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by Razor Suleman | July 23, 2010

Last month an employee in your company was named Employee of the Month, an award the organization has been presenting for years, and the criteria of which no one in your firm really knows in order to win. The award includes a plaque, a certificate, a lapel pin, or maybe even a parking spot in front of the office.

Why are companies still doing this?

Companies often use antiquated employee recognition methods and rewards, and employee of the month awards are one of them. Not only do their presentations and gifts seem cheesy or disingenuous, but employee of the month awards are commonly popularity contests or “pass around” events where most (if not all) employees will win if they wait around long enough.

The reasoning behind employee of month programs is to recognize one outstanding individual in the organization every month in an effort to increase engagement and create healthy competition among the workforce. Although the company’s intention behind it is positive, an employee of the month award is actually problematic because when one employee wins, everyone else loses. Other high-performers aren’t recognized for the positive contributions they have made to the organization, and they become demotivated.

That is not to say an employee of the month award should not be used. It can be one aspect of a rewards strategy. But in most cases, it is used as the sole method of recognition. The reality is employee of the month type programs by themselves are weak substitutes for more meaningful retention strategies.

It’s important to use a comprehensive strategy that builds a culture of engaged employees, who know that the day-to-day value and performance they contribute will be recognized by their managers. Engagement is a critical aspect of performance and retention. Employees who are most committed to perform better are much less likely to leave the organization—indicating their significance to organizational performance.

As with all other organizational activities, employee recognition and incentives must be systematic and timely. Traditional incentive and recognition programs such as president’s clubs, years of service, and employee of the month have their place, but more importantly employees need immediate recognition. Instead of waiting 29 days to recognize someone for great performance, recognize her instantly to encourage repeat positive behavior in her day-to-day activities.

An effective recognition strategy requires timely reponses to the achievement of specific behaviors and goals that are important to the organization’s success. Rather than providing plaques and other impersonal items, empower employees to choose rewards that are meaningful to them and suit their lifestyles; this is what motivates them to repeat their behaviors. By attaching recognition to a point-based program, employers can let employees accumulate good deeds for things that are important to them.

For example, imagine someone receiving an iPad for his positive contributions to your organization. Every time he uses his beloved iPad, he is reminded that it is a gift from the hard work and value he brought to your company. What gets recognized gets repeated.

Recognition and rewards go beyond monthly certificates or pins that likely end up in a drawer somewhere and forgotten. Recognize your workforce in a timely manner to encourage repeat behaviors, and provide meaningful rewards. Most companies understand recognition and incentives are important, but they need to be timely, not monthly.

The employee of the month award isn’t cutting it anymore. Progressive companies are implanting full reward and recognition programs and are seeing increases in retention, productivity, and engagement.

Razor Suleman is the CEO and founder of I Love Rewards, a provider of Web-based employee reward and recognition, sales incentive, and service award solutions. I Love Rewards works with top employers across North America to recruit, retain, and inspire employees, and drive the results most important to business success. For more information, visit www.iloverewards.com.