We spoke recently with a Reward Director at a professional services firm who explained how he was building a business case to introduce a recognition programme. Despite the relatively low cost and obvious benefits, he was still having to work hard to convince senior leaders that this was the right thing to do.
It’s true that recognition is often seen by us in HR as ‘low hanging fruit’. Low cost and hugely powerful. But why is it so powerful?
It makes workplaces attractive
The slack will soon be out of the labour market. Unemployment is at its lowest rate since the recession and job openings are increasing dramatically. Employers have to work harder than ever to be attractive to the talent they require. And to keep them.
This means responding to the fact that the workforce and workplace are changing. Organisations are flatter and more collaborative, we have a multi-generational workforce with Millennials making up 50% by 2018 and older workers not retiring, many of us work remotely or flexibly, and the labour market is heading towards a skills gap.
The new workforce is looking for a purpose-driven company, regular feedback, career opportunities, and interesting work. And they want to feel valued for the work they do. That’s where recognition comes in.
It builds your brand and reinforces values
Recognising employees for living your core values helps to connect them with the bigger picture and purpose. Employees need to understand how they directly impact your business success for their jobs to feel valuable.
Make sure employees understand the behaviours that are important and why. If you reinforce desired behaviours with positive feedback, they will be repeated.
A carefully designed recognition programme can build your brand by being specific about behaviours you value, and creating linkages with your CSR policy, vision and mission statement and external customer branding. For example, a manufacturing company with an environmental policy can recognise values and behaviours linked to cutting waste. And perhaps make awards that are environmentally friendly.
It increases employee engagement
80% of employees say recognition is a strong motivator of work performance and 70% percent would work harder with continuous recognition (1).
Recognition is a catalyst for engagement. It creates an emotional connection. Employees feel valued when they have done a great job and the company has celebrated their success. Engaged employees are more likely to stay with their employer and promote the company to others.
It improves productivity
There’s plenty of evidence that high engagement has positive a positive impact on performance for example operating income increasing by 19% (2) and reductions of employee turnover by 31% (3).
Recognition is part of the virtuous circle aligning employees to business objectives by reinforcing behaviours tied to corporate results. There’s a strong correlation between employee engagement and customer loyalty.
Engaged, aligned and recognised employees will increase their individual productivity and work harder to satisfy customers. In turn customer loyalty and satisfaction increases and this enhances company performance. Gallup estimate that an engaged employee will give up to 57% more of themselves – at no extra cost.
The bottom line is that recognition costs very little compared to the impact it has. The average cost of recognition programmes in the UK is less than 0.5% of payroll and very informal schemes can cost almost nothing. You’ll need to decide your effectiveness measures.
In the case of our Reward Director at the start, the challenge from senior leaders is the perfect opportunity. It means they are willing to listen. And the more they understand about the power of recognition, the more they will be actively involved. Companies are nine times more likely to have strong business results if recognition is role-modelled from the top.
So speak the same language and provide the compelling evidence. Use data where possible. That will mean ROI for Finance, customer satisfaction for Sales, and engagement for HR.
Engagement and business alignment are the invaluable results of a good recognition scheme. Recognition makes it possible to better leverage your best resource—your people.
(1) Gallup Report. 2010. Web. 10 Feb. 2014
(2) Towers Watson. “Engagement at Risk: Driving Strong Performance in a Volatile Global Environment.” Towers Watson Global Workforce Study 2012.
(3) What Works Market Brief: Turning Thank you Into Performance. Bersin by Deloitte. Jun. 2012.
Image courtesy of Thomas Tolkein