It's natural to recognize and reward your company's top workers. But especially in a small business environment, rewarding some employees and not others can lead to hurt feelings or in extreme cases, adverse legal action. This doesn’t mean that your company’s best workers should never be awarded raises, promotions or other perks that other workers don’t receive. Instead, you should strive to do so without giving the appearance of favoritism.
Establish and Maintain a Transparent Recognition System
As the owner of your company, you have broad latitude in choosing specific rewards or recognitions to be awarded to employees. However, rewards and recognition should be administered in an even handed manner. Policies for rewards tied to specific performance benchmarks, such as sales figures, should be spelled out in writing and distributed to employees and new hires
Once a reward or recognition is in place, it should be administered equally, consistently and transparently. That is, if the policy states that employees who produce a certain dollar amount in sales receive bonuses of a specified amount, all employees who achieve that milestone should receive the same bonus amount. That said, it’s OK to award graduated bonuses for higher levels of achievement – as long as the criteria are clearly stated and equally applied. .
Administer Rewards and Recognition Evenly
Taken at face value, advising employers to administer rewards evenly would seem to contradict the ability to single out outstanding employees for recognition. However, that’s not what is being suggested here. Instead, this statement should be interpreted to mean that employees who accomplish equal levels of excellent should be rewarded evenly. For instance, if John and Jane both obtain 10 percent sales growth during the previous quarter, John should not be awarded a company car while Jane is required to settle for a one-time $500 bonus.
Likewise, awarding top performers with a previously-determined amount of paid time off over and above the amount designated for all employees is fine. However, Allowing certain employees to routinely breeze into work hours late or leave right at the stroke of five (or earlier) while everyone else is expected to toe the line is guaranteed to breed resentment, even if the offending employees are performance superstars.
Time Rewards and Recognition to Coincide with Excellent Performance
In the book Catch People Doing Something Right, author Ken Blanchard recommends managers to devote time each workday to observe their workers – not to spy on them, but to “catch people doing something right.” Upon observing praiseworthy conduct, Blanchard advocates administering immediate recognition and praise.
While it’s not necessary to “catch people doing something right” regarding perks like raises and promotions, employers should make an effort to tie rewards and recognition to tangible results or conduct. If rewards or recognition cannot be awarded immediately (for instance, annual raises), there should be some sort of announcement that raises or other awards are forthcoming that describes the achievement (s) for which employees are being rewarded.
Beware If Workers from Protected Classes Never Receive Recognition or Rewards
If the only workers in your company who receive special rewards or recognition are white, or male, or under age 40, or share come combination of these characteristics, beware. Your company may find itself on the wrong end of a discrimination lawsuit from one or more workers in your company who belong to a protected class, likely sooner rather than later.
This does not mean that you must arbitrarily promote women, people of color, mature workers or anyone else to “balance” promotions awarded to young white males. However, such circumstances should inspire a close look at your company’s hiring and employment policies to determine if factors other than merit are responsible.
Don’t Substitute Rewards or Recognition for Adequate Compensation
In April 2015, Gravity Payments, a credit and gift card processor based in Seattle, announced that by 2017, the minimum wage for all its employees would be a hefty $70,000 annually. One of the driving principles behind the move, according to founder and CEO Dan Price, was that no one who worked for his company should struggle to make a living.
Of course, paying every employee such a generous salary isn’t practical for many companies, nor is it necessary to do so. On the other hand, if your company’s salaries are well below the average for your industry and region of the country, you’ll have a hard time recruiting or retaining workers. Obliging your company’s workers to obtain adequate wages through raises or promotions while maintaining an overall substandard wage scale is no way to fill the gap.
Disclaimer: This article represents a general discussion of employee rewards and recognition. It is not intended to provide legal or specific employment policy advice. Please consult an attorney who specializes in employment law with specific questions concerning employee raises or promotions in your company.