Question: do incentives really work, and is money the answer?
Continuing our discussion last month about morale, the answer is an emphatic yes: carefully structured incentive programs do get results. But money is only part of the answer, in that a competitive salary is the baseline for any incentive program. Employees also appreciate even modest monetary recognition, in the form of a gift card to a popular store or a "dinner for two" certificate, for example.
So, on the premise that you're already paying competitive salaries, what kinds of incentives work best in credit unions to enhance productivity and morale? Incentives are numerous and varied, to say the least. To start, the type of incentive depends on who's asking the question. Here, it's an HR manager, so this answer deals with performance, longevity, and morale. Also, it's vital that incentives be perceived as fair by all employees; the merest hint of favoritism, for either individuals or departments, will undermine and eventually doom your incentive program.
Incentives work because we all have a basic need for recognition by others. CU employees, like employees everywhere, need to feel needed, wanted, important, and valued by the credit union. A few words of appreciation still go a long way, but everyone is motivated by tangible rewards — and not just cash rewards — as well.
Cash rewards work to change the actions of an employee, whereas non-cash rewards work to change the attitude of an employee toward the organization. Great attitudes result in great morale. Although cash rewards are easily applied to various criteria related to performance, many other types of incentives also work well. For example, one of the most highly prized incentives among employees is time off with pay. One credit union CEO instituted a day off with pay, a "Fun Day," awarded to employees during their birthday month. Far from reducing productivity, this incentive has the opposite effect: it increases productivity because it boosts everyone's morale. Another advantage of time-off incentives is that they can be used for virtually anyone in the credit union, for individuals or teams or both as a way to reward outstanding work on specific projects.
Other non-monetary incentives, which could be included in each department's budget are:
- Reserved parking spaces close to the front door for the "Employee of the Quarter"
- Dress codes that feature "casual Fridays" and/or seasonal theme days (e.g., a costume contest for Halloween)
- Breakfast with the CEO to recognize excellent team performance
- Lunch for a department that's done exceptionally well
- Subsidized commuter expenses (e.g., Metro passes)
- Gift certificates or movie tickets (e.g., small gifts that managers can award at their discretion from a "treasure chest" for the department/group)
- Onsite or discounted child care
- Gym memberships, with extra time to work out (e.g., 1.5 hours for lunch twice a week)
From the HR perspective, we also recommend building in some type of formal recognition for longevity, marked by an official ceremony, a plaque, and a cash bonus, into every credit union culture. It's critical that the other employees participate in recognizing their fellow employees. At one credit union's annual Employee Appreciation Dinner, both the "oldest" (most years of employment in the credit union) and the "newest" (most recent hire in the credit union) employees are recognized, along with others who have reached specific milestones of 5 years, 10 years, etc.
Of course, there are drawbacks to every incentive you offer. All too easily, your incentives can become seen as "entitlements" that are no longer tied to goals and performance. So it's critical that management refresh the credit union's incentives, so that employees do not take them for granted.
You also should think carefully about the results you want, because your incentives will reinforce specific behaviors. Thus, your incentive program must be multi-dimensional and multi-tiered, including both front- and back-office performance. Balance among them is essential. The goal of any incentive program is to reward both individuals and teams, with individual strengths contributing to the success of the team mission.
Which leads us to our final point: your incentives must reflect the culture of your credit union and must align with the mission and goals of your credit union. Your employees must feel that what they're doing is more than a job. As we discussed last month, employees who understand the "big picture" and know that management recognizes and appreciates their value/contribution to that big picture are employees with high morale. Incentives reinforce that morale and strengthen the employee bonds with each other and with the credit union.
Editor's Note: CURE (Credit Union Retired Executives, a resource for free, confidential management advice, is offering Credit Union Journal readers a glimpse into its with "Advice from the Brain Trust." CURE selects from among its user questions and publish the advice that was offered in response. CURE responses are put together by the group's think tank of retired credit union leaders.