The ROI You Get From Smart Employee Recognition

Do you reward employees according to job performance? Are you sure?

My company, Globoforce, published last week the results of its bi-annual survey with SHRM examining the current state of HR leaders’ employee engagement and recognition practices and their impact on performance management.

One finding: 64 percent of companies that have an employee recognition program say their employees are rewarded according to job performance vs. just 36 percent of organizations without an employee recognition program.

Five critical findings

To me, that shows the dramatic value of a strategic employee recognition program for adding far more data points, from far more sources, for a much more complete picture of employee performance. All of that leads to a much better ability to accurately reward employees for job performance.

The five most critical report findings were:

Employee engagement tops the list of HR challenges. Employee engagement is the foremost human resources issue for HR leaders, yet only a minority tracks it. Those that do measure engagement see higher levels of workforce satisfaction.
Performance management remains stuck in neutral. Annual performance reviews continue to under-serve the needs of many HR leaders, opening the door for more feedback-rich technologies.
Recognition programs fill the feedback and appreciation gap. Employee recognition offers HR leaders a new way to evaluate performance year-round. The result is higher levels of employee engagement and appreciation.
Recognition programs have an observed positive impact on business results. Employee recognition is building the business case for HR leaders, as a majority of respondents say it improves key HR and business metrics.
Recognition aligned with core values leads to more effective managers. Values-based recognition programs designed to reinforce desired behaviors continue to be a key component of effective, successful recognition programs. The result is higher levels of employee satisfaction.

The ROI results are particularly telling

Among organizations that measure the ROI of their employee recognition programs, HR leaders observed increases in key metrics. More than half of survey respondents saw increases in productivity, customer/ employee retention, employee engagement, return on profit margin, and return on equity as a result of their employee recognition program.

Percent of HR leaders who say they observed an increase in these metrics as a result of their recognition program:

Employee productivity – 63 percent
Employee engagement – 61 percent
Return on profit margin – 58 percent
Customer retention – 52 percent
Employee retention – 51 percent
Return on equity – 50 percent

You can get the full survey report here.

You can find more from Derek Irvine on his Recognize This! blog.