The Impact of Recognition on Employee Performance: Theory, Research and Practice

Fred Luthans University of Nebraska Department of Management Lincoln, NE 68588-0491 e-mail: [email protected]

Alexander D. Stajkovic University of Wisconsin-Madison Department of Management and Human Resources

The Impact of Recognition on Employee Performance: Theory, Research and Practice Introduction Although money receives the most attention as a reinforcer and incentive motivator, and is even equated with reward systems by practicing managers, there is increasing evidence that contingently administered recognition can be a powerful reinforcer to increase employee performance. The purpose of this paper is to provide reinforcement and social cognitive theoretical explanations and research results on recognition, explore the moderators of the relationship with performance, present some specific guidelines for effective implementation, and review representative applications. Theory and Research Background As a reward for employee performance, recognition is defined as acknowledgement, approval and genuine appreciation (not phony praise). This recognition can be set up on a formal basis (e.g., employee of the month or million dollars in sales round table) or informally used by a supervisor/team leader in managing individual employee or team behavior. It can be administered on a public (staff meeting, newsletter, or banquet) or on a one-on-one private level, verbally or written. There is a fine line between recognition as defined here and other positive reinforcers or rewards such as money and feedback. For example, providing a merit increase in pay or a bonus and feedback about performance can be considered forms of recognition. However, this paper focuses on nonfinancial recognition and does not necessarily contain information about performance, although some formal recognition programs may involve prizes, dinners or plaques that cost money and both formal and informal recognition may sometimes include information about performance. The broad appeal of recognition is that most practicing managers believe it applies to everyone (top to bottom in the organization), no one gets too much of it (no satiation principle here), it is available to everyone to use, and it doesn’t cost anything. To demonstrate these claims, simply ask yourself, are you or anyone you know suffering from too much recognition? Besides this common-sense appeal of recognition as a powerful, but still not wisely used, positive reinforcer for employee performance, there is also considerable theory and research supporting its effectiveness. The Use of Recognition in Classic Behavioral Management Under classic behavioral management based on reinforcement theory (Komaki, Coombs, & Schepman, 1996), recognition is classified as a natural reinforcer (as opposed to a contrived reinforcer such as money) (Luthans & Kreitner, 1975, 1985). Recognition is treated as universally applicable and, if provided on a contingent basis in managing employee behavior, can be a very powerful reinforcer to improve performance. For example, under the Luthans and Kreitner (1975, 1985) organizational behavior modification (O.B. Mod.) approach, after the critical employee performance behaviors are identified, measured and functionally analyzed, then the intervention step can 2

contingently apply recognition to strengthen and accelerate the identified behaviors with resulting performance improvement. In a manufacturing setting, an identified performance behavior might be productive use of idle time during preventative maintenance. The contingent recognition might be the supervisor saying to a worker, “I noticed that you helped out Richard while your equipment was being serviced by the maintenance guys.” In this example, it is important to note that the recognition did not include a “gushy” thank you or phony praise for doing what this worker was supposed to be doing, but instead the worker simply “knew that his supervisor knew” that he had gone out of his way to help out a fellow worker. Because of this supervisor’s recognition, the worker will tend to repeat this helping behavior in the future. In other words, instead of receiving no consequence for this helping behavior (which will lead to extinction) or a punishing consequence of having to work harder (which will lead to a decrease), the supervisor providing contingent recognition as a positive reinforcer will strengthen the worker’s behavior and enhance the productivity of the unit. In a service setting such as a bank, an identified performance behavior of tellers might be providing customers information about various products that the bank offers. As in the manufacturing example above, upon observing this behavior the supervisor would provide contingent recognition by saying something like, “I overheard your explanation to Mr. Smith about how to obtain, use, and the advantages of a debit card. I’ll bet we will be adding him to our debit card business.” The recognition is a positive reinforcer for the service behavior leading to increased performance. A large number of studies over the years have verified that recognition is indeed a powerful positive reinforcer for employee behaviors leading to performance improvement in both manufacturing (e.g., Luthans, Maciag, & Rosenkrantz, 1983; Ottemann & Luthans, 1975; Welsh, Luthans, & Sommer, 1993) and service (e.g., Luthans, Fox, & Davis, 1991; Snyder & Luthans, 1982) organizations. A recent metaanalysis of all studies over the past 20 years that used the O.B. Mod. approach to behavioral management using recognition as the intervention found an average of 15 percent performance improvement in service applications. When recognition was combined with performance feedback an average increase of 41 percent in manufacturing and 30 percent in service organizations was found (Luthans & Stajkovic, 1999; Stajkovic & Luthans, 1997). Interestingly, the use of monetary reinforcement as the intervention had about the same impact as the recognition in the service applications, but when the recognition was combined with performance feedback, it had about the same impact as the money in manufacturing and about twice the impact as the money in service applications (30% vs. 14%). A Social Cognitive Explanation of Recognition The research and application of recognition in classic behavioral management is based on reinforcement theory. This reinforcement approach assumes the causal agents of employee behaviors are found in the functional relationship between the environmental antecedents and consequences and the behavior they effect (Komaki, 3

1986; Komaki, Coombs, & Shepman, 1996; Luthans & Stajkovic, 1999). However, Bandura (1986, 1997) and others (e.g., Locke, 1997) have argued that reinforcement theory falls short of providing the needed conceptual process-oriented analysis as to the nature and operating processes of outcome determinants such as recognition. Social cognitive theory (Bandura, 1986, 1997, 1999; Maddux, 1995) is emerging as a richer, more comprehensive explanation of organizational behavior in general (Stajkovic & Luthans, 1998 b) and incentive motivators such as recognition in particular (Stajkovic & Luthans, 1999). Starting with Bandura’s (1999) premise that human agency is grounded in social systems, the social cognitive explanation of recognition as an incentive motivator for employee performance would have three dimensions: (1) its outcome utility; (2) its informative content; and (3) the mechanisms through which it operates to control employee behavior (Stajkovic & Luthans, 1999). An analysis of recognition along these three lines can lead to a more comprehensive, additive understanding than is provided by reinforcement theory alone. Outcome Utility of Recognition. Bandura (1986) argues that recognition derives its outcome utility from its predictive value; not just from the social reactions themselves as reinforcement theory would suggest. Recognition (acknowledgement and approval) precedes and can lead to desired employee outcomes such as a promotion, a raise or an assignment to a prestigious, desired project. In other words, recognition may have considerable outcome utility and incentive value for future employee behavior. Also, it should be noted that recognition given by those who have the power and resources to make desired outcomes a reality for the recipient, will have stronger effects than those recognition givers who do not have such power or resources. For instance, recognition from the boss may have a stronger effect than recognition from an outside vendor. However, recognition givers who have considerable respect and credibility (e.g., an admired peer or mentor) may lead to desirable outcomes such as being included in the in-group and thus also have considerable impact. As Bandura (1986) points out, “it is difficult to conceive of a society populated with people who are completely unmoved by the respect, approval, and reproof of others” (p. 235). Taken to the workplace, recognition having a positive impact on performance can draw from this outcome utility explanation from social cognitive theory. Specifically, this social cognitive approach predicts that employees will engage in behaviors leading to performance improvement that receive recognition (especially from those that can provide desired outcomes, either material or social). Informative Content of Recognition. Compared to performance feedback, recognition as defined here has relatively less informative content as suggested by social cognitive theory. Yet, because the guideline for providing effective recognition insists on specifics, there is informative content value in what is being expressed. In other words, instead of a generic phrase such as “good job,” the recognition giver provides detailed information (e.g., “I know that you

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stayed late last night to finish the graphs that I gave you at the last minute. They made my presentation a great success in the meeting this morning.”) This detailed form of recognition not only conveys acknowledgement and genuine appreciation, but also information for reinforcing behavior that can lead to improved performance. Standardized phrases such as “good job” have no such informative content that can lead to performance improvement; it becomes an “empty reward,” not a positive reinforcer detailing how to improve performance. Recognition as a Regulatory Mechanism. The outcome utility value and informative content of recognition suggest a richer explanation and predictive properties. The third dimension of a social cognitive explanation of recognition would be its role as a regulatory mechanism for human action. It has been argued (Stajkovic & Luthans, 1999) that the basic human capability of forethought (Bandura, 1986; Stajkovic & Luthans, 1998b) is the means to cognitively operationalize recognition as an incentive motivator. This forethought regulatory mechanism for recognition is explained as follows: “Based on the recognition received and, thus, the perceived prediction of desired consequences to come, people will self-regulate their future behaviors by forethought. By using forethought, employees may plan courses of action for the near future, anticipate the likely consequences of their future actions, and set performance goals for themselves. Thus, people first anticipate certain outcomes based on recognition received, and then through forethought, they initiate and guide their actions in an anticipatory fashion”(Stajkovic & Luthans, 1999). What this means is that forethought is the regulatory mechanism that permits perceived future desired outcomes based on the recognition to be transferred into current and future employee behaviors that lead to performance improvement. Once again these refinements and extensions offered by social cognitive theory are compatible with the power of recognition as a way to improve employee performance.

Refinements and Moderations of the Relationship Traditionally, based on reinforcement theory and applied through classic behavioral management, it was implied that recognition had no exceptions or moderators as to its positive impact on performance. Unlike money, recognition as used in classic behavioral management is portrayed as always being a positive reinforcer (it strengthens and increases the preceding behavior), not just a reward (what managers think will have a positive impact) (see Luthans & Stajkovic, 1999 for a full discussion of the important differences between rewards and reinforcers in performance management). As the opening comments indicate, recognition is most often thought of as applying to everyone and no one gets tired of it.

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Type of Organization The universalistic notion of recognition still plays a role in application, at least all other things being equal, but the meta-analysis of O.B. model interventions (Stajkovic & Luthans, 1997) and the social cognitive theoretical analysis now clearly indicate there are needed refinements (if not exceptions) and certainly moderators of the relationship between recognition and performance. Specifically, the theory-driven moderator analysis of the O.B. Mod. studies found the average effect sizes varied significantly between the manufacturing and service applications (Stajkovic & Luthans, 1997). The type of organization was a categorical variable significantly related to the magnitude of effect sizes. The overall effect regardless of type of O.B. Mod. intervention (money, feedback, recognition, or combinations) or type of organization was 17 percent. However, the applications in manufacturing (33%) were much higher than those in service organizations (13%). Although a direct comparison between recognition only interventions and the other types of interventions was not possible with these data, when recognition was used in combination with feedback only and with feedback and money, the significant difference of manufacturing applications over service held. In other words, the principle of recognition seems to work better in manufacturing than in service organizations. However, this conclusion needs to be tempered by the fact that no study to date has directly tested this proposition. Also, it may be that there is more difficulty in identifying performance related behaviors in service than in manufacturing, rather than the lesser effect of recognition in service organizations. Task Complexity As the previous discussion indicated, a social cognitive explanation of recognition goes beyond reinforcement theory by getting at the very nature and underlying mechanisms of its relationship to performance. This analysis leads to some additional qualifying refinements and potential moderators. In particular, we feel that the level of task complexity may be another important moderator. Relevant to a social cognitive analysis is the fact that different levels of task complexity have different effects on the behavioral, information processing, and cognitive capacities of the task performer (Bandura, 1997; Stajkovic & Luthans, 1998a; Wood, 1986). Specifically, the higher the task complexity, the greater the demands on the employee’s (1) knowledge, (2) skill capacity, (3) behavioral facility, (4) information processing, (5) persistence, and (6) selfefficacy (Bandura, 1986, 1997; Stajkovic & Luthans, 1998a). In these types of demands for highly complex tasks, recognition may take on relatively more importance for the employee, manager or staff specialist than say alternative consequences such as money. The Role of Self-Efficacy Besides task complexity, self-efficacy may also be an important moderator for the recognition-performance relationship. In a social cognition interpretation, recognition derives its power and importance from forethought as already discussed, but, especially for complex tasks, also from self-efficacy (Bandura, 1986, 1997). Self-efficacy is the 6

belief in one’s capabilities to organize and execute the courses of action required to produce outcomes in a specific context (Bandura, 1997; Stajkovic & Luthans, 1998b). When faced with a specific task or job to perform, an employee’s efficacy determines whether the necessary behavior will be initiated, how much effort will be expended and sustained, and how much persistence and resilience there will be when there are obstacles or even failure (Bandura, 1997, 1999; Stajkovic & Luthans, 1998b). This efficaciousness has been shown to strongly relate to work performance (a .38 weighted average correlation in the recent meta-analysis of 114 studies, Stajkovic & Luthans, 1998a). Self-efficacy is generally recognized as a state, rather than a trait, and thus can be developed and trained. The most important input into the development of self-efficacy is mastery experiences, modeling/vicarious learning, social persuasion and arousal (Bandura, 1997; Stajkovic & Luthans, 1998b). Recognition would have direct or at least indirect implications for each of these developmental dimensions of efficacy. For example: (1) recognition would be confirmation of success; (2) seeing others being recognized would be vicariously reinforcing; (3) recognition framed as social persuasion would enhance the receivers’ beliefs as to what they can do with what they already have (without requiring new knowledge and skills); and (4) of course recognition would arouse the receivers to stay the course and persist when meeting future obstacles and problems. In other words, recognition may help build efficacy and those with higher efficacy will perform better. As Bandura (1997) notes, it is not behavior [and in this case the consequence of recognition] that causes behavior, but what is psychologically made out of it [in this case efficacy development].

Implementation Guidelines Nelson (1994) provides practicing managers 1001 Ways to Reward Employees. This book, consists of three major parts: 1.

Informal rewards. This part includes sections on no-cost recognition (e.g., all employees at Apple Computer who worked on the first Macintosh had their signatures placed on the inside of the product); recognition activities (e.g. at South Carolina Federal Financial Services, the president and other top managers serve employees lunch or dinner in recognition for a job well done); public recognition/social rewards (e.g., honor peers who have helped you by recognizing them at meetings and recognize people who recognize others); and examples such as the role of communication, time off, celebrations and the use of gift certificates, merchandise and recognition items (trophies, pins, and plaques).

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Awards recognizing specific achievements and activities. This part contains sections with accompanying real-world examples on recognizing outstanding employees, productivity/production/quality, employee suggestions, customer service, sales goals, group/teams, attendance and safety awards. For example, at Home Depot each store picks an Employee of the Month (the criteria being someone who has given time to an area of the store that technically lies outside his or her responsibility). The 7

recipient is given $100, a merit badge (five badges earn an extra $50), a special pin to wear on his or her apron, and the honoree’s name engraved on a plaque displayed at the front of the store. 3.

Formal recognition rewards. This last part is more concerned with formal reward systems per se, rather than ways to specifically recognize employee behavior for performance improvement. It has sections with actual examples of multi-level reward/ point systems, contests, field trips/special events/travel, education/personal growth/self-development, advancement/responsibility/visibility, stock/ownership, employee/ company anniversaries, benefits/health/fitness, and charity/social responsibility. For example, Tenneco has Tennwood which features a twenty-seven hole golf course, swimming pool, tennis courts, an outdoor dance floor and fishing lakes--all free to employees; a large fleet of vans to pick up employees, covers most of the cost for monthly bus passes and subsidizes parking expenses for car pools; and an on-site health and fitness facility providing all clothing needed for a workout, including socks and athletic supporters. Levi-Strauss makes a donation of $500 to community organizations in which an employee actively participates for a year.

Practice Supporting the Theory and Research The Nelson (1994) 1001 book and many other books and articles in the consulting and practitioner literature (e.g., see: Dolmat-Connell, 1999; Hale & Maehling, 1992; Levering, Moskowitz, & Katz, 1985) provide numerous examples and guidelines for implementing recognition as a way to improve performance. Most of this considerable practitioner-oriented literature is in line with and supports the theory and research outlined. For example, some representative quotes taken from practitioners in Nelson’s (1994) book supporting the universal reinforcing value of recognition per se would be the following: “Money is not going to have the same impact with upper level management as it does with lower salaried employees. However, everyone appreciates recognition.” – Martha Holstein, Associate Director, American Society on Aging. “Human Beings need to be recognized and rewarded for special efforts. You don’t even have to give them much. What they want is tangible proof that you really care about the job they do. The reward is really just a symbol of that.” – Tom Cash, Senior Vice President, American Express. “Incentive awards are not compensation – they are recognition – a meaningful way to say thank you…recognition for a job well done” – The MBF Group, Inc.

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The quotes also support how this reinforcing recognition leads to higher performance: “Once employees see that what they do makes a difference to the organization and is valued, they will perform at higher levels” – Rita Numerof, President, Numerof & Associates. The quotes even lend support to the more complex social cognitive explanation of recognition involving outcome utility, informative content, and regulatory mechanism. “My main motivation is the recognition. It’s very competitive and tough to move ahead here, so going to the awards luncheons and meeting the VP’s is a good way of gaining visibility. My main purpose is to move ahead in my job, not to win a prize. If being a top performer helps me get promoted, it’s a means to an end.” Sara Navarro, Senior Sales Representative, U.S.A.A. In addition to the antidotal/qualitative evidence supporting the theories explaining recognition, the practitioner-oriented, professional literature also contains some empirical support. For example, a recent nation-wide survey of U.S. workers found that nearly seven out of 10 (69%) report that non-monetary forms of recognition provide the best motivation (HR Focus, 1999). A contingency implication for implementation (and also supporting a social cognitive interpretation) was that this same survey found employees favor recognition from managers and supervisors by a margin of almost 2-1 over recognition from coworkers or other sources. Another recent study with contingency implications was a meta-analysis patterned after Hunter and Schmidt (1990) conducted on the Gallup Organization database of 28 studies involving 105, 680 employee responses to surveys from a wide variety of organizations. The survey item dealing with recognition (“In the last seven days, I have received recognition or praise for doing good work”) was significantly related to 2, 528 business units’ outcome measures of customer satisfaction/loyalty, profitability and productivity, but not turnover (Harter & Creglow, 1999). In other words, even though conventional wisdom and some surveys (Nelson, 1996) indicate that recognition (or at least appreciation) is a major determinant of retention, this large empirical study does not offer such support. Formal vs. Social Recognition Reinforcement and social cognitive theories and the findings from the metaanalysis of research studies over the past twenty years (Stajkovic & Luthans, 1997), mostly refers to managers providing social recognition contingent upon individual employees’ (and to a lesser extent group/team) behaviors that lead to performance improvement. Although the recognition that is inherent in formal, non-financial reward systems and programs are included in the definitional domain provided at the beginning of the paper, we would suggest that for implementation the social recognition would have relatively more impact than these formal recognition approaches. This is because the one-on-one contingently administered recognition (of the form stated earlier “the employee knows that his or her supervisor/manager knows”) tends to be a reinforcer, but 9

the formal recognition in the form of some type of award or benefit tends to be a reward (management thinks this will strengthen the employee behavior and lead to performance improvement) rather than a reinforcer (the behavior will indeed strengthen and lead to performance improvement). In other words, we would say that formal recognition is more like money. As advocated in the recent analysis of pay for performance, “Reinforce for Performance: The Need to Go Beyond Pay and Even Rewards” (Luthans & Stajkovic, 1999), also would apply to formal recognition programs. The reason formal recognition can be a reward rather than a reinforcer is that it turns into being phony, not valued by the recipient, or goes against the cultural norms. For example, a formal recognition award such as the “Golden Banana” at HewlettPackard or “Employee of the Month” given at most companies can initially be a reinforcer, but over time may cross the fine line and become phony or even a joke. The first few employee of the month recipients may be very deserving and everyone agrees with, but over time selections become more and more controversial and less or not qualified. At this point company politics often come into play and those earlier who truly deserved the recognition feel betrayed. Also, from a cultural values and individual differences standpoint, although everyone may like to be recognized for their efforts and achievements, not everyone likes to be singled out in the public way that usually goes along with formal recognition. The implementation guideline to get around these problems associated with formal recognition would follow from the reinforcement and social cognitive theoretical foundation. One guideline would be to use formal recognition awards contingent upon objectively measured performance. The key is that everyone involved must perceive that the formal, public recognition is truly deserved. For example, formal awards based on sales performance (the famous pink Cadillac at Mary Kay Cosmetics or a plaque given for selling 5 million at a real estate firm’s banquet) would be appropriate and effective, but many outstanding performer of the month awards (or teaching awards in academic institutions for that matter) may not be. The latter are subjectively determined and in order to be effective as a reinforcer for performance improvement, they must be as objective as possible and be perceived by the recipient, and even more so by others, as being fairly selected (i.e., procedural justice). This guideline is compatible with both reinforcement (e.g., objective, contingent consequence) and social cognitive (e.g., perceived fairness and vicarious learning) theories. Another implementation guideline is to depend on and provide relatively more informal, social recognition than formal recognition. Contingently given social recognition dominates the reinforcement-based classic behavioral management approach presented at the beginning of the paper and has been clearly demonstrated to increase performance (Stajkovic & Luthans, 1997). However, the more recent additive social cognitive theory would also suggest the importance of formal recognition on the basis of outcome utility, informative content, and regulatory mechanism (Bandura 1986, 1999; Stajkovic & Luthans, 1999).

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Importantly, the implementation guideline is not to eliminate formal recognition. The social cognitive perspective suggests the value of grounding private social recognition in public, formal recognition. However, the guideline above would add that the more objective and fair this formal recognition, the better. In fact, performance management consultants use a four-to-one guideline. For example, Allen (1994) states, “If people receive social reinforcement on the four-to-one ratio (a minimum of four socials to one tangible) and receive reinforcers for behaviors, not only results, they will view the tangible as a symbolic representation of appreciation. Then tangibles become items which serve as reminders of the social reinforcement they have already received. A tangible reinforcer carries the most impact when it symbolizes the recognized behavior or result” (p. 25). Once again reinforcement theory would say that the social recognition is reinforcing per se, but the social cognitive theory would suggest that the formal recognition is at least needed once in awhile to provide outcome utility (e.g., a raise, promotion, or special assignment), informative content (what does the organization value), and regulatory mechanism (forethought on developing strategies to obtain desired outcomes).

Application Examples Nelson’s (1994) book contains 1001 real-world examples, a number of which are short cases of mostly formal recognition programs in well known firms such as Kodak, Honeywell, American Express, IBM, GTE, Procter & Gamble and a host of smaller firms. Most of these are richly described with specific individuals and details of the form of recognition which was used to improve performance. At best, however, only a very few of these provide any, even descriptive, data on the effectiveness of these formal recognition programs, and of course none use research designs or statistical analysis to test hypothesis or draw causal conclusions. In total, however, these examples do provide considerable anecdotal evidence and testimony on the effectiveness of formal recognition programs in improving performance. The following are representative from empirical studies of manufacturing and service applications using informal recognition interventions. Most of these allow causal conclusions to be drawn on the effectiveness of recognition in improving performance. The last application listed, however, had mixed findings and some problems with a positive recognition approach. These studies are summarized and largely drawn from Luthans (1992: 247-256) and generally followed the five step O.B. Mod. model (identify, measure, functionally analyze, intervene with contingent recognition, sometimes in combination with feedback, and evaluate) (Luthans and Kreitner, 1975, 1985; Stajkovic & Luthans, 1997; Luthans & Stajkovic, 1999). Medium-Size Light Manufacturing Firm This field quasi-experiment conducted by Ottemann and Luthans had two matched groups (experimental and control) of nine production supervisors each. The 11

experimental group received training in classic behavioral management by the researchers. The intervention involved supervisors’ recognition contingent upon their workers exhibiting the identified performance-related behaviors. On the charts kept by each trainee (step 2 of the O.B. Mod. behavioral management approach) it was clearly shown that in all cases they were able to change critical performance-related employee behaviors. Examples of behavioral changes accomplished by the supervisors included decreasing the number of complaints, reducing the group scrap rate, decreasing the number of overlooked defective pieces, and reducing the assembly reject rate. The most important result of the study, however, was the significant impact that the recognition intervention had on the performance of the supervisor’s departments. By use of a pretestposttest control group quasi-experimental design, it was found that the experimental group’s departments (those in which the supervisors used the recognition intervention in their behavioral management) outperformed the control group’s departments. Statistical analysis revealed that the department production rates of supervisors who used the recognition intervention increased significantly more than the department production rates of the control supervisors. Largest Meat-Packing Plant in the World This study was conducted by Luthans, Maciag and Rosenkrantz in the very tough, labor intensive meatpacking industry. In the largest packing plant in the world (in terms of employees and output), 135 production supervisors were trained by the researchers in classic behavioral management and used social recognition as the intervention. The recognition was contingently applied by the trained supervisors to identified employee behaviors such as performing a particular operation more efficiently or delivering a certain piece of material in a more timely manner. This behavioral management with recognition as the intervention had a positive impact on all product areas in which it was applied. There was wide variation, but utility analysis indicated that although there was only a 2 percent gain in product 2, this still translated to an annualized value of nearly $900,000 in this company, and the 1.4 percent gain in product 6 equated to an annualized value of about $750,000. The projected annual values of the gains in other product areas were estimated for this company as follows: product 1, +$259,000; product 3, +$510,000; product 4, +$371,000; and product 5, an impressive + $2.276 million. It should be noted that this study did not contain the design methodology as the medium-size light manufacturing study presented first. Thus, the results in this study cannot lead to the same causal conclusions concerning the impact of contingent recognition. Yet, there is still considerable evidence that recognition did lead to the improved performance. For instance, when examined closely, the performance changes following the staggered starting dates of the program support the conclusion that the effects were indeed caused by this approach rather than some other factor. This is a simplified version of the multiple-baseline design from which causal conclusions can be drawn. In every product area tracked in this part of the analysis, the start of the program was followed almost immediately by a clear improvement in the quality or quantity of performance. 12

Large Comprehensive Hospital This hospital study in the fast growing, but much less structured than manufacturing, health care industry was conducted by Snyder and Luthans. Similar to the manufacturing applications, 11 supervisors from medical service, business, and operations units were trained by the researchers in behavioral management and used contingent recognition as the intervention. The results showed that there was improvement in all the performance measures. For example, over the two months of the intervention, emergency room registration errors (per day) decreased 76%; medical records errors (per person per audit) decreased 97%; average output of transcriptionists increased 2%; EKG procedures accomplished increased 11%; drug output (doses) in pharmacy increased 21% and waste decreased 25%; retake rates (percent) in radiology decreased 11%; and in the admitting office time to admit decreased 69% and average cost decreased 22%. Although we were unable to employ an experimental design in this study (and therefore cause-and-effect conclusions are not warranted), the simple before-and-after analysis provides a rather convincing argument that the recognition intervention was effective in modifying a broad range of performance-related behaviors in a hospital setting. This approach seemed to affect both the quality and the quantity performance measures. Moreover, the data indicate that each of the trained supervisors was successful in applying the intervention, despite the wide variety of situations encountered. The Teller-Line in a Bank Unlike the manufacturing and even the hospital applications, which had specific performance outcome measures, this service application conducted by Luthans, Fox and Davis measured teller—customer quality service interactions as rated by customers. The study used a pre-test post-test control group quasi-experimental design. The experimental group was the teller-line at a branch of a medium-sized bank and the control group were the tellers at another branch of the same bank. The researchers gathered baseline, intervention and post-intervention data unobtrusively (around the corner from the teller line) from customers right after the interaction with the tellers in both the experimental and control groups. The customers rated the service they received according to six key dimensions that were identified as being most important: greeting, eye contact, speed of service, degree of help offered, personal recognition of the customer, and appreciation for the customers business. An overall perception of the quality service for the transaction was also obtained. These ratings were gathered randomly over a ten-day period in each phase of the experiment. Since the data was collected out of site of the tellers, they were unaware this was happening (follow-up interviews indicated this was the case). The intervention consisted of identifying, fully describing in behavioral terms, and emphasizing the importance to customer service of the six dimensions to the tellers and their supervisors in the experimental group. In particular, the supervisors were carefully instructed by the researchers to provide contingent recognition when observing 13

these six dimensions being exhibited by their tellers. This recognition was given throughout the intervention period, but then the recognition was withdrawn and mentioned in the post-intervention (reversal) period. The researchers were frequently onsite to remind the supervisors during both phases of the experiment. The results indicated that in the pre-intervention, baseline period there were no significant differences between the experimental and control groups on any of the six categories. However, during the intervention period, four of the six dimensions (greeting, speed of service, personal recognition and appreciation) were significantly higher in the experimental group. The means of the dimensions were relatively constant throughout all three phases for the control group, thus providing evidence of minimizing the threats to internal validity. Also, in the post-intervention, reversal stage, except for one dimension (speed of service) which dropped below the control group, the between-group means were not significantly different. The overall measure of quality service was not different during baseline, significantly higher for the experimental group during intervention, and then not different during the post intervention. In other words, like the manufacturing applications, a contingent recognition intervention seems to have a causal positive impact on customer service performance. CONCLUSION The purpose of this paper was to examine the theory, research and practice of the impact of recognition on employee performance. Recognition was initially given a theoretical explanation in reinforcement theory for its universal appeal, but in an additive sense, its more complex nature needed to be explained by social cognitive theory. Recent meta-analytic research reveals the type of organization moderates the recognition— performance relationships. Social cognitive analysis also suggests that moderators such as task complexity come into play and the state of self-efficacy may be enhanced by recognition, which in turn helps explain performance improvement. Because of the broad appeal and popular use of both formal and informal recognition, there are numerous examples and guidelines for effective implementation. However, in the academic literature, there are very few studies that test the impact of recognition on work performance. The representative studies summarized here indicate that recognition does have a positive impact in both manufacturing and service applications. For the future, there is a need to go beyond reinforcement theory explanations and research on the role of moderators such as task complexity and self efficacy needs to be conducted so that there can be even more effective application of recognition for employee performance. REFERENCES Allen, J. 1994. In Nelson, B. 1001 ways to reward employees: 25. New York: Workman. Bandura, A. 1999. Social cognitive theory: An agentic perspective. Asian Journal of Social Psychology, 2: 21-41. 14

Bandura, A. 1997. Self-efficacy: The exercise of control. New York, NY: Freeman. Bandura, A. 1986. Social foundations of thought and action. Englewood Cliffs, NJ: Prentice Hall. Dolmat-Connell, J. 1999. Developing a reward strategy that delivers shareholder and employee value. Compensation & Benefits Review, March/April: 46-53. Hale, R. L., & Maehling, R.F. 1992. Recognition redefined: Building self-esteem at work. Minneapolis, MN: Tennant. Harter, J. K., & Creglow, A. 1999. A meta-analysis and utility analysis of the relationship between core employee opinions and business outcomes. In M. Buckingham & C. Coffman, First, break all the rules (255-267). New York: Simon & Schuster. HR Focus, 1999. April: 5. Hunter, J. E., & Schmidt, F.L. 1990. Methods of meta-analysis: Correcting error and bias in research findings. Newbury Park, CA: Sage. Komaki, J. 1986. Toward effective supervision: An operant analysis and comparison of managers at work. Journal of Applied Psychology, 71: 270-279. Komaki, J., Coombs, T., & Schepman, S. 1996. Motivational implications of reinforcement theory. In R.M. Steers, L.W. Porter, & G.A. Bigley (Eds.), Motivation and leadership at work: 34-52. New York: McGraw-Hill. Levering, R., Moskowitz, M., & Katz, M. 1985. The 100 best companies to work for in America. Reading, Mass.: Addison-Wesley. Locke, E. A. 1997. The motivation to work: What we know. Advances in Motivation and Achievement, 10: 375-412. Luthans, F. 1992. Organizational behavior (6th Ed.). New York, NY: McGraw-Hill. Luthans, F., Fox, M. L., & Davis, E. 1991. Improving the delivery of quality service: Behavioral management techniques. Leadership and Organization Development Journal, 12(2): 3-6. Luthans, F., & Kreitner, R. 1975. Organizational behavior modification. Glenview, IL: Scott, Foresman. Luthans, F., & Kreitner, R. 1985. Organizational behavior modification and beyond. Glenview, IL: Scott, Foresman.

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Luthans, F., Maciag, W., & Rosenbrantz, S. 1983. O.B. Mod.: Meeting the productivity challenge with human resource management. Personnel, March-April: 28-36. Luthans, F., & Stajkovic, A.D. 1999. Reinforce for performance: The need to go beyond pay and even rewards. Academy of Management Executive, 13(2): 49-57. Maddux, J. E. 1995. Self-efficacy, adaptation, and adjustment: Theory, research, and application. New York, NY: Plenum Press. Nelson, B. 1994. 1001 Ways to Reward Employees. New York: Workman Nelson, B. 1996. Secrets of successful employee recognition. Quality Digest, August: 26-28. Ottemann, R., & Luthans, F. 1975. An experimental analysis of the effectiveness of an organizational modification program in industry. In A. G. Bedeian, A. A. Armenakis, W. H. Holyer, Jr., & H. S. Field (Eds.), Proceedings of the 35th Annual Meeting of the Academy of Management: 140-142. Snyder, C. A., & Luthans, F. 1982. Using O.B. Mod. to increase hospital productivity. Personnel Administrator, 27(8): 67-73. Stajkovic, A. D., & Luthans, F. 1999. The relative effects of different incentive motivators on work performance. Paper presented at the Academy of Management Meeting, San Diego, CA, 1998. Stajkovic, A. D., & Luthans, F. 1998a. Self-efficacy and work-related performance: A meta-analysis. Psychological Bulletin, 124: 240-261. Stajkovic, A. D., & Luthans, F. 1998b. Social cognitive theory and self-efficacy: Going beyond traditional motivational and behavioral approaches. Organizational Dynamics, 26: 62-74. Stajkovic, A. D., & Luthans, F. 1997. A Meta-Analysis of the effects of organizational behavior modification on task performance, 1975-95. Academy of Management Journal, 40: 1122-1149. Vroom, V. H. 1964. Work motivation. New York: Wiley. Welsh, D. H. B., Luthans, F., & Sommer, S. M. 1993. Managing Russian factory workers: The impact of U.S.-based behavioral and participative techniques. Academy of Management Journal, 36: 58-79. Wood, R. 1986. Task complexity: Definition of the construct. Organizational Behavior and Human Decision Processes, 37: 60-82.

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