Eye on Recognition

A survey reveals four trends in employee appreciation

By Cord Himelstein

Interest in global employee engagement has been on the rise for the last several years, and investments in recognition programs are returning to growth times after plateauing. In fact, according to Aon Hewitt’s 2016 Trends in Global Employee Engagement report, employee recognition jumped five points and is now the third top driver of global employee engagement this year. What’s driving this change? To gain insight in this trend, Michael C. Fina Recognition conducted a survey at the 2016 SHRM Conference in Washington D.C.

1. Service and achievements remain recognition cornerstones. When it comes to the most effective ways to engage employees, survey respondents felt that “above and beyond” performance awards (22 percent) and traditional service awards (20 percent) are proven approaches. This is in line with WorldatWork’s latest Trends in Employee Recognition report, which shows these two initiatives as the most consistently popular forms of recognition over the last decade.

The bottom line: These programs work well. Recognizing years of service correlates highly with worker retention. WorldatWork’s report shows that employee engagement, motivation, and satisfaction improve greatly as more results-driven initiatives are used. Honoring milestones and rewarding individual achievements or results are essential elements to any program.

2. Surprising motivations for no- and low-cost solutions. Interest in these programs is high, with an overwhelming majority (94 percent) of attendees said they were either very interested, interested, or somewhat interested. What are the drivers for these approaches? Surprisingly, budget is not one of them. The survey found that the appeal of these programs is because they:

• “encourage daily recognition and interactions between peers” (35 percent);

• “are easy to set up and maintain” (22 percent); and

• “help reinforce/build culture of recognition” (18 percent).

Only 13 percent of survey takers had the response: “is the right fit for our organization size/budget.”

One no-cost solution—personal notes or eCards—was named the third most effective form of recognition by the survey. In the past, personal notes and eCards were considered minor, discretionary recognition efforts meant to balance out more formalized efforts. In fact, WorldatWork doesn’t even track this form of recognition. It seems that as more and more web-based eCard and note programs become formalized, HR professionals are more apt to give these no- and low-cost programs credit for keeping employees engaged. The low initial investment is just the icing on the cake.

After reflecting on current budgeting trends, this is not surprising. As the U.S. economy enjoys the lowest unemployment levels since the days of the Great Recession, belts are beginning to loosen and more focus is being placed on these types of programs as investments rather than expenses. According to current WorldatWork data, the top two reasons organizations do not field recognition programs are “too challenging to administer” (25 percent) and “too costly” (22 percent). Easily administered and budget-friendly no- and low-cost solutions may be emerging as the perfect antidote for these types of situations.

3. Early recognition commands a split decision. If budgets are becoming more flexible, has that affected how early organizations begin engaging new hires with recognition? In a word: maybe. There was a near 50/50 split from survey respondents on offering employees recognition within the first year (this refers to any form of recognition, whether it be onboarding gifts, service awards, etc.).

It is likely that early recognition will eventually become a preferred option among organizations. Over the past few years, recognition has been trending toward more comprehensive solutions, as employers further embrace the idea of melding formal and informal methods to provide employees an end-to-end experience. Even if employers do not offer formal recognition, they will at least provide some introduction to their reward systems and tout them as an added benefit to new hires to aid in recruiting efforts.

With recognition budgets rising, there is more room for experimentation with newer types of initiatives. WorldatWork research shows that currently 26 percent of organizations spend 1 to 2.9 percent of payroll on recognition programs—a 16 percent increase since the last time it was measured it in 2013. The survey revealed 70 percent of respondents plan to make changes to their recognition programs in the next 12 months, an increase of 10 percent from last year.

4. Return on investment (ROI) measurement has room for improvement. Along with budgeting, measuring a recognition program’s ROI can be a challenge for many organizations. So what are the preferred ROI measurement methods? The clear winner was employee surveys, according to 39 percent of survey takers, followed closely by 35 percent saying “we do not measure.”

This is troubling considering the data and analytical tools available to track program performance. In the age of big data, most—if not all—modern recognition solutions provide some form of analytics or reporting scheme to capture all pertinent data points.

Employee surveys are easily administered and excellent for checking the temperature of a program, but surveyed opinions must be balanced with objective data to get the whole picture. Other options for ROI measurement—participation rates, customer surveys, turnover, and productivity—only garnered single-digit results from the survey.

Keep Looking Forward

Recognition budgets and initiatives will continue to expand as long as organizations can press the advantage of a rebounding economy and rising engagement rates worldwide. Whether it is early recognition, no- and low-cost solutions, or seamless data tracking and ROI measurement, HR has more flexibility and lower risk with a rewards program. Employee recognition investments are the strongest they have been in a decade, and the technology available has made it much easier for organizations to get the most out of each dollar spent.

Cord Himelstein is VP of marketing and communications for Michael C. Fina Recognition.

Posted August 2, 2016 in Performance Management & Rewards

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