The Business Case for Recognition

Data and technology are helping to provide the ever-elusive return-on-investment metrics for incenting employees.
Marta Chmielowicz

Can recognition programs deliver business results that directly impact the bottom line? This question has preoccupied HR professionals for years, but with the recent surge and accessibility of data, the answer is closer than ever before.

And it comes not a moment too soon, for the current state of the U.S. economy and workforce is making the stringent measurement and effective use of recognition increasingly critical to good business. “Because of the 2008 economic meltdown, more emphasis has been added to determine investment effectiveness throughout all aspects of corporate management,” says Jim Costello, managing director of incentive engagement at Meridian Enterprises Corporation.

Faced with talent deficits and a rapidly changing workforce, organizations must act quickly to improve their recognition programs and maximize workforce performance, talent attraction, and retention.

“Nowadays, the challenge of measuring ROI has really become an opportunity for companies … to attach real business value to their recognition strategies,” says Vanessa Brangwyn, vice president of customer success at Achievers.

Companies eager to optimize their recognition programs need to quantify their effects, despite their more qualitative nature, and integrate this data into broader business strategies. This can be executed using five best practices:

1. Start by tracking program metrics. When organizations are just beginning to track recognition metrics, it can be difficult and overwhelming to determine which performance indicators they should monitor. “Where clear metrics exist, like sales and expense management, the cost effectiveness of recognition programs can easily be determined,” says Costello. “However, the subjects discussed in many boardrooms today involve behavioral metrics beyond those mentioned.”

That is why David Sturt, executive vice president of marketing and business development at O.C. Tanner, suggests a framework of three different tiers of ROI feedback and measurement: program metrics, culture metrics, and business metrics.

Within this framework, program metrics report basic information about recognition program usage, culture metrics address employee satisfaction and engagement, and business metrics reveal program effects on key business indicators, such as productivity and profits.

Sturt believes that organizations should begin their monitoring efforts at the program metrics tier. “Program metrics track things like usage, adoption, frequency, reach—information that you can get if you analyze what is happening with recognition across the enterprise,” Sturt says.

The data on the program level is straight-forward, easy to interpret, and easy to collect, and according to Matt Tremmaglia, director of strategy and operations at Achievers, provides valuable information needed to drive recognition program adoption and usage among both employees and team leaders.

2. Incorporate culture and business metrics that are already tracked in other areas. As the recognition program grows and becomes more widely utilized, HR professionals should begin to incorporate additional data points that measure company culture and business performance into their analytics. Sturt recommends that companies do this by utilizing metrics that that are already being tracked by their HR and operations functions, such as employee engagement, retention, productivity, and customer satisfaction.

“By using the three-tiered approach, HR professionals can go as far as they want to go to show the value, the impact, and the influence that recognition is having on the organization,” says Sturt. For most organizations, Sturt believes that tracking five program metrics, three to four culture metrics, and one business metric is sufficient to illustrate key patterns and trends.

3. Align the recognition program with business goals. Once program, culture, and business performance data is collected, HR professionals can begin the task of running correlations and determining the ways that specific employee behaviors affect business outcomes. “A huge benefit of leveraging a technology platform for recognition is that you have access to a wealth of data that can be correlated to behaviors that occur external to the system,” says Tremmaglia.

With this information, organizations can leverage their recognition program as a tool to improve performance and meet specific company goals. When recognition programs are aligned to a corporation’s goals and values, managers better understand the behaviors that should be acknowledged, says Costello. By rewarding the activities that the data shows are linked to an organization’s specific business objectives or desired cultural values, companies can utilize recognition to shape the culture of their workforce and reinforce positive behavior.

4. Ensure the recognition platform is accessible. In order to get the best possible data from which to draw conclusions about ROI, organizations need to ensure their recognition programs are easy to use and used often. For Susanne Gensch, wellness and recognition program manager of HR global operations at Ericsson, the company’s recognition platform, delivered from Achievers, provides “a one-stop shop, open to all employees and managers across Ericsson North America with a mobile app that allows managers to acknowledge success in the most timely way.”

“Technologies such as real-time dashboards, contextual analytics, and on-demand reporting are great tools that keep managers aligned and in touch with their team’s performance against defined KPIs,” adds Tremmaglia. When recognition metrics and analytics are easily accessible, managers are more likely to implement the desired strategies.

5. Continue to re-evaluate the data. Even if organizations initially see positive results from their efforts to improve business outcomes through the manipulation of their recognition program, it is important that they continue to re-evaluate the relationships between the various performance metrics at regular intervals.

“As today’s organizations are in constant flux— between reorganizations, growth, and a changing employee mix—there is a constant need to evaluate, and then reevaluate the linkages between a company’s recognition program and the desired business outcomes on an ongoing basis,” Tremmaglia explains.

To combat this challenge, Gensch says that there are ongoing assessments of Ericsson’s recognition program. “We conduct quarterly and annual reviews with the [recognition platform] vendor and adapt the program based on findings as well as new features launched by the vendor,” she says.

By performing quarterly reviews, companies can challenge existing assumptions about which strategies work, formulate new hypotheses, and make recommendations that continually improve their programs.

Measuring the effectiveness of a recognition program doesn’t have to be a complex process. With a handful of basic performance metrics, organizations can begin to create a plan of action for rewarding and acknowledging their employees that is consistent with their overall business strategies and positively affects their bottom line.

Posted April 4, 2017 in Performance Management & Rewards

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