Understanding the Business Case for Recognition

Why should you give recognition to employees at work? Is there really a business benefit from giving recognition?

Many organizations seem challenged whenever I encourage them to integrate recognition into their regular work practices. It seems like what appears to be the right thing to do, or even a nice thing to do, doesn’t happen because they lack knowing the business purpose behind employee recognition.

There are the stereotypic, negative perceptions about the value of, or importance of, giving employee recognition.

You may have heard some of the lines in meetings, like:

• “We pay them well enough. What more do they want?”

• “In our company we focus on bottom-line results not feel good stuff.”

• “Where’s the proof that recognition makes any difference?”

Where Things Are Often At

This is often the harsh reality when trying to build the case for employee recognition. Many leaders and managers have never seen a business reason for recognizing their people.

In addition, as I talk to managers in our fast-paced workplaces, they share how overwhelmed they feel, and how time pressured they are with the demands that impact their work. Recognition is perceived as something more on top of everything else they have to do.

Our research at Rideau Recognition Solutions show that the effective use of employee recognition programs are leading indicators of several performance outcomes, including areas like:

• Employee retention
• Sales performance
• Customer satisfaction

We have found other indicators like the number of performance-based awards and nominations given are related to the customers’ “likelihood to recommend” the company as a good place to do business with. Interestingly, we discovered the number of award nominations employees received were the strongest predictor of a customer’s likelihood to recommend.

In one sales oriented organization we learned how every additional award received predicted an additional 2.78 sales transactions. Even with just nominating someone for an award, without any guarantee of winning the award, each additional nomination predicted an additional 0.8 sales transactions.

Where You Would Like Them To Be

All that is needed for most leaders and managers is a refocusing on what it is they want to achieve in their business area. When they examine their individual business and performance goals carefully, they should find lots of ways to utilize recognition to assist them in achieving these goals.

By understanding the reasons why and the importance for giving recognition they will prioritize how to make recognition giving part of their everyday life.

We need to teach and show leaders and managers how their strategic business initiatives and people strategy goals are the very reason why giving peers and employees recognition is the right thing to do.

How To Get There

The key is helping leaders and managers identify their own business case for giving employee recognition in their specific area of work.

We can coach managers and leaders to identify what their personal performance management objectives are and what the key performance measures are in achieving their annual business goals. From there, it is simply a matter of aligning business strategy targets with recognition. By giving better and more frequent recognition to peers and employees we can show leaders how they can achieve their goals.

Giving effective recognition helps employees feel valued and know that their contributions are purposeful to them and make a difference for the company.

And not every focus has to be totally bottom-line related. Leaders and managers can also target people strategy directives such as retention, engagement, talent management, etc. which are aided by recognition.

For example, in one organization we found every additional award given was found to predict a 6% increase in the probability of retaining an employee.

There is no longer any need to question or speculate on the business benefits of employee recognition done well. Recognition works and it makes business sense.

Question: How has giving recognition been questioned or challenged in your organization?

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.