Published on February 19, 2014
“The deepest human need is the need to be appreciated” William James, American philosopher and psychologist (1842 –1910) The Power of Recognition The compelling facts about employee engagement
Employee engagement drives company performance. That’s the bottom line. There is plenty of evidence to support the idea that employee engagement has a positive, quantifiable impact on individual and company performance, and that employee recognition is a key driver of engagement. Yet, despite this, there is also evidence to suggest that two thirds of the workforce is not engaged.¹ Thanks and praise fulfil the inherent human need to be appreciated, and with the growing influence of the Millennial generation in the workforce, recognition is no longer simply seen as a factor in motivation - it is an expectation. This expectation extends to the use of social media and mobile devices within the work environment, and not just among Millennials, but increasingly also among older demographics. In the following pages we have drawn on a broad range of reputable sources to help you more clearly understand: • The impact of engagement on individual performance • The bottom line impact of engaged employees • The importance of tailoring recognition to different workplace demographics • The impact of non-cash recognition and rewards • How to think about recognition within an increasingly social, connected world 1. Ayers, K. The High Cost Of A Lack Of Engagement.
The Upside of Engaged Employees The evidence demonstrating the positive impact of employee engagement on individual performance is difficult to ignore. And recognition has an important role to play. Employee vs Manager Quality & Brand Employee Higher Perception % Efficiency % Advocacy % Retention Workers not recognised More efficient Recommendations Lower turnover improved performance Nearly 80% of senior leaders believe employees are recognised at least on a monthly basis: however, approximately 70% of employees report that they are recognised annually or not at all.1 84% of highly engaged employees believe they can positively impact the quality of their company’s products and services and 68% believe they can positively impact costs in their job.2 81% of engaged workers are willing to provide positive recommendations of their employer’s products and services, compared to 18% of disengaged workers.3 Organisations with effective recognition programs have a 31% lower voluntary turnover rate.4 82% of employees say that the recognition they receive at work motivates them to improve their performance.5 70 84 81 Sources: 1 WorldatWork®, Retention of Key Talent and the Role of Rewards (Global). 2 A Towers Perrin Study (Global). 3 Gallup Business Journal, Employee Disengagement (Global). 4 WorldatWork®, Retention of Key Talent and the Role of Rewards (Global). 5 Gallup Poll (Global). 6 Madison, Workforce Engagement (US) 31% Performing % 82 Reduced Absenteeism 2.6 6.2 VS Sick days taken p/y Engaged employees take just 2.69 sick days per year on average vs. 6.19 for disengaged employees.6
The bottom line: The impact of employee engagement on company performance When we also consider the quantifiable evidence showing a direct link between an engaged workforce and a company’s financial performance, it makes the case for a structured recognition program even more compelling. Revenue Growth 9 3 % VS 50% % higher productivity Organisations that implement non-cash reward and recognition programs have annual revenue increases averaging 9.6% vs. 3% for all other companies. Source: Incentive Research Foundation (Global) Operating Income 19% 28% income earnings Businesses with high engagement had a 19% increase in operating income and a 28% increase in earnngs per share. i In contrast, companies with poor engagement had declining operating incomes and an 11% drop in earnngs per share. i Business Productivity Organisations with higher than average levels of engagement experience 50% higher productivity in comparison with business units in the bottom 25%. Source: Forum, IRF, HC Institute ‘Value and ROI in Employee Engagement’ report (Global) 85% positive impact Employee Engagement Organisations that pair bonuses with employee recognition programs see an 85% more positive impact on worker engagement and 65% increase in retention. Source: Society of Human Resources Management HR Professionals Survey (US) Source: Towers Perrin Global Workforce Study (Global) Customer Satisfaction 50 % higher Organisations with high levels of engagement find success with 50% higher customer satisfaction. Source: A Towers Perrin study of 85,000 large and midsize companies (Global) 28% VS 19% industry average increase Market Value Share prices of firms with highly engaged employees increased an average of 16% compared with an industry average of 6%. Source: ‘The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want’, Sirota Consulting (Global)
Recognition: One size does not fit all It’s important to cater to the growing influence of Millennials (Generation Y) in the workforce, however if you hope to maximise engagement, don’t ignore the needs of your other employees. Millennials will form 75% of the workforce by 2025.1 However, this can’t be at the expense of Boomers and Gen X employees. Employee engagement strategies need to adapt accordingly. Millennials (up to 29 years old) The ‘Gimme Generation’. Need access and transparency to ‘inside information’ and feel entitled to have a voice in broader aspects of the business. Limited employer loyalty – are inclined to ‘shop around’ until they get what they want. Require frequent feedback. Prefer instant, social and public recognition in which they can participate. • 91% of Millenials anticipate staying at a job for less than three years.2 • 81% of Millennials are either actively searching for new jobs or are open to new opportunities, regardless of their current employment status.3 • Only 19% of Millennials believe they will always be recognised and rewarded if they work harder or take more responsibility.4 Sources: 1 Millennial Branding Survey (US). 2 Job Hopping Is the ‘New Normal’ for Millennials, Forbes Online (US). 3 Job Tenure: A Millennial’s Perspective, Recruiter.com (US). 4 Human Resource Executive Online, Inspiring Talent Survey (Global) . Generation X (30 to 46 years old) Baby Boomers (47 – 65 years) Like to keep their options open. Motivated by the process of work more than the end result. Need to be recognised for their knowledge, abilities and breadth of experience with the opportunity to develop new skills. Like to observe feedback to others to learn what is valued by the company. Enjoy material rewards as a manifestation of success — especially things they can share with their family. ‘Cradle to grave’ mentality. Need to be recognised for their individual accomplishments and helped to see their progress. Believe they will always be recognised and rewarded if they work hard and take extra responsibility. Prefer public recognition and the attention of peers. Like material rewards that will convey the prestige of their accomplishment.
Beyond cash: The impact of recognition & non-cash rewards Over-reliance on pay and promotion as motivators leads to an organisational culture that is very transactional and disengaged. For people with satisfactory salaries, non-financial rewards are shown to be far more effective than extra cash in building long term employee engagement. Say ‘Thank You’ 57% of employees reported that the most meaningful recognition was free. “Getting the money was great, but it was also a letdown. What I really wanted to hear was ‘Thanks, you did a good job.’” Source: Harvard Business Review Blog, ‘Attract and Keep A-Players with Nonfinancial Rewards’ (US) Wall Street Broker who received a $500,000 bonus. Find The Right Motivators 85% of the time people say they prefer cash; however, when asked what they did with it – 29% paid bills, 11% bought household items and 18% don’t remember – only 9% spent their cash reward on a ‘personal treat.’ Source: Worthlin Worldwide survey (Global) Non-Cash Incentive Non-cash incentives improve performance by 40% vs. 15% for cash rewards. Source: ‘Using Noncash Rewards to Motivate, Retain and Engage Employees’, Talent Management Online (Global) How Do You Reward & Recognise Your People? Merchandise Experiences Gift Cards Career Development Public Recognition Staff Benefits On-The-Spot Recognition Travel
What’s trending in #Recognition? In an increasingly social and connected world, it comes as no surprise that the use of social media principles (‘social recognition’) and mobile technologies continue to gather momentum within the recognition landscape – making recognition more personal, more visible and more engaging than ever before. The benefits of social recognition • Broader public recognition and sharing through ‘likes’, ‘shares’, recommendations and comments – in real time. 39 % of 18-24 year olds would consider leaving a job if not allowed to access sites like Facebook.1 • More frequent, personal and meaningful recognition. • Extend the reach of recognition activities outside the workplace. • Quickly build a culture of recognition. • The use of game mechanics (‘gamification’) to strengthen engagement. • Social media is becoming a basic expectation in the workplace for the Millennial generation. 2.7 hours per day 91 % of 18-34 year olds “On average, smartphone users spend 2.7 hours per day socialising on their mobile device.” 2 “Social media and digital device penetration is at its highest among 18 – 34 year olds, with 91% using Facebook and 80% owning a digital device.” 3 The benefits of mobile engagement • Encourage employees to recognise, share, collaborate and innovate on a commonly-used channel. • Ability to Interact with recognition activities and colleagues at a time and place that suits them. • Caters to Millennials, who typically have greater expectation around remote employment and mobile device usage. Sources: 1 New Talent Technologies: Managing People Better, Bersin & Associates. 2 Mobile Marketing Statistics, Smart Insights Online . 3 The Economist, MPA and GfK MRI benchmark study on social media (Global)) .
The Recognition Spectrum – where do you sit? Social media-style tools and principles provide the ideal mechanism by which to drive a more inclusive, collaborative, personal culture of recognition. However, it’s important to understand the benefits – and risks – of each of the recognition tools available as you move towards the more public end of the ‘recognition spectrum.’ UNDERSTAND THE IMPLICATIONS CHOOSE THE APPROPRIATE SOCIAL TOOLS CE SO CIA POT ENT IAL AU DIE N Public - High RK WO ET LN INESS BUS ALL BUSINESS UNIT TEAM MA As the visibility and reach of recognition increases, so too does potential brand risk and the need for moderation GER NA Private - Low [1:1 / private: enterprise ] Recognise individual and team performance via traditional one-to-one mechanisms such as peer nominations (manager-approved) and e-cards. [social: enterprise] Integrate with existing social media platforms . Generate sharing, discussion and votes (e.g. “Likes”) that publicly celebrate individual and team performance, and build employer brand advocacy. The potential reach of information sharing is unknown. [social: enterprise and/or public] Create a more engaging, collaborative, visible and personalised recognition experience. Generate sharing, discussion, votes (e.g. “Likes”) and searchable profiles that publicly celebrate individual and team performance via ‘social recognition’ tools and public recognition events such as town halls, team meetings and award presentations. The reach of information sharing is contained.
The power of recognition – in summary To recap, there are several key points to remember when planning how to best engage your people: • Engaged employees positively influence bottom line performance. • Recognition is a key driver of engagement. • Cater for the growing influence of Millenials, but not at the expense of your older workers – one size doesn’t fit all. • Once workers are paid a competitive salary, non-cash recognition and rewards is proven to have a far more positive impact on engagement than cash. • Understanding how recognition fits into an increasingly social and connected world is vital, but it must make sense as part of your overall people engagement strategy. • Choose a range of recognition tools ranging from private to public, understanding the benefits – and risks - of each. There’s plenty to consider, which is why seeking the right advice is so important. accumulate.com.au @accumulateAU linkedin.com/company/accumulate
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