. However, all rewards are generally not linked to the direct individual performance of an employee. There are certain reward mechanisms where all employees are rewarded, when a company reaches a milestone.

For instance, if a group of employees or a team is involved in spearheading the success of a project in a company — or developing a product which sees success in the market — irrespective of how much each individual contributed to the project, the whole team gets rewarded. Such rewards are known as group rewards.

Talking to HRKatha, Kamlesh Dangi, group head – HR, Incred Financial Services, opines that R&R should ideally be linked to individual performance. However, sometimes, it becomes very difficult to identify or choose the best performers.

“We need to reward only deserving employees to set an example for the others so that they may also aspire for such a recognition”

Praveer Priyadarshi, Senior HR leader

When a company gets recognised as a highly-ranked brand in the field of customer service, for instance, the whole customer-service team gets recognised or every member of the team receives a bonus. “In such cases, it would be difficult to pick and choose the best performers who contributed to this achievement. After all, the customers are interacting with everyone, and the overall performance of the team is appreciated and rewarded,” states Dangi.

“I do believe that the R&R mechanism should majorly be linked to an individual’s performance, but not all,” continues Dangi.

When the company rewards an entire team, there is a parity in terms of how much each individual gets. As Dangi explains, “many a time, the group rewards get calculated as a certain ‘X’ percentage of the total package the employee receives”.

The R&R strategy is also a reflection of a company’s culture and its values. As Jacob Jacob, group CHRO, Malabar Group, enumerates, “The core of an R&R strategy lies in the cultural fabric of a company”.

Often, when a company is performing well financially, it tends to give bonuses to all employees to celebrate its success. “This kind of an approach is the result of the R&R philosophy of a company,” asserts Jacob.

“I do believe that the R&R mechanism should majorly be linked to an individual’s performance, but not all”

Kamlesh Dangi, group head – HR, Incred Financial Services

He goes on to observe that many companies were thoughtful enough to reward their employees even during times of crisis, such as amidst the pandemic, to keep the morale of the workforce high. Employees were rewarded on the basis of how they carried themselves in a remote environment, whether they logged in on time and whether they met delivery deadlines.

In fact, Jacob believes that the true nature of a company becomes obvious during crises. Many promoter-lead companies cut down their R&R budgets and even slashed salaries during the pandemic. However, such companies paid a heavy price when the job market opened up, as all their best employees left the firm.

Praveer Priyadarshi, senior HR leader, strongly believes that to create a high-performing culture, “all rewards should be linked to an individual’s performance”.

He further believes that a company, on the whole, performs well only when all the employees in the company perform well, otherwise the poor performers slow down the growth of the company. Moreover, rewarding good performance becomes a highlight for the culture of the company. “We need to reward only deserving employees to set an example for the others so that they may also aspire for such a recognition,” explains Priyadarshi.

“The core of an R&R strategy lies in the cultural fabric of a company”

Jacob Jacob, group CHRO, Malabar Group

Priyadarshi feels that even when it comes to the performance of groups, “with a robust performance- review system in place, it is very much possible to identify the best performers”. According to him, the challenge comes when the reviewer does not give honest feedback on employee performance.

If a company follows the philosophy of rewarding only the deserving employees, even tenure-based rewards will appear fair. After all, only high-performing individuals are capable of surviving in a high-performing culture.

Clearly, the general opinion of HR leaders is that all rewards should be directly linked to individual performance, but in certain cases, it becomes challenging to identify the best performers.

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