Award Program Return on Investment Series: Employee Recognition Programs

On the second Monday of every month, I dedicate the weekly post to sharing return on investment possibilities and case studies with readers. This week, the focus of the ROI series is on employee recognition programs. In October 2009, The Human Capital Institute, or HCI, released a white paper titled, "The Value and ROI of Employee Recognition," which included the findings of several studies. There are three points in the white paper that I would like to cover, each showing how powerful employee recognition is and how can be leveraged to increase results.

Recently published, long term studies illustrate that recognition is highly correlated to improved employee engagement.

When employee contributions are regularly recognized and rewarded, managers are able to increase employee engagement.

Increased employee engagement has a dramatic, positive effect on improving job performance and capturing business value.

Companies with an engaged workforce are reported as having more productive employees, lower turnover and higher profits and customer satisfaction than their peers with indifferent or even disengaged workforces.

Those organizations actively seeking to improve employee engagement, including through the use of formal and informal recognition, financially outperform their competitors.

Organizations reported as having high levels of employee engagement also had a 19% increase in operating income and a 28% increase in earnings per share according to a Towers Perrin study that took place between 2007 and 2008.

In order for recognition programs to achieve these results, the HCI research showed that several components need to be present. First of all, several forms of recognition awards should be part of the recognition program in order for the recognition to be consistent, yet spontaneous. Giving employees on the spot recognition and consistent recognition for anniversaries and milestones is a good balance for many organizations. Second, employee feedback must be gathered in order to ensure the recognition program expectations are all met.

Third, anytime recognition is bestowed, a person should be able to understand the reason for the recognition and or award being given. Recognition awards need to be linked to specific job performance behavior or goals. Lastly, recognition needs to be presented in a way that employees will value. Not all employees enjoy public recognition and managers should recognize individual preferences.