The Value and ROI of Employee Recognition
Are Those Company Incentive Trips Really Worth It?
In today’s tough economic climate, businesses are searching for more creative ways to generate profits. The age-old strategies of focusing purely on the numbers are no longer effective. Smart companies realize there is untapped profitability in a resource they already have – their employees. Employees have the potential to maximize profits in ways that number crunching never will.
Multiple studies from Gallup, the Corporate Leadership Council and Towers Perrin’s Global Workforce Study have produced eye-opening results. Compared to companies with a large percentage of disengaged employees, they discovered that when employees have a strong commitment to their company and are actively engaged, their business is substantially more successful in four distinct ways:
1. Productivity – Companies that have employees who are excited to come to work report upwards of 50% higher productivity than companies with employees who just show up.
2. Employee Turnover – Happy employees stay where they are reducing training costs and increasing productivity.
3. Profit – They generate 44% more profits. There isn’t a single cost-cutting measure that can compete with those numbers.
4. Customer Satisfaction – Not only are these companies making money, their customers report a 50% higher customer satisfaction rate. A satisfied customer is a company’s best advertisement.
So the next logical question is how does a company encourage its employees to give their best work? These studies point to both recognition and rewards programs as prime motivating factors. Successful companies that continually rank high in employee engagement use rewards and incentives for maximum benefits.
Recognition and rewards can be anything from verbal praise and acknowledgement, trophies, employee of the month programs, financial bonuses, tickets, experiences and perhaps the most sought after reward, trips.
But for an incentive program to work, a company must be committed to seeing it through. Companies that have successful programs follow five basic concepts:
1. Be Strategic – Companies that offer rewards that directly tie in to their own mission see results. An example of this is a company selling whirligigs gives a bonus to not only the team that sells the most whirligigs, but also to the team that develops new whirligig clients.
2. Be Personal – Companies at their core are made of people. Give people a chance to express themselves in programs they care about and reward them for doing it. Recognition for the department that puts in the most hours for The Special Olympics is an example. Even better if that company manufactures athletic shoes.
3. Be Flexible – Employees are all different, so celebrate those differences. Give employees choices in the ways they can make a difference such as choosing to bike to work or adopting an urban garden and then give them a choice of reward as well. A stressed-out mom may love a massage, the mechanic may want to see his name on the company sign and a dad may jump at the chance to take his family to Disney.
4.Be Simple – Make your program easy and one in which everyone can participate. Create easy to understand benchmarks that contribute to your overall company goals such as entire departments turning off their computers when they leave or ride sharing programs.
5. Be Intentional – An incentive program that is thrown together will not last. And a lasting campaign is the most effective. Commit to an overall program that employees can buy in to, knowing there are real and trackable results.
A company’s most valuable asset is their employees. Smart companies invest in their employees using rewards, incentives and recognition programs. And they, in turn, are rewarded with low turnover rates, higher productivity and higher customer satisfaction which all contribute to the best benefit of all – higher profits.