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The Business Case for Recognition

EMPLOYEE RECOGNITION IS MORE THAN AN HR PROGRAM— IT HAS A PROFOUND IMPACT ON AN ORGANIZATION’S WORKPLACE CULTURE AND BOTTOM LINE.

Employee recognition has a strong influence on an organization’s workplace culture. Research on 10,000 employees in 12 countries shows that organizations who have a great culture are:

• 54% more likely to have employees that are Promoters on the standard NPS scale
• 53% more likely to have highly engaged employees
• 29% more likely to have employees innovating and performing great work
• 27% more likely to have increased in revenue last year
• 25% more likely to have growth in team size in the last year

By creating a great workplace culture employees want to engage with, you’ll see an improvement in business results. Employee recognition touches every aspect of your company culture and your employee experience—from recruiting, to engagement, productivity, innovation, and retention.

ATTRACTING TALENT
A global survey of 200,000 job seekers asked employees to choose the most important attributes in a new job from a list of 26. The number one attribute was that their employer or manager showed “appreciation for my work”. This was followed by good relationship with colleagues, good work-life balance, and good relationships with leaders. Attractive salary came in at number 8.


Gallup agrees: “In today’s war for talent, organizations and leaders are looking for strategies to attract and retain their top performers while increasing organic growth and employee productivity. But in their search for new ideas and approaches, organizations could be overlooking one of the most easily executed strategies: employee recognition.”

There are 6 aspects of workplace culture that make organizations a magnet for talent:
• Purpose (connecting employees to your organization’s reason for being)
• Opportunity (providing opportunities to grow and develop)
• Success (employees innovating, doing meaningful work, feel like they are part of a winning team)
• Appreciation (feeling valued and appreciated for unique contributions)
• Wellbeing (employees’ physical, social, emotional, and financial wellbeing)
• Leadership (good leaders who are mentors and create a sense of camaraderie)

Research shows that recognition significantly impacts all 6 of these areas. Recognition can help your organization be an attractive place to work.

ENGAGEMENT
Unfortunately, employee engagement is still not high. A 2017 Gallup report shows 51% of the workforce is not engaged, and 16% are actively disengaged. The good news? Research shows that when employees feel appreciated, engagement improves.

32% increase in employee engagement when employees feel appreciated.

26% increase in employee engagement when employees give appreciation.

Employees who receive strong recognition are more engaged overall and in 4 different areas: having a sense of drive and determination, feeling connected to the company, having strong work relationships, and understanding how their work makes a difference.

Organizations may underestimate the power of recognition on employee engagement. Quantum Workplace’s analysis of the Best Place to Work organizations found that the question “If I contribute to the organization’s success, I know I will be recognized” is a top driver of engagement but is also one of the 5 lowest scoring areas for organizations. And the O.C. Tanner Institute also found that informal recognition programs are the least utilized programs by companies globally but deliver the highest engagement outcomes.

EMPLOYEE PRODUCTIVITY, INNOVATION, AND GREAT WORK
Recognition also has a drastic impact on how employees work. When asked “What is the most important thing your manager or company currently does, or could do, to cause you to produce great work?”, recognition not only came in as the top answer, but was as high as the next three answers combined.

Employees who recieve strong recognition are:

33% more likely to be proactively innovating.

2x generating 2x as many ideas per month and 2x as likely to be highly innovative.

And employees who receive strong recognition are more likely to be working at 80% capacity or higher.

Employees also said recognition for going above and beyond would encourage them to be innovative and productive more than a 5% salary bonus.

IMPROVED LEADERSHIP
Employees who receive strong recognition have a strong relationship with their direct managers (87%) compared to those who receive weak recognition (51%). Employees also said recognition for ongoing effort would improve their relationships with leaders more than a 5% salary bonus.

RETAINING EMPLOYEES
Research shows when employees feel appreciated at work, they are more likely to stay at an organization and less likely to leave for another job. When asked if they would leave their current job for a job with another organization with a similar role, pay, benefits, and location, employees who feel appreciated were less likely to take the other job.

According to Gallup, employees who do not feel adequately recognized are twice as likely to say they’ll quit in the next year.

In some instances, just having an employee recognition program can make an impact. Companies with a simple service award program retain employees for 2 more years than companies without – 4 more years if that program is excellent.


WHAT BUSINESS IMPACT HAVE ORGANIZATIONS SEEN?
Here are a few examples of the impact organizations have seen from their recognition initiatives:

91% of employees felt connected to the company’s values and understand how they contribute (purpose)

87% felt the company cares about them (wellbeing)

90% increase in career accomplishments being celebrated (appreciation)

93% likely to stay with the organization after being recognized

Won the J.D. Power President’s award (only the 13th company in history to receive this award), 98% engagement

Gallup Great Workplace Award

 

Engagement survey scores increased from 55th to 83rd percentile

Overall retention in top 70th percentile

Won national award for top HCAHPS scores in every reporting year

 

21% higher nursing satisfaction

59% lower nursing turnover

33% lower employee turnover

Decrease in falls, infection rates, readmission rates

Increase in home health ambulation

Increase in resident satisfaction to say they’ll quit in the next year

 

In some instances, just having an employee recognition program can make an impact. Companies with a simple service award program retain employees for 2 more years than companies without – 4 more years if that program is excellent.

HOW TO MEASURE ROI
Here are a few examples of the impact organizations have seen from their recognition initiatives:

What recognition metrics are important to look at when it comes to determining business impact? While every organization will have different objectives and impact, the most common measures are:

• Employee Engagement—pulse survey or employee survey scores

• Retention—turnover numbers

• Great work—productivity metrics, new ideas submitted, efficiency improvements

• Customer satisfaction scores/patient satisfaction scores

• Financial metrics—sales growth, guest count, profitability

• Wellbeing—safety, attendance, health metrics

Look at high recognition areas compared to low recognition areas (manager, department, location, business unit, etc). Do areas that use recognition more have better outcomes? Higher engagement scores? Better business outcomes? Lower turnover? A simple correlation analysis to measure the strength of the relationship, or looking at before/after and change-over-time statistics, can help you see the true impact of employee recognition.

Research shows that recognizing employees for their great work and career achievements can help you build a culture that attracts the best talent, where engagement thrives, and where employees are inspired to be and do their best for a long time. While recognition is still an underutilized tool for many organizations, the potential impact on a company’s culture and business should not be underestimated.


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