Everyone wants a positive Return on Investment (ROI) for any new project or program. Employee recognition is no different.
Leaders and program owners alike want to know and compare the monetary benefits from their recognition program. One client recently asked me, what do you consider the estimated return on investment for implementing employee recognition program?
Unfortunately, the quick and easy answer to that broad question is, “that depends.”
But to bring some peace of mind to any of you who might have the same question, I will now give a more detailed answer.
Online recognition programs are websites acting as a central platform for a variety of recognition and reward programs. They allow everyone in an organization to express their appreciation, say thanks to folks, and give recognition for the great things people do at work every day.
Those with permission can also give people rewards, whether tangible, monetary, or experiential. You give rewards to people for going above and beyond normal work expectations and when excellent performance occurs.
What can your recognition programs tell you that you’re not tapping into?
We all know recognition should be multi-directional in where it originates
Recognition is no longer dependent on being a top-down driven practice. Everyone, at every level, is responsible in valuing people and their contributions.
But should your senior leaders at least be leading out with recognition? Let’s find out.
Hopefully, you have a supportive executive leader who acts as your sponsor or champion for the cause of employee recognition where you work. You never want recognition to become out of sight and then out of their mind.
The only reason recognition would ever disappear off of your leader’s radar screen is if you take it off yourself.
That’s why it is so important to help your leaders stay on top of everything that’s going on with employee recognition.
Here are some great ways to keep recognition top of mind for your leaders.
Whether approaching the end of a calendar year
or a time to consider a refresh of your recognition practices and programs, it
is important to ask yourself as the recognition owner in your organization,
“Where do we most need to improve recognition?”
Often this whole question of improvement
follows the review of your annual employee engagement survey. Right off
the bat I can tell you that if the average score of your recognition related
questions on your survey is less than 65 percent, then you are dealing with
issues with your daily recognition practices of everyday recognition.
Looking at everyday recognition, you know this
should happen on a daily or weekly basis and impact between 80 and 100 percent
of your employees. This is a great opportunity to work on.
Where else can you improve recognition at your
organization? What are some practical steps you can take?
Vineet Nayar, an Indian business executive and former Chief Executive Officer of HCL Technologies, is the author of the critically acclaimed management book Employees First, Customers Second.
Nayar says
that employees are the clear differentiator in the value zone for helping
organizations grow faster and be more competitive. He further states that the
business of leaders and management is to enthuse, encourage, and enable
employees to continue creating this differentiating value for their customers.
Great leaders
already know the power of employee recognition. But not everyone is like Vineet
Nayar.
However, what all leaders want to know about recognition is four major points about the programs and practices that you are overseeing.
Whenever technology is involved there will always be bugs and glitches that get in the way. It’s the same with recognition and reward programs. However, for the most part the biggest problem with recognition programs is not technology. It is the people factor and how recognition programs are used. Consider these Top 10 Solutions to Typical Recognition Program Problems to help you out.
1. Poorly Planned Programs. Too many leaders launch recognition programs without a plan. Create a recognition strategy with purpose, philosophy and principles. Determine overall objectives you want to achieve with them. Then set specific, measurable goals so you know how to measure your progress. Develop an annual plan to improve the weak areas of your recognition programs.
2. No Management Participation. Start right at the top by lobbying for an executive sponsor to champion the recognition cause. Show leaders how to use the programs and provide supports. Personally commit leaders to using recognition programs. Educate managers on recognition practices and using programs. Hold managers accountable for usage and monitor program reports.
3. Lacking Consistent Usage. You have your recognition programs in place but managers and employees aren’t using them. Apathy and complacency are the enemies of using tools for what they were meant for. Set clear expectations for using the programs. Regularly communicate how to use programs and share positive examples of great recognition givers and their impact on people.
4. Inability To Recognize. Recognition programs are simply tools for giving appreciation and recognition to other people. An effective user of recognition programs must already be effective in giving recognition face-to-face. Teach people the positive behaviors associated with giving people meaningful, memorable and motivational recognition. Expect people to apply these skills first.
5. Too Achievement Focused. Some recognition programs are really reward or incentive programs labeled solely as recognition programs. That’s because rewards are being used to reinforce performance outcomes. This can create an entitlement mentality. Don’t forget to use recognition programs to express appreciation, acknowledge people, and communicate gratitude for everyone.
6. Programs Remain Unknown. Sad to say it but there are companies with recognition programs that their employees don’t even know about. I’ve seen it when we get companies to inventory all the rogue programs that exist. Create a centralized strategy with some core programs and allow local programs to continue. Now brand, communicate and promote them everywhere you can.
7. Unclear Program Expectations. Spell out the expectations for each type of recognition program. Social recognition programs connect people with each other and positive actions. Performance recognition programs reinforce positive behaviors and strategic goals. Milestone or service awards are a celebration of people’s contributions. Don’t expect the wrong things from different programs.
8. Lousy Rewards Criteria. Recognition and reward programs can create problems when criteria for rewards are not clearly determined. What one person determines is above and beyond is different for someone else. Develop clear criteria for rewards based on whether the action was once or consistently done; the degree of impact of their actions; and who and where the impact was made.
9. Big Hoopla Launch. Beware grand launching of new programs with big glitz and full of pizzazz. Ask any IT department about introducing new software and they’ll tell you there are always bugs. The best advice I can give is if you start big you will end small; if you start small you will end big. Start by piloting the program in one division first. Iron out any program glitches before going company-wide.
10. Not Creating ROI. Recognition programs can be a sitting duck for being reduced in scope or completely eliminated when seen just as a feel-good-activity. Your recognition programs must be aligned with your businesses goals and seen as a performance driver. Make sure you are fully using reports and analytics to correlate recognition with results and always calculate business impact and ROI.
Previously published by this writer 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.
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.
Whenever technology is involved there will always be bugs and glitches that get in the way. Likewise with recognition and reward programs. However, for the most part, the biggest problem with recognition programs is not technology. It is the people factor and how recognition programs are used. Consider these Top 10 Solutions to Typical Recognition Program Problems to help you out. (more…)
You’ve got your recognition strategy and plan written up and ready. The budget is prepared and your finance people have reviewed it. Primary stakeholders were consulted on their specific needs. Any relevant concerns have been addressed. You have the support of most of your leaders.
He or she doesn’t see the value of spending money on employee recognition. They view recognition as an expense along with compensation and benefits. There’s no urgency in their mind to invest in recognition.
Those of you responsible for employee recognition will likely have to deal with such a leader at some point in time. They just don’t “get it” as far as recognition is concerned. Yet, you know that wise leaders always invest in growing and developing people.
What can you do to prepare yourself for such a leader? How do you anticipate any potential rejection points towards recognition initiatives? (more…)
