When you search
out Recognition Professionals International’s (RPI) seven best practices
standards you’ll learn that their first standard is Recognition Strategy.
RPI defines a
Recognition Strategy as a written strategy statement and plan with specific
program objectives, with recognition aligned to the organization’s culture
(i.e. vision, mission and values) and the business strategy and
objectives. They use a three-dimensional recognition approach of formal,
informal and day-to-day recognition practices. This Recognition Strategy
document typically outlines the procedures and processes used and the
program delivery methods for the various types of recognition adopted.
My definition of
a recognition strategy includes a few more features that help make your
recognition strategy a working, actionable tool.
When you think
education and training is the next steps to take with making real recognition
happen where you work, there are a few things to take into consideration first
before planning the training program.
In fact, if you
prepare yourself and the prospective learners properly, then they will better
learn how to give more meaningful and effective recognition to those they work
preparation also impacts those involved in designing and developing the
learning curriculum and planning the right methods of delivery.
Let’s get ready
to educate your employees about recognizing one another the right way.
We need greater accountability for the success of our incentive programs. Planning to calculate the ROI of incentive programs from the start will help us focus on results. Following the Top 10 Ways to Measure the ROI of Incentive Programs will be a handy checklist to ensure the success and ROI of your incentive programs.
1. Identify the problem you want incentivized. Assess the current performance problem to determine the needs, conduct a gap analysis, and look for potential improvements you think could be incentivized. Too many accidents, not enough sales, losing too many people, or not reaching performance targets.
2. What are the costs of the problem? Analyze the direct and indirect costs currently associated with the identified performance problem or need. Like: What are salary and operational costs for a retail store? What are turnover costs? What is the number of lost-time days due to accidents?
3. Determine the achievable objectives. Propose one or two key measurable objectives to be targeted by incentives. Example: percentage of reduced voluntary turnover; increased quarterly productivity indicators at retail stores; percentage of sales performance numbers; or, reduced number of annual accidents per year.
4. Figure out the best measures to use. Identify the specific behavioral measures you will use to determine the right program success measures. When you define the performance well enough you will know the behaviors you want more or less of. You’ll then know if the behaviors occur or not and how to measure them.
5. Calculate the costs of incentives. Project the overall costs associated with conducting an incentive plan to improve the performance problem. Determine the value of incentives, the frequency or number of behaviors required for an incentive, the time period of the incentive plan, and multiply to determine total costs.
6. Keep tabs on budget spend. Monitor the costs associated with producing the improved performance results along with implementing the incentive plan. ROI is about return on investment of monies spent, which includes administration costs, monitoring, data collecting, and analysis.
7. Gather the data you need. Collect baseline data of target performance results from the period before the incentive plan began as well as during the implementation period (e.g. year before versus current year). Do as much as you can before the incentive plan so you can deal more with data following implementation.
8. Create a before and after analysis. Analyze and calculate the costs of the targeted performance problem before and after the incentive plan. Here you monetizing as much of the data as you can. Make friends with the folks in finance to help you put a dollar figure on as many data points as is possible.
9. Consider reasons for the success, or not. Give a general interpretation of the results observed of performance outcomes achieved while using incentives. This is putting the human observation and deductive reasoning as to whether things worked or not. Your hypothesis can then be validated by the data collected.
10. Work out the ROI. Calculate the actual return on investment. The math is easy: It’s the estimated dollar amount of the impact made by the incentive plan minus the combination of the annual incentive payout costs plus administration costs, then divide the previous total by the impact dollar amount, and finally multiplied by 100. Previously published in Incentive Magazine
Previously published in Incentive Magazine
Roy is no longer writing new content for this site (he has retired!), but you can subscribe to Engage2Excel’s blog as Engage2Excel will be taking Roy’s place writing about similar topics on employee recognition and retention, leadership and strategy.
It is essential for you to know your recognition program data so you can understand how to use this data to leverage the results for elevating your performance and people metrics.
Too often I get asked about best practices in various aspects of recognition practices and programs. The problem is, whenever I see a best practice it likely took the professionals in that company 2 or 3 years to get where they are today.
For you to simply copy what they are doing right now immediately puts you behind the times the minute you start to do what they are doing.
So don’t compare yourself too closely with your competitors or other industry leaders.
I am going to take you on a reality check regarding your recognition program metrics. Then we’ll see what we can do with the numbers. (more…)