Workers at an Australian nickel refinery got a surprise at their recent Christmas party – a $10M surprise, to be accurate.
The owner of Yabulu Nickel Refinery, Clive Palmer, gave each of his 800 employees a gift in recognition for their achievements over the past 18 months. These gifts were not your normal box of chocolates or bottle of wine. They were much more.
In fact, 55 of his employees received Mercedes Benz cars, 750 will enjoy a luxury holiday for two in Fiji, and 50 who have recently joined the business received weekend stays at 5-star resorts in Queensland.
All reports suggest the workers (yes, these are rank and file workers, not senior management) are very happy with their gifts.
"The employees have worked tirelessly since July 2009 (when Palmer took over the refinery) to make this business a success, and now I want to reward them" said Palmer.
"The rewards for my entire workforce match the performance of the individuals and the business in its entirety. That's why the prizes are so big – they simply deserve it."
I'm not sure whether Mr. Palmer knows about the motivators/satisfiers theory of motivation first put forward by Fred Herzberg all those years ago, or whether he just wanted to do the right thing. Either way, he seems to have hit the nail on the head when it comes to motivating his workforce.
When Palmer bought the refinery 16 months ago from BHP Billiton, it was losing money. In fact had it not been sold, it would have been closed down.
So what's his secret of success?
Amazingly, the first thing he did when he took over, was to raise the level of pay for all employees (one of Herzberg's "satisfiers"). To many business observers, that may not have been seen as such a wise move for a company that appeared to be failing.
At the same time, he introduced a staff suggestion scheme. Now you might be thinking "staff suggestion schemes, aren't they a bit old hat? Do they ever produce real results?"
This one did. Why?
Palmer listened to the suggestions and implemented the ideas. As a result, people made more suggestions to which he again listened and implemented (readers may recognise this as paying attention to the motivators – achievement, recognition, responsibility). The scheme has been so successful that to date it has saved the company $16M.
In fact many of those who will be driving a new Mercedes are production workers, who Palmer says have been instrumental in turning the business around.
"When we took over the plant we recognised that we didn't know how to run the plant as well as the workforce. We let them go to do what they thought was best."
Since 2009, production at the refinery has gone through the roof and the company is once again turning a profit.
And so to the rewards handed out by Palmer. Are they in fact rewards (as he called them) or a form of recognition for work well done? There's a very important difference between the two and the difference is not merely semantic.
For starters, note that the gifts Palmer presented, are gifts not money (as is often the case with bonuses which are paid as a result of achieving certain targets). Here's my take on the difference between the two . . .
|Financial incentives intended to direct employee activity toward a particular outcome.||A show of appreciation for work well done (already completed), i.e. a gift.|
|The "reward" is identified and known in advance.||Given as a result of work well done – not known, nor necessarily expected.|
|Generally tangible and most often money.||Can be tangible (e.g. a gift) or intangible (e.g. praise).|
|Rewards, when included in salary, incentive or bonus schemes, are quickly forgotten.||Recognition such as a personal note or gift, can provide a lasting memory.|
|A simple contract (either written e.g. salary/bonus scheme or verbally expressed such as "If you will do... then I/we will provide...").||Unwritten, unexpected.|
|Are tactical in nature, i.e. planned for and executed.||Are psychological in nature – can be planned or spontaneous|
|Promote a person's need to feel satisfied with the organization and what it has to offer.||Promote a person's need to be acknowledged and recognized for his/her achievements.|
|Are extrinsically motivated, i.e. they satisfy the drive for food, shelter and material goods/services.||Are intrinsically motivated, i.e. the need to feel good, competent and wanted by the organization.|
|Obtain short-term results – i.e. changes in behaviour.||Promote long-term relationships and loyalty to the organization, team and/or manager.|
As managers, we need to be aware of these differences so that we can use both rewards and recognition appropriately. Each produces different results.
For example, will Palmer's people remember the pay increase or the gift? They'll probably remember both. Well, at least in the short term. They probably felt very good when their pay was increased some 16 months ago. Now, each also has a lasting memory of the appreciation shown for their hard work.
I think anyone who finds themselves driving a Mercedes Benz car five years from now, will certainly remember the circumstances. And whilst the other gifts were less in value, they were not less of value. Each will be long remembered.
As managers, most of us do not have the resources to be able to give away cars. But we can give away credit and praise for work well done. Even a small "thank you" (preferably in writing) can have a lasting impact.
If you've liked what you have read here, why not start the recognition process yourself? Find someone who has done some good work and go and thank them.