Innovation is key

Incentives and recognitions can prove a headache for any firm – but imagine if your enterprise comprised of over 50,000 employees. Verizon does – but somehow, it manages to keep those employees on track and motivated through its incentives and recognitions programs. Verizon is split in two with regards to rewarding employees: into the categories of mass market sales and Verizon Business. Vicki Cahill is director of incentives and recognitions programs for Verizon’s Domestic Telecom group, and Barbe Mariotti is the manager of Recognition and Incentives for Verizon Business. They spoke exclusively with HRM about the role of incentives and recognitions in the workplace.

HRM. How do the incentives programs differ on each side of Verizon?

VC. On the sales side, we have incentive programs in place that are pay for performance, so they’re not cash compensation plans. They are linked directly to quota and commitment views; if you sell X amount and you meet a quota you get that item. Most of the payoffs are with points that they redeem for merchandise out of a catalogue or an online award medium.

BM. In regard to the business side of the host, Verizon Business started a year ago when Verizon merged with MCI. The result was Verizon Business, which is made up of 32,000 employees that are not sales employees. In looking at incentives programs, there were many incentives programs specific to sales organizations, so they were specific to meeting specific goals and earning some type of reward. Looking at the rest of the community we needed to have a recognition program that looked at the entire employee base.

Our compensation and benefits packages are part of what we call our total rewards package, and within that is recognition. Within that, we are trying to build a culture of recognition for our employees. We can’t say, “well you did X so you get Y” like you can in the sales organization, so in Verizon Business we needed to make this culture of recognition part of the management’s day to day duties. Like the mass market side we also use a point structure, and it’s online. We created it with flexibility in mind, because there are a number of organizations that need to use it, and be able to recognize their employees for the different milestones they hit throughout the year.

HRM. How difficult is it to implement this culture of recognition when you’ve got such a huge organization with so many employees?

VC. We have an outside third party agency that helps us in administration of the program. All the tracking is done internally then we transfer those files to the agency monthly. According to what the rule structure of the program would be, they would manipulate the data according to that rule structure then they would make deposits into employees’ accounts. Every employee has an account, and based on their results and the rules of the program would determine what their monthly payouts would be. The agency helps with all the communications, the design work, all the point deposits, administration of the results, converting it to the payout and then making deposits into employees’ accounts. There are about 15,000 employees so it’s a good-sized undertaking! But because it’s all automated it’s very do-able.

HRM. Do you gain value from using third party management?

VC. Certainly. I manage a Centre of Excellence and I have multiple channels within my group so there is vastly increased efficiency. There was a time we did manage it internally but we found it to be cost prohibitive which is why we initially looked to third party vendors. It definitely helps us do all the kinds of things we want to do in terms of complexity in the channels, and there we have sufficient skills and intellectual capital to manage it this way.

HRM. Barbe, does it differ for the business side?

BM. We also use a third party company to administer and fulfill the orders, we use their website. There is a debit card that folks can receive as an award, so they work with Visa which is something I couldn’t do internally; I can’t be a bank and do all of the other things I need to do to motivate employees! Due to the complexity of the rewards we want to offer our employees, you absolutely need to use a third party to do that in an efficient way. It would be too hard to do that in-house, besides which that’s not what we do. We want to go to a company whose expertise is managing rewards.

From a recognition side, you must ensure you have management embrace recognition, and within Verizon business we have that, it’s very important here. We understand that we want to recognize our employees for a job well done. You need metrics on the backend to measure “this is how much money we’ve spent, this is how many people we have rewarded, these are the types of rewards they’ve received”: it’s important to be able to track that. Again, the third party company comes in handy there.

HRM. What kinds of gifts do you offer your employees?

BM. Within our catalogue we have over 1200 merchandise items that they can select from: electronics, homeware, jewelry, toys, anything you can think of. In addition to that we have about 200 gift cards to local retailers, it really gives the employee the opportunity to select what they would like, rather than us just giving them a TV when they might not need one! Because Verizon Business is global we provide different resources for international employees that will work better for them, and are not cost prohibitive in terms of shipping.

VC. We also use the online catalogue but within that there’s the opportunity to customize. There’s family travel, and we have concierge service that allows employees to send flowers to their families for special occasions. If an employee has saved up enough points and wants to order something that is not in the online catalogue, the third party company will do the sourcing for them. For example we had an employee who had been saving his points from the sales group for several years, and eventually he saved enough to buy a pickup truck. The third party went out, sourced his truck for him and converted his points. We also have a site that’s a bit like eBay, where we have unusual items, like collectors baseballs, to tickets for a sold-out rock concert. Employees can bid their points for those items online. Have a wide array of award mediums is really important because we don’t want employees to feel like they’ve already earned everything they want from the catalogue. We’ve got enough out of there that they could sell forever and there would still be plenty of variety gifts, and travel, and merchandise they could select from.

HRM. Do you think having such a wide array of gifts – and corporate gifts in general – are they successful in reinforcing employee performance, do they improve loyalty and productivity in the workforce?

VC. I think corporate gifts definitely improve motivation and loyalty, but you have to be careful it doesn’t become an entitlement. We make it clear that it’s pay for performance, and we have strict goals they must obtain. But when we take employees out on group travel programs based on them being a top seller, it creates energy, momentum and excitement within the channels and does a lot towards building loyalty towards the company. One of the reasons we don’t do cash or gift cards on the sale side particularly is that you really want those tangible items; you want the employees to think and dream of earning something. It can be a very powerful tool if it’s used appropriately.

BM. I would agree. It’s about having the choice of value, so every time they use their reward, they’re going to remember that they got that working for Verizon: that’s very important. With recognition it’s always in the back of someone’s mind, “I’m trying to do a good job because I want to be recognized for this”, knowing that they might be recognized with an e-card or a thank you or praise in front of their peers. If they can also receive some points as well as being recognized in front of their peers in key meetings, all that builds on itself and managers are using that throughout the year. Rewards and incentives are really powerful tools that managers can use within their teams to keep everyone motivated.

HRM. Is there increasing demand from different departments for items?

VC. There are definitely items that are popular for our demographic. Travel is popular, so are electronics. We’re always trying to keep the latest and greatest electronics for our employees. That’s not in the online catalogue though, we have a special team at our third party agents seeks out the best in the market, and occasionally we’ll have what we call Power Sales days and we give golden ticket awards, kind of like in Willy Wonka. When they get those electronic golden tickets and redeem them, they can get things that are not in the catalogue: they might get a wide screen TV, something we were able to buy en masse at closeout, tickets to the Grammys. There is a lot variety even within the golden ticket. In general it’s pretty diverse, so we don’t get the request for more than what we offer.

BM. I would agree; it’s so diverse. The catalogue is ever changing. We used to print it out for employees to look at but in the past few years we haven’t printed it, and the main reason is because it changes so frequently, especially the electronic items. It’s constantly being updated so it would be a waste of money as it’s being changed so regularly.

HRM. Bearing in mind that the catalogue is always changing, are you seeing increased demand for electronics over household goods?

VC. Well, I wouldn’t say there’s demand on the whole for one particular item over another, and I think that is because our audience is so large and diverse. We’ve done so many different things. I don’t think there’s one item that our audience prefers over another. Probably electronics and household goods are top of the list, anytime we do anything with washers and dryers, amazingly, they love that!

BM. Based on our statistics, the majority on our side prefer electronics, and then household items (blenders, cotton candy machines, stuff like that). After that it’s pretty even. Electronics is definitely our number one item.

HRM. How do you find gift cards do?

BM. We do gift cards to retailers on the business side, that’s pretty even with the percentage for electronics as it is with gift cards. Those gift cards vary, but there’s definitely a higher demand for electronic stores, and also restaurants. But it’s hard to say if the card is being used by an individual or being gifted to give to someone else, which is not ideal for us.

VC. We never use American Express, or Visa and so on as that would be considered cash. We do some gift certificates that employees can redeem their points for but it’s not something that we get high demand for.

HRM. Have you noticed differing trends in incentives being offered over the past five years?

VC. It’s really driven by the demographic. My audience wants the latest and greatest in electronics so that would always be a demand. It will always depend on your demographic, it just so happens that’s what our people want. If it’s new and hot, they want a piece of it.

BM. Another thing we look at is how can we automate the program, what is the best technology we can use on the website to make it easy for management and employees to use. Over the past five years the need and fulfillment of that has increased. Six to seven years ago there were very few companies that had all of the elements we’ve been talking about and could handle the management of that kind of program for 15 to 30,000 people. We’ve definitely come a long way in that. I’ve certainly talked to enough third party companies who say they’ve come such a long way because we’ve asked for so many things, and we’re working together to achieve those.

HRM. When you’re offering incentives to employees do you think this can breed jealousy in the workplace? I read somewhere that it’s better to reward employees as teams so they’re not working against each other they’re competing against competitors in different industries.

VC. We haven’t seen that. Although we have some team competition, most of it is individual based, I haven’t seen jealousies and animosities within the centers. Even though we sometimes do team incentives, for the most part it’s based on individual performance.

BM. I would agree especially from a recognition standpoint, people like to see other people be rewarded and be recognized. Obviously if you can recognize a team for doing a great job for something they’ve been working on, creating that culture of recognition is really important and if the management is doing it on a regular basis there shouldn’t be that culture of animosity there.

VC. We do find that group travel is a high motivator for our employees and we do a fair amount of that, we take on domestic group travel programs quarterly for top performers. That generates the most momentum, excitement, the types of group travel programs we have. So it is beyond the catalogue and cards and merchandise.

BM. For sales employees, they’re the ones out there looking for that carrot, they’re going to come back totally motivated, talking about that trip, and you get a lot of mileage from that. There’s a lot of opportunity to drive that after the fact. From a recognition standpoint when there’s folks from a lot of different organizations and you’re trying to find something to build on for all employees a points program definitely works well because each organization can use it how they need to, where as a trip is a short lived program and obviously costs a lot of money to bring folks together, definitely more advantageous for sales organizations to do that sort of thing.