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Incentive Primer: Employee Disengagement Dilemma
June 09, 2008
Battling the High Cost of Employee Disengagement with Recognition
By Derek Irvine
Employee disengagement is one of the biggest threats to a company's bottom line. Underperforming and disengaged employees are more contagious than engaged employees. Disengaged employees cause productivity levels to drop, company morale to plummet and can even destroy a company's ability to recruit new talent. Many companies today are increasingly realizing that strategic employee recognition programs can drive improved engagement, advancing recognition from a "nice-to-have" to a business success requirement.
However, for far too long, employee recognition programs have been allocated to human resources departments as a tactical task. These programs are now seen as a strategic business investment that influences a high-performance workplace. Recognition reinforces the most important results employees deliver for their company—advancing the firm's mission and vision by consistently performing their duties in alignment with company values.
Executives are beginning to recognize the benefits of recognition as a key driver in employee engagement. Executives across industries have seen for themselves the difference between a "willing" employee and a truly "engaged" one. "Willing" employees get the job done, doing what's essential, but nothing more. "Engaged" employees seek to improve efficiency, effectiveness and results, looking for opportunities to go above and beyond to achieve personal and team bests.
The ROI on Employee Recognition
According to a 2004 Gallup survey of employees worldwide, organizations with higher than average levels of engagement also enjoyed 27 percent higher profits, 50 percent higher sales and 50 percent higher customer loyalty levels.
Meaningful Appreciation for "Doing It Right"
Studies prove most people want to perform well at their jobs. But even the most enthusiastic workers need recognition—frequent and timely pats on the back for a job well done. Sadly, a recent Gallup poll found 65 percent of Americans reported receiving no recognition for good work in the prior year.
Employees need to be recognized as important contributors to the company mission and the bottom line. Employee recognition programs are gaining momentum as a strategy for fully engaging employees by motivating and driving employee productivity, but also in promoting the company brand to the employees themselves.
Smart companies recognize that success in the marketplace depends largely on their employees' belief in the integrity of the brand and the company. What is trumpeted externally through advertising and other communications must resonate internally, or the campaigns will not inspire and motivate employees. Smart companies recognize their employees need to be interested—engaged—in what they do every day. Towers Perrin conducted a global study that showed only 14 percent of employees worldwide consider themselves to be fully engaged in their work.
How do successful organizations keep their employees engaged in corporate values and strategic mission? Total rewards play a critical role. Total rewards seek the highest ROI, with the optimal mix of rewards including salary, benefits, equity, recognition, appreciation and intrinsic rewards.
How to Start a Recognition Program
When developing a strategic recognition program, businesses should focus on the same framework they use for other strategic projects. This often includes organizational steps for determining expectations, budget allocations and a communications plan; defining a training program; planning for maximum momentum; and designing a measurement system to determine success.
Every company has a different list of priorities to accomplish with their recognition program. Before a vendor can be selected, those priorities must be clearly defined.
• Consultation Capabilities. Companies seeking a vendor to help structure their strategic recognition program do so to tap into the expertise and best practices the vendor has developed with industry-leading companies. But not all vendors are created equal. Some vendors will force your needs to fit into their rigid offerings. Look instead for a vendor who will consult with you to fully understand your needs and tailor the program to fit.
• Cross-program Validity. If your company has multiple divisions or program lines, determine if your needs will be best met with a single recognition program that has the same look and feel across all divisions, or if you need a program customized to the various divisions while maintaining the same corporate-level branding and messaging. Regardless, there should be one administration platform for the recognition system to enable overall program measurement and management.
• Global Capabilities. In global companies, all employees must be considered equal, from initial program development to rollout and beyond. Too often, companies will begin a "global" program rollout only in the country where headquarters is located. This creates a problem of credibility for the global locations that have repeatedly received a "global" program that does not take into account the requirements of the local culture. With a strategic recognition program, rollout should be global in phase one—both in delivery model and in language capabilities.
• Rewards Model. Multiple rewards models are available for consideration. The traditional method uses catalog merchandise. These programs are inherently flawed, with limited selections (especially globally), additional shipping and tax costs and frequent cultural-disparity issues. The new model is gift card offerings that give reward recipients freedom to select their own reward from a much larger offering, including travel and entertainment. With this model, global companies must ensure numerous options are available in all cultures and countries involved in the recognition program.
• Technology Expertise and Client Services Program. The planning and implementation team should have a balanced experience of system development, implementation and incentive experience. The program must integrate with payroll and other HR systems, maximizing ease of use and implementing efficient monitoring and reporting systems. The client services team should also be capable of handling any program-participant questions or concerns about rewards processing or delivery at any time, and to adjust as needs grow and change over time.
Evaluate the Program's Effectiveness
The key to the success of any strategic recognition initiative is honest and ongoing evaluation. With recognition programs, success should be measured through both tangible and intangible results to ensure the program's goals and objectives continue to be effective, are fresh and align with the company objectives.
Companies should consider surveying employees about the program and requirements to determine how well the program is known and received throughout the organization. This can also give valuable insight into how many employees are actively engaged in the program and who is involved in nominating and receiving awards.
As companies are increasingly challenged with recruitment and retention issues, recognition programs can positively impact engagement levels and help increase an organization's bottom line. Effectively designed and properly implemented, reward and recognition programs increase performance, engage participants and attract quality employees. Ultimately, organizations that successfully motivate their workforce to achieve specific goals will realize the greatest financial gains over time.
Derek Irvine is vice president of Global Strategy, Globoforce. Derek Irvine has worked with such global enterprises as Avnet, Dow Chemical, Intel, Intuit and Thomson Reuters, advising his clients in the development of their strategic employee recognition programs. Contact Derek at derek.irvine@globoforce.com.
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