Does a Point System Work for Employee Recognition?

Such a system risks being too simple, and could turn employee recognition into a popularity contest.

I didn’t know employees sometimes were assigned points to decide which individuals should be recognized until I saw the following headline from Quartz: “Point systems used to boost workplace culture miss the point.”

The article by Laura Bratton suggests, as I would have assumed, that systems that assign points risk being too simple. Reducing recognition to points may turn recognition into a popularity contest.

It is likely that the most outgoing, visible employees will get the highest number of points. The popularity factor could be offset if the manager and formal performance reviews play the greatest role in awarding points. However, if a dimension of the rewards system relies on co-worker feedback, the points system could end up giving the highest rewards to the people who are most well-liked but not necessarily the best performers.

Bratton writes, “One issue with employee recognition platforms is that they can reinforce old systems and structures that discriminate against historically marginalized employees, said David Kryscynski, an associate management professor at Rutgers University.”

Larger Dissatisfactions at Play

Bratton also notes that rewards based on digitized points systems often are not able to make up for larger dissatisfactions on the job. So even when the points system works fairly, it can be cold comfort to receive nothing more than a gift card for your efforts.

“…point-based rewards are little consolation for more systemic dissatisfactions on the job—say, issues with pay and benefits. In the U.S., employees on the whole are dissatisfied with their salaries. Although the U.S. has made record gains in wage growth in recent years, nearly two-thirds of employed Americans say their pay hasn’t kept up with inflation. Gift cards for presentations do little to move the needle when employees are seeking raises instead,” Bratton writes.

COLAs Are Not Raises

Organizations can be hesitant to deliver true merit-based salary increases. Salary increases often are delivered as across-the-board 2 percent increases, given to all employees who have been with the company for a minimum period. Some managers erroneously refer to these salary increases as “raises.” What they really are, however, are cost-of-living adjustments (COLAs). COLAs are important, but they should not be confused with more substantial merit-based increases. Organizations need to do both—offer humane and fair COLAs that keep pace with the cost of living and determine at the end of every year which employees are most deserving of a merit-based increase that goes beyond the COLA to recognize superlative work performance.

Choosing Who Gets a Merit Increase

A manager may not know what to do if all their employees are “superlative,” but there are ways to drill down to determine which ones are more quantitatively deserving than the other(s). In sales roles, this is usually easy. In non-sales roles, a manager could look at the amount of money an employee’s business unit is generating vs. operating costs (including number of employees) and how vital the employee’s work is to that revenue generation. If they aren’t selling the product/services of the department, are they producing the products and services the salespeople are selling?

Two employees from equally profitable business units, with one employee doing it all themselves (incurring no additional labor costs) and the other with one, or more, people working under them, are not equally entitled to a merit-based increase, even if they both did a great job. I believe that the employee who is doing it all on their own and is in a business unit that is generating the same or more than others, is the one who should get the merit-based increase.

In an ideal world, all employees who do a great job would be given merit-based increases, but if you must choose (and most organizations do), you have to look at the employee’s business unit’s operating costs, and how the work they do offsets those costs. In an era of ongoing skeleton staffs, there are many employees who are holding down the fort on their own. That may not be equally true of all their colleagues.

Whatever you do, don’t call across-the-board COLAs “raises.” A true raise can be an essential way to recognize employees who may be producing the same, or more, profitability as their colleagues while doing most of it on their own.

Do you distinguish between COLAs and merit-based increases? How do you ensure that recognition is fair (not a popularity contest), and that monetary rewards go to the most deserving employees?