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Outsourcing Recognition Programs Eases Admin Burdens

By: Joanne Sammer

SHRM, HR Outsourcing Focus Area

As outsourcing becomes a more widespread tool in HR management, recognition and rewards programs – designed to award employees for specific achievements – are taking their place among services better handled by outside specialist.

If used appropriately recognition programs can provide incentives and reinforcement for desired employee behaviors in areas such as productivity, sales, workplace safety, years on the job and peer cooperation.

Administrative Issues

Trouble with recognition programs is that they tend to be time-consuming to administer. Even a simple program that recognizes employees for years of service requires a lot of administrative tasks just to obtain the necessary accoutrements for the program, such as plaques, certificates or gifts. As the program becomes more complex and specialized, the administration required increases significantly.

Not surprisingly, that kind of backlog in awards tends to mute the recognition program’s effectiveness. And if the employer is trying to improve safety, career longevity, productivity or some other area, the program may not be meeting its own goals.

Many companies outsource recognition programs to free up staff time and to ensure that the program is administered in a timely way. Ideally, outsourcing recognition programs should reduce staff time to just a few hours a week for oversight, responding to employee questions and concerns, and promoting the program internally.

To ease administration, many vendors provide an online interface through which HR staff and line manager can keep track of the program and specific awards, including who has been nominated, who has gotten what awards, top award getters, and how current recognition spending compares to the budget.

An online interface allows keeping track
of specific awards.

ADVO, a Windsor, Conn. – based di9rect6 mailer, decided to outsource its recognition systems when its mainframe sales commission system no longer addressed the company’s needs, according to Mike Scaringe, the company’s director of sales compensation services. In addition to managing the recognition and incentive system, the company’s vendor provides streamlined reports for sales associates. These reports used to run about 100 pages but now are limited to five pages with graphics and other visuals that show the sales rep’s current performance and reward levels and project potential awards for various levels of future performance.

Moreover, ADVO relies on data from its outsourcing partner to provide performance reporting, including incremental revenue reports, to senior management.

Greater Flexibility

As recognition programs become more complex and diverse, strong program administration becomes even more essential.

In these cases, individual employees and/or managers can nominate a peer or subordinate for a recognition reward by filling out a form, usually online. Once the nomination form has been reviewed and the award approved, the employee receives notification of the expected reward. In some cases, companies convert awards to points that employees can exchange for products, services or cash at their convenience.

With this type of flexibility, companies can also launch unique or one-time recognition programs designed to drive a certain type of behavior or result for a specific period of time. For example, the company might want to push certain products through its sales force or customer care center, achieve certain production goals, or improve attendance in a specific department. In these cases, the company can emphasize the special one-time nature of the award by making the payout slightly higher than usual or with a new type of reward or prize.

Reward Variety Is Key

When weight loss centers Jenny Craig, Inc. implemented a new points-based incentive program for its 2,700 field employees, it decided to outsource the program for a couple of reasons. The primary motive was to ensure ample variety in the merchandise for which employees can redeem their points. However, the company also wanted to reduce the internal staff time spent on administering the program, according to Teresa Howes, the company’s national operations manager.

Jenny Craig’s points program allows employees to earn a certain number of points for all recognition events, including years of service awards, employee referrals, and performance-related achievements. Each employee can bank these points in an account then redeem those points for merchandise that ranges from magazine subscriptions to electronics, jewelry and clothing.

Given the geographic and demographic diversity of its workforce, the company wanted to make sure the vendor could make a wide variety of items available for redemption so that employees would be motivated to earn more points. “We surveyed employees and found that the most important element of the recognition program is variety of merchandise,” says Howes. “Our vendor had to be able to accommodate that need and provide a level of merchandise variety as comparable to as possible.”

Further easing administration is the fact that the points program is handled through an online interface managed by the vendor. Jenny Craig staffers spend only about two to three hours a week on the program, which mostly involves answering employee questions about the program. Through the vendor’s web site, employees can track their points and shiop for merchandise to redeem.