Engaged WorkforcePerformance Management & Rewards

Recognition: A Numbers Game

HR must work with and learn from the expertise of their neighborly financial personnel to help show and tell the value of employee recognition.

by Roy Saunderson

Pick any executive or board meeting. Listen to the CFO make a presentation. You may find it a short and dry, but you can’t argue about the facts. Something about those numbers they use. Everybody loves numbers.

HR personnel need to pull a page out of the CFO’s book when it comes to selling and proving the value of recognition initiatives. Better yet, start working with your financial department and have them help you monetize your HR metrics.

Frequency, incidence, rates, time, and averages are all indicators of numbers. And any of these numbers can, with the help of your financial colleagues, be turned into dollar signs. Many of the numbers you need are already in your HR database, and your financial friends will have payroll, benefits, and other budgetary numbers right at their fingertips. Your relationship with your financial counterparts will be essential in assisting you to calculate the true value of your human capital strategy.

So let’s see what happens when you put together a strategically aligned recognition program into practice. One focus could be an incentive program to reward employees for improved customer service. You may also have implemented immediate or instant recognition awards to improve retention in a high-turnover industry.

From the HR line, you ensure your regular employee engagement index is administered to obtain the opinions of your employees with some quantified measures. Customer satisfaction indexes can gather similar information.

Your employee engagement index is the total number of satisfied employees divided by the number of staff responding to the survey. Plotting your scores over time allows comparison of where improvement or decline occurred and whether targeted engagement areas are actually below or above the norm.

That’s the HR side of the numbers equation.

Research about customer service shows strong correlation of employee engagement impacting customer satisfaction, which in turn leads to superior business performance. Now it’s a matter of asking good questions. Can finance calculate productivity levels at the individual employee level? How can you correlate engagement levels with performance outcomes?

Is there any way of showing that when you improve employee recognition, it increases profit per employee?

You can ask finance to pull operating profit from the company’s financial statements and then divide that figure by the number of full-time equivalent employees to generate the profit earned per employee.

Obtain these numbers and figures well before you unveil your recognition program. Baseline data is essential in knowing where you were before you began your recognition program. Then it’s a matter of creating two tracks of numbers.

One track measures inputs such as performance of managers in recognizing employees demonstrating great customer service. If a technology-administered system is used in providing incentive points redeemed on-line for lifestyle items of choice, you can pull reports of the number of givers and recipients of recognition. Get employee feedback on their perceptions of recognition along the way.

A parallel track of metrics is the outputs, like number of customers and the sales per customer turned into financial numbers. The logic follows that rewarded and improved customer service increases customer satisfaction, which ups the number of dollars spent and affects the bottom line.

From the human capital side, we know engaged and satisfied employees correlates with higher retention rates. You can be even more specific by figuring out the retention rate of your key employees, those who are your consistent high performers. The retention rate is the number of employees present at the end of a time period (usually a year) divided by the number of employees at the beginning of the year multiplied by 100 to obtain the rate. Work with finance to add dollar signs to these numbers.

Retention levels can be compared over time.

Did it improve following the start of your recognition program? What benefit could this be to your company? Finance can tell you the costs of staff turnover, including recruitment, hiring, and training. By aligning HR data with the dollar figures from finance, you have the beginnings of a great relationship.

Tags: Engaged Workforce, Performance Management & Rewards

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