Richard, a friend of mine, recently faced quite a managerial dilemma. His department evaluates employees every quarter and picks out and rewards the best performer for the period. Last quarter, it was quite a tight run. There was this one employee, John, who had put in over two years of committed and dedicated service at the firm. On the other hand it was Sarah, who had joined just a couple of months back, but had been delivering at some other level altogether. It was not apples & oranges yet becoming tougher to choose.

It was a hard run. But, my friend eventually decided to give out the award to John. John had, eventually, been there for so long, and might not get another shot at it any longer. Sarah, Richer thought, can be given the prize for the next quarter. Things don't work out so simply. Sarah, who was probably left a bit disillusioned or perhaps just undaunted by the work, slackened off her pace. Her performance for this quarter was anything, but spectacular. John carried on his lulling track of mediocrity.

Organizations of all shapes and sizes have introduced bonuses, rewards, and other feats of recognition to acknowledge pioneering work done by their employees. Over 72 percent of companies use such incentive programs to motivate non-sales employees. Moreover, well-appreciated employees were more pleased with the work life, increasing productivity by 27 percent, profit by 22 percent and customer satisfaction by 38 percent. All these facts are commonsensical. Where Richard went wrong was in the matter of timing.

Most managers underestimate the impact awards and appreciation have on employee engagement. In most cases, such recognition practices are poorly managed and organized. An employee is selected, almost at random, to be given an award. Not too much of thought or analysis is put in. Instead, the underlying logic seems to be that you should not leave anyone unhappy. In extension, this practice implies that if an employee stays long enough at the firm, he/she will pick up an award, irrespective of their performance.

Such work recognition practices are flawed and inconsistent. Instead of creating a healthy competitive atmosphere at the workplace, it catalyses a lazy, indifferent and lackadaisical attitude. Moreover, it is heavily demoralizing for younger and newer employees who feel that their determined labor has gone unnoticed and unrecognized. More than anything else, it creates an impression for your firm as being ingrained, immobile and parochial.

So, what steps can you take to get the timing just right?

Continuous Evaluation. Review employee performance weekly, and provide adequate feedback, giving them scope to improve.

Consistent Practice. Identify metrics which can quanitfy performance. Use these to find out and reward deserving employees.

Merit over Tenure. Reward employees for exceptional performance right away. Do not delay and wait for another chance.

Widen the Scope. If you feel that you cannot compare metrics on a single scale, create new awards and other modes of recognition.

Rewards of Value. Plaques and trophies are fine. But for a continually over-performing employees, they serve as a reminder that they have to move on. Instead offer rewards which add value to their daily life.