Recognize This! – Mixing cash with employee recognition confuses the intentions and outcomes of a recognition program.

Let me be clear. Cash is not the currency of employee recognition.

Let me be equally clear. Cash IS the currency of compensation. And unless you have your base pay and compensation structured appropriately, no amount of recognition, praise or feedback will ever be perceived as sufficient or good by employees.

Ann Bares, author of the Compensation Force blog (and editor of the Compensation Café blog where I am a contributor), makes this point well in a post last week:

Quotation

“We must get cash compensation right – and do the communication and information sharing necessary for employees to understand how this critical baseline of the relationship is set and managed. If we fail this, if employees believe that there is a fundamental imbalance at the core of employment exchange, chances are good that our efforts to provide sound feedback and express genuine appreciation will fall on deaf (or at least highly skeptical) ears.”

What are the consequences of getting this wrong? Employees think, “Gee, I’m glad you appreciate what I do and I got a nice note, but I’m still paid25% less than my colleagues in the same role who I know for a fact slack off half the day.”

Once you do get your cash compensation right, then why can’t cash also be the currency of recognition? It’s simple. Because cash is the currency of compensation, it quickly becomes an expectation and entitlement when used for recognition. That’s why we see the tremendous disconnect with annual bonus programs and people threatening to quit or even sue if they don’t get their expected annual bonus.

Instead, the currency of recognition is tangible and of economic value, but not cash. Strong recognition requires timely and specific messages of thanks and praise, along with a means to choose a reward for oneself that is personal, meaningful and culturally appropriate. But it is not cash.

What “currency” does your organization use for employee recognition and reward?