How Much to Spend on Recognition Programs?

We are often asked how much should be spent on average per recipient in a recognition program.  While there is no hard and fast answer to that, the incentive industry for years presented a formula to clients that were based on the employee’s income and duration of the award program.  If they were trying to motivate the individuals to achieve a outcome that
was quantifiable  based on profits, then the recommendation could have been 5% of income for the period if it was long term (9-12 months) and 10% of income during the program is it was short term (3-4 months). 

Recognition programs that couldn’t be quantified were simply budgeted based on what the company thought they could afford, nothing more.  The more emphasis the company leadership placed on the importance on a culture of positive reinforcement for employees who performed well, the hire the budget per employee.

This dichotomy is one of the single most important differences between incentive programs designed to produce results, and recognition programs that were designed to improve employee satisfaction.  However, drawing a line from satisfied employees the company’s bottom line results has always been difficult to do so it has always been difficult to determine a spend rate for it.

The 2015 Incentive Magazine Gift Card IQ survey asked their respondents how much they budgeted per employee for their recognition programs.  The results were as follows:   

$ Spend Per Recipient	%
Less than $25	11%
$25 to $49	28%
$50 to $99	22%
$100 to $149	17%
$150 to $199	4%
$200 to $499	8%
$500 to $999	5%
$1000 or more	5%

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