Recognition

Recognition Employee Desirability

By JENNIFER C. LOFTUS

Moving Beyond the Gold Watch

Employee recognition is one of five total rewards elements that employees receive in exchange for their work. Other rewards – cash compensation, benefits, work/life balance and career advancement & development – provide a foundation necessary for successful talent attraction and retention.

Successful organizations link their HR strategies to their overall organizational strategies. By extension, the organization’s rewards strategy ties directly to the employer’s overarching strategic direction. Effective recognition programs support having the right people in the right jobs at the right time and goal achievement through behaviors that create success. Another reason is the cost of employee turnover. Conservative estimates for the US place the cost at 50% of each exited employee’s annual salary. Consider an organization with 100 employees leaving each year, earning an average of $50,000 annually. $2,500,000 in costs impact the bottom line annually. Each dollar spent to minimize employee dissatisfaction increases profitability and morale.

POWER OF RECOGNITION

Employers acknowledge the power of recognition. Research from Mercer’s 2011-12 Compensation Planning Survey finds that 78% of organizations have nonmonetary recognition awards in place and 61% use spot cash awards. Employers can deliver recognition both informally and formally, short and long term. Using multiple recognition plans to reinforce key behavior delivers the highest return. When designing a program, first determine your goals and desired results. Then determine the behaviors necessary to achieve those goals and the time necessary for employees to make behaviors their own.

REWARDS IN ACTION

Take, for example, a NYC-based service organization with employees across the US, which uses a number of techniques nationally and locally to develop a high performance workplace. In 2011, the company invested in a new performance management system to enable quarterly communication and feedback between employees and managers. The firm trained its managers in effective feedback methods and ways to reward performance. They also use a quarterly safety incentive to convey the goal of cost-control related to injury statistics. Employees at a location receive a bonus of $50-$100 for each quarter without injuries or workers compensation claims. The firm also has a national program to celebrate top performers. Local leaders can develop programs that celebrate success and demonstrate ideal behavior while providing recognition in ways employees prefer. Managers receive training on providing instant feedback when observing effective behavior in action.

RESULTS OF RECOGNITION PROGRAMS These programs enable the company to enjoy turnover rates 35% below the industry average and savings on workers compensation premiums. When estimating turnover cost savings of $880,000 per year below industry levels, investments in recognition provide a desirable return, increase in morale and support for the goal of being a choice industry employer. Not sure where to start? Using informal recognition with a small financial investment in each employee, with day-to-day thank yous and feedback from managers, allows your organization to reach a larger segment of your employees. Formal awards provide additional reinforcement as your program develops over time. Combining different rewards creates a return on investment and impact on your strategy unrivaled by the gold watch of yesteryear.•