Online recognition: Like other HR functions, employee recognition programs move online with fewer administrative headaches, lower costs - Agenda: Awar

That's when Wilhelm contracted with a vendor to provide the company with an online program. Now, the company hands in a list of people eligible for service awards at the beginning of the year, and the vendor handles the rest.
But isn't L'Oreal USA paying a premium for such service? "It's actually less expensive than the paper program when you factor in the zero amount of time anyone here spends administering this," Wilhelm explains. "The lost work time was really the hidden cost in the old program."

As more HR functions go online, there's an increased interest in bringing awards programs online, says Bill Termini, national sales manager for Hinda Incentives Inc. in Chicago, a longtime industry vendor that began offering web-based awards programs in 1999.

Online awards systems can be connected with HR management systems, payroll systems or the company's enterprise resource planning system, says Kevin Jorgensen, president and CEO of Beyond Work Inc., a provider of incentive and recognition programs based in San Jose, Calif.
The ease and convenient access for employees is what prompted Southern Company, a Fortune 500 energy producer in the Southeast, to move its program online.

"When we moved the benefits enrollment process onto the web we saw immediate interest. In one year, online participation went from 26 percent to 82 percent," says Tripp Cagle, HR communications manager. "Based on that, we knew employees would be interested in an online awards program."

Mercury Interactive Corp., a software company in Sunnyvale, Calif., reaped financial rewards from its online incentives program. Amit Ronen, vice president of field technical operations, wanted to motivate field staff who maintain and troubleshoot computer systems.

"We asked them to voluntarily lot notes about opportunities they saw when on assignment, but the program was so-so. I thought that if we could create an incentive program we'd generate more interest," he explains.

For example, the field staff should look for holes in existing client systems and be alert to hear about weaknesses from client staff. Such situations could provide sales opportunities. The company implemented an online program in which field staff receive points for such leads and even more points for leads that generated business.

"The administration of this would have been way too much if the program wasn't online," Ronen says. "A $7,000 investment has generated more than $600,000 in new business."

Tracking Data

Dana Hubbard, a compensation analyst with Southern Company, says the online system has simplified administration of awards for the company's 26,000 employees.

"We can see what's being redeemed; so we know what's appealing to employees and can keep the program meaningful," she says.

PacifiCare Health Systems Inc., in Santa Ana, Calif., made the move to an online program for its 9,500 employees in June 1999 after an IRS audit turned up discrepancies.

"Each business unit had its own awards, nothing was centralized and it was a nightmare to keep track of," explains Tonia Rockwell-Koren, a senior compensation analyst.

Now that the online program automatically deducts taxes and keeps records for PacifiCare, Rockwell-Koren says, "I don't know how we ever managed the other way."

Online programs also give managers easy access to data and the flexibility to adjust information. "You can capture data easily and keep information current," says Michelle Smith, vice president of strategic sales for Bravanta Inc., an online awards program provider in San Francisco. "As priorities change, so too can programs. They can be altered with a click of the mouse."

With the data centralized in online systems, HR also can improve the effectiveness of the awards program and demonstrate that the program is making a difference.

For example, say you're running a safety program. HR can pull data to show a direct correlation between reduced accidents and incentives. In addition, the computer can run comparisons to highlight differences in accident costs before and after implementing the safety program. Then, those figures can be compared to program costs. The online program calculates these statistics, so no one has to spend weeks tallying and tracking information.

"Online programs prove what we already knew instinctively, that incentive programs motivate people and have an effect on the bottom line," says Smith. "An online system enables HR to keep data on ROI that generates board-level interest."