A down economy has put some budgets on hold, but providers and buyers are getting creative in their ways to show staff members their value.
By Debbie Bolla
With unemployment so acute these days, the employed don’t expect much more from management than a paycheck. Frankly, most are simply thankful to have a job. That being said, months of layoffs have taken a toll, and morale is down. According to the “The Voice of the Employee,” a research study conducted by recognition solutions provider Globoforce, 70 percent of employees anticipate a negative short- or long-term impact on morale and 80 percent of HR leaders expressed the same concern. Forward-thinking organizations are responding by looking for ways—some very cost effective—to boost and recognize the staff that they still have.
“Recognition goes a long way to forming a culture,” said Peter Hart, president and CEO of Rideau Recognition Solutions. “Every time you recognize someone, it’s an indicator of performance.”
And while Hart understands the realities of today’s economy, he is seeing activity in the pipeline. Organizations aren’t looking to spend a lot of money. But they aren’t looking to withdraw from current programs either, just grow them at a slower pace. Hart noted that buyers are taking the opportunity during this time to gather information about how they might be able to move forward in the future, since they still understand the importance of recognition to company culture.
A newer option that is beginning to make headway is leveraging social networking technologies in the recognition space. Hart said, “I think it is the next big wave. Leading-edge companies are starting to talk about it.”
Rideau recently partnered with PollStream.com, an online provider of interactive engagement and community building solutions. This web-based platform allows employees and managers to institute peer-to-peer and manager-to-employee recognition. PollStream’s social networking tool The Hive is a technology-based community of employee recognition where staff members share accomplishments, activities, and team successes.
Other outlets such as LinkedIn, Twitter, and Facebook can be arenas for citing employees’ work and successes. Encouraging online comments can establish a positive work environment and create credibility for excelling employees among their peers. For example, with LinkedIn, you can post a statement about a colleague as a recommendation, commending their work. The other people they are connected to will see their accomplishment. “We are finding social networking truly innovative,” said Louise Anderson, president and CEO of Anderson Performance Improvement, explaining that it is also an optimal tool to share best practices. “Generation Y cares about feedback.”
Cost-effective options such as social networking might be where this sector is heading, particularly given budgetary belt-tightening. “The Voice of the Employee” reported that 88 percent of HR department respondents said they had been asked to reduce costs by cutting or lowering merit increases and bonuses. Personal gratis forms of recognition from managers are a step in the right direction to help keep morale up. “Companies aren’t canceling programs, but there is definitely a reduction of spend,” said Mike Ketcherside, vice president of sales for MTM Recognition. “Managers should get involved with employees now more than ever. And it’s important that presentations be made in front of their peers.” E-cards are a solid and cost-effective communications tool that can compensate for the lack of monetary rewards during lean years.
Greater Value
Providers did report that despite the economic doldrums, some organizations are continuing to allocate funds in their recognition programs. But at this time of heightened spend analysis, the effectiveness of programs and the return on investment (ROI) is being scrutinized.
“Companies are doing recognition inventories and looking at overall spend,” noted Ketcherside. “Companies don’t want to just give away stuff—they want it to mean something. We are enlisting employee surveys that track the employee experience of the reward.”
Stephen Humphreys, CEO of Grassroots, agrees that ROI can be challenging to measure, but if expectations are addressed at the outset and are made clear, success of a program is more easily assessed.
“Value programs should be aligned with the values of the organization, and a benchmark should be put in place to measure if it is working or not,” he noted.
Intelligent tools and new technology are helping to track employee fulfillment. For example, MTM Recognition has a point program called point folio. The system lets managers track and measure employees’ reward and recognition portfolios on the web. “Managers can see when employees are recognized and why they are being recognized,” Ketcherside explained. And it benefits the staff by often allowing members to use their point accumulation toward a reward of their choice.”
Assessing employee feedback on reward continues to be crucial to the success of the program. Said Hart, “Ninety percent of North American companies have recognition reward programs, but 60 percent of employees don’t feel recognized. You will not get employee engagement without employer engagement. Recognition is a tremendous motivator if used properly.”
Scott Himelstein, director of compensation for Discovery Communications is reaping the rewards of a successful recognition program. In March of 2008, the global firm enlisted Globoforce to provide a portal-based automated recognition solution. Managers and employees have access to the application through the company’s portal, called Stellar. Here, staff members and executives can recommend peers for recognition for exemplary work in values or traits—quality, profitability, innovation, expertise—that are important to the company. After the recommendation is approved, the employee has the opportunity to select a monetary or gift card reward of their choice. Just over a year into the program, Himelstein is reporting success on several levels.
“We’ve gotten some very good traction from it,” explained Himelstein. “We sent out a survey internally to award recipients. Through the program, 85 percent felt that they were more connected to the company, 75 percent felt more satisfied, and 94 percent felt more appreciated.”
Employees presented with fulfilling incentives are usually more engaged and active, which positively effects productivity in the overall organization—and the bottom line. “There are a lot more resources for companies to gauge the level of engagement,” said Derek Irvine, vice president of global strategy for Globoforce. “If we improve recognition, there can be a 15 percent increase in engagement and a 2 percent improvement in the operational bottom line.”
Himelstein agreed, “Eighty-six percent of the survey respondents felt they were more engaged in their work as a result of receiving a recognition award.”
Buyers are also beginning to link rewards programs with talent management. “People are always looking for ROI, and it can be linked to retention and customer satisfaction,” said Hart.
Anderson is also seeing this trend. Retaining key staff members is a critical issue for organizations trying to prosper. “One of our clients ties recognition to talent management,” she noted. “The use of recognition is one of five key metrics for talent development”
Facing the Future
As the economy finally starts to tiptoe in a positive direction, some would argue that now is the time to take a hard look at how to recognize and reward employees who have survived the storm of layoffs, budget cuts, increased hours, and diminishing bonuses and raises. Morale in some organizations needs to be rebuilt. Retaining top talent will be critical as competitors resume hiring or reorganize infrastructure and staff.
Best Practice Strategies
As a board member of Recognition Professionals International (RPI), Peter Hart recommends use of the following seven objectives for instituting a solid and success-driven rewards and recognition program. “These seven things are what RPI spends a lot of time and money on investigating,” he noted. “You can’t have a best practice program unless you have the strategy, management buy-in, and the measurement components.”
1. Have well-defined, written strategies that tie into corporate objectives.
2. Ensure management is on board, so that recognition is not one of the programs on the chopping block.
3. Measure program effectiveness. In the past, programs were soft. Now they should provide metrics for ROI.
4. Training creates understanding about why recognition is effective and how to efficiently enforce it. Recognition is a learned behavior.
5. Create a strategy for communications, enlist it, and reinforce it. For example, one company has one touch per employee per week; it gets used heavily, everyone is aware of it, and it is very successful.
6. Celebrating achievement can encourage what you want more of; make sure people understand who is being rewarded.
7. Develop programs that are scalable and adaptable to what’s going on in your organization.
Achieving Engagement in a Recession
Budget cuts. Layoffs. Complete reorganization. These are just a few of the side effects brought on by the downward global economy. Globoforce’s study “The Voice of the Employee” recommends the following five tips to harness the goodwill of remaining employees and nurture it into full engagement for bottom-line benefits.
• Communicate clearly. Effective communication from senior management helps connect employees to the overall objectives of the organization. A strategic recognition program that ties frequent and timely employee recognition to strategic objectives and company values can show employees how their actions impact those objectives.
• Show employees you respect and value them. It’s not the type of gesture, but the gesture itself. A simple in-person thank you can bolster morale. Show appreciation for employee’s accomplishments as well as skill sets.
• Build career paths. Training and raises may not be part of the 2009 budget, but providing employees with advancements in job duties can help develop new skills and increase output.
• Remember that recognition offers higher ROI than bonuses. A McKinsey study showed that a $1,000 payment had a 10 times higher ROI when it was given as recognition than when it was registered as an increase in base pay.
• Recognize everyone, not just top performers. The study “Watson Wyatt Indentifies Steps to Keep Employees Engaged, Productive in a Downturn” found that employees who indicate that their organization effectively delivers on commitments to employees are 20 percent more likely to be highly engaged and 50 percent more likely to be top performers.
Building Morale Trumps Elusive Monetary Rewards
