Employee of the month. Salesperson of the year. Top marketer in the group. Everyone's used to these kinds of awards; they've become second nature in most industries. But if you're implementing such a program, have you stopped to think about why you're really doing it, and what the implications are for the company as a whole?

At Pluralsight, we originally launched without a formal recognition program, but people soon started asking us why we didn't have one. It seemed a logical suggestion since so many other companies had them, so we implemented a program for Employee of the Quarter.

Three quarters later, we pulled the plug on it. Here are five reasons why you might consider doing the same:

Public recognition breeds unhealthy internal competition. While rewards and recognition programs are designed with the good of employees, teams, and the company in mind, they tend to backfire for a simple reason. When you raise one person up on a pedestal, it leaves others below on the ground. And some of those left behind may feel resentful.

Perhaps they contributed to the effort that's being recognized, or even came up with the original idea. Maybe they were part of a team that facilitated a key component to the successful outcome, but it happened behind the scenes where you couldn't see it. The point is, when you single someone out as the hero, it can make others who are just as worthy feel like goats. The selection is often subjective and promotes partial or inaccurate views of what really happened to create a result. This can lead to team members turning against one another, competing against each other rather than partnering toward common goals that are best for the business.

Trying to motivate an individual can demotivate a group. While the award winner you've chosen may certainly feel validated for his or her work, recognition programs ultimately end up making a much larger number of people feel like losers. In a group of 100 people who may have had a hand in a project, 99 may end up demotivated when only one is rewarded.

The problem lies in the idea of "motivation" itself. I've said it before--if you feel you need to motivate people, it's a red flag for a culture problem. Many leaders use their rewards program as a mechanism to try to drive certain types of behavior within the company. Any time you start playing that coercive game with your employees, you're disempowering their autonomy and long-term thinking, which can lead nowhere but to unhealthy outcomes.

Rewards programs create a culture of praise junkies. When you set the expectation that a reward is the indicator of how well someone is doing, you'll have an environment of constant strivers who are focused solely on gaining praise. Whether it's a psychological reward that you're offering through public recognition or a monetary reward through bonuses or cash incentives (even sales commissions), you're causing your teams to focus on the wrong thing. Instead of understanding the business goals and working together toward a shared vision, making decisions accordingly, you instead have people fixated on trying to gain a particular goodie.

The alternative is to create a culture of people who come to work wanting to do the right thing due to intrinsic motivation. They want to make an impact and be successful in what they're doing for its own rewards--not for externals that cheapen it. Such a culture drives value for your customers and helps your company continue to grow simply because people already have the company's best interests in mind. Once this happens, there's no need for extrinsic motivators like rewards programs.

The wrong approach is more damaging than no approach. When we tried our short-lived recognition program at Pluralsight, the types of issues above are exactly what caused us to shut it down. We started hearing negative feedback from employees around the situation when we'd give an award, leading us to do some additional research about the pros and cons of these programs. After reading Alfie Cohen's Punished by Rewards, our leadership team realized that there are many compelling reasons why you shouldn't use rewards programs, and few reasons why you should.

We saw that such programs are generally more hurtful than helpful, based on Cohen's premise that manipulating people with incentive-based rewards may appear effective in the short-term, but the strategy ultimately fails and can do lasting harm. Other thought leaders, like Daniel H. Pink, agree, pointing out that work-based incentives inhibit creativity and flow.

It's not that recognition itself is wrong; the devil is in the details. How you express appreciation is incredibly important to how the morale and culture builds around the office. When recognition is given in the wrong way through rewards programs, it can be damaging to the culture and a detriment to the company by breeding unhealthy competition, demotivation, and a sense of arbitrary wins. Clearly, you'd be better off just killing such programs and doing nothing--remember, less is more. Research validates these findings as well; studies by Princeton professor Sam Glucksberg found that a lack of incentives actually fueled greater productivity.

Expressing appreciation informally is more effective. Instead of using verbal bribes through public praise with rewards programs or financial bribes through sales commissions, we realized what we really need to do is express appreciation at the right point in time. If someone does something awesome that really helps you or the company, acknowledgement of that fact is in order. At Pluralsight, we decided that the right way to offer that recognition is to do it one on one, expressing sincere gratitude and thanking the person.

The key is to make sure that the recipient of your compliments knows how grateful you are for these actions, without trying to put him or her on a pedestal in front of the rest of the company. If you don't know who's responsible for a certain success that's been highlighted in the company, don't save your praise for just one person--thank the team as a whole, and watch morale grow.

Published on: Oct 21, 2014