Employee recognition: the most effective method of creating a sustainable ‘service’ culture

Russell Flint, Accumulate’s Senior Manager Commercial Partnerships, examines the critical role employee recognition and reward can play in turning the tide of public opinion within the banking sector.

In January 2017, the ‘Retail Remuneration Review, Issues Paper’ was published as part of an independent review commissioned by the Australian Bankers’ Association into how banks pay staff (refer: retailbankingremreview.com.au). The paper provides a broad review of the role of reward in the banking and finance sector, its aim being to identify whether commissions, bonuses or other incentives might motivate bank employees to focus on their own financial interests, rather than those of their customers.

Of particular interest was the question posed relating to what it takes to create a stronger customer focus: ‘What is different between a ‘sales’ and a ‘service’ culture and how best to effect a transition to ‘service’?

While the responses to this question touch on a diverse range of issues, they really only scratch the surface regarding the role of recognition as a motivational tool to help influence behaviour that is aligned to a stronger service culture.

With that in mind, it’s important to examine in greater depth the role recognition can play in helping to promote the right behaviour – day-in, day-out – within large scale organisations.

Recognition and reward in the banking sector
Accumulate has managed employee recognition programs in the banking sector since 2005. Over that time, we have seen the nature of these programs continually evolve in line with the changing thinking on employee motivation and performance-based incentives.

Prior to 2010, these programs focused primarily on frequent recognition and reward of performance outcome-based metrics.

In recent years however, the growing trend is to structure programs in a way that more closely aligns frequent behavioural recognition with positive customer outcomes or company values, and encourages a culture of positivity and appreciation.

We are in constant dialogue with our clients about the relative merits of behaviour versus outcome-based recognition and (non-cash) reward, and we are seeing everyday employee recognition and reward schemes feature more prominently within the total reward strategies of both Big Four and challenger banks. With the looming prospect of material changes to the cash-based incentive framework, we expect banks to consider these schemes as an even more important strategic lever with which to drive motivation and improve customer outcomes.  

It is important to note that recognition and reward are not mutually exclusive in this context; (non-cash) reward plays an important role in providing positive reinforcement, where appropriate, to encourage repeat behaviour (for example, when the discretionary effort or the business impact warrants reward).

Why are these programs important in the Banking sector?
Where delivered effectively, employee recognition can be a powerful lever in communicating behavioural expectations and embedding cultural change – this is particularly important given the publicity that has centred on the need to rebuild consumer trust in this sector. When designed and executed effectively, these programs can have a profoundly positive impact:

–   Recognition programs act as powerful tools through which to communicate behavioural expectations and provide                        frequent, timely reinforcement.

–   Recognition programs help make desired behaviour more measurable and tangible within the organisation, and provide a         pool of stories of positive performance that can be shared to role model that behaviour.

–   Recognition programs foster a positive, fun, engaging and appreciative employee experience (underpinning an                                environment that promotes pride in the workplace and ultimately, quality service).

In addition, these programs can play a role in shifting the focus from sales to service, by empowering leaders and providing them with a suite of powerful tools with which to reinforce everyday good behaviour, performance and customer service.

Thinking about the future
Beyond just values-based recognition, we’ve been thinking about a significant opportunity for banks to establish recognition programs that align employees with behaviours that feed the best outcomes for customers and help in the re-establishment of trust.

We’re of course not the first to consider this approach. In September 2016 for example, Westpac publicly announced a scheme to reward tellers for customer service performance. One of the main challenges we see is that customer service metrics are often hard to collect and quantify and are subjective by nature, making them problematic as a single measure on which to base a frequent recognition scheme.

As the thinking continues to evolve in this space, we see frameworks that focus on a range of areas, including pure customer service, playing a more prominent role in embedding a stronger, customer-focussed service culture – think capability, behaviour and leveraging the vast array of metrics that are captured about an individual banker’s performance.

Beyond the banking and finance sector, there’s a growing appetite for industries to disrupt the way incentives are delivered, and ensure alignment with consumer experience and interest. A prime example is the automotive sector, which in recent weeks has publicly discussed plans to cap commissions on after-sales products (source: Drive, Fairfax Digital, ‘ACCC moves on commissions for car dealers’, 17 February 2017).

There is a clear – and largely untapped – opportunity for organisations to balance cash incentives with recognition programs to embed the desired service culture, significantly enhance customer experience and, ideally, assist in promoting trust, loyalty and advocacy.

There’s a growing appetite for industries to disrupt the way incentives are delivered, and ensure alignment with consumer experience and interest.