Employee Recognition: Getting from Expense to Investment

It’s amazing when asking participants in a training session how many organizations continue to view employee recognition initiatives as an expense versus an investment. Let me give you 6 quick points moving recognition directly onto the investment column.

1. Align Employee Recognition with the Corporate Strategy
In interviewing a manager from one corporation today, it was easy to see that they are the ones left in charge of recognition and to make it “work”. The power of an effective recognition strategy is when it helps leaders and managers in achieving the business objectives and help reinforce the culture and values of an organization.

2. Determine existing measurable indicators
Whether it was Peter Drucker or W. Edwards Deming they are often attributed in having said “if you can’t measure it you can’t manage it.” Find out any all numbers available – number of programs running and what type; number of nominations, points or card recipients; how effective are the programs in employees’ eyes, etc. Capture quantitative as well as qualitative data.

3. Establish clear quantifiable business objectives
Reward and recognition programs often get dumped upon for being “soft” stuff. But when you use recognition for acknowledging people for reaching incremental targets, demonstrating great customer service attributes, and then rewarding people when targets were reached, then recognition and rewards can be a powerful player in the performance arena.

4. Apply recognition processes to improve performance and behaviors
So when you know the goals you’re shooting for you need to spell out exactly what behaviours you want to recognize or reward. For example, in one situation a company was rewarding business division managers with gift cards for completed and good safety reports. When asked if employees were being recognized for demonstrating safe workplace practices there was no affirmative answer. Always make sure you recognize the right behaviours – report writing or safe actions.

5. Measure performance and behavioral outcomes of business objectives
This goes back to the last point. Once you know what you really want to have happen – safe carrying and emptying of environmental waste into appropriate storage container, you can then define what looks like and create appropriate observable measures to validate it. Some things can be weighed objectively and others subjectively. Determined the yardstick you will use ahead of time. If you measure up then recognition or rewards are due.

6. Calculate the rate of return for your recognition processes
You simply have to calculate the net benefits from a project and divide that amount by the program costs to generate a Benefits/Cost Ratio. If it equals “1” then Benefits = Costs. If the number came out as “2” for example, it would be written as a ratio as 2:1, and means for every $1 dollar you spent on the recognition program you had a return on investment, or benefit, of $2.
To actually come up with the ROI percentage, simply subtract “1” from the Benefit/Cost Ratio and multiply by a hundred and you have your Return on Investment.

Hope this helps begin a greater focus on making your recognition programs and practices a more meaningful and valuable business tool.