Building and Managing an Employee Recognition Budget

Usually before anything else can be done to design and implement an employee incentive or recognition program, you must have a budget.  Without one you’re stuck at the starting gate ready for the race, but the gate never opens.

Over the years we have assisted many companies in building budgets.  Without spending quality time to do it, you will have to deal with obstacle after obstacle in developing the program and constantly be looking for permission to add all the pertinent strategies to make the program as effective as it can be.

Oftentimes, many parts of your needed budgets will already be embedded in the financial workings of the organization but in separate departments or disciplines.  When this is the case, you may find that you are competing with managers of those departments who want to maintain control of those budget dollars.  That can be a common occurrence.

There are common formulas and metrics for building a program budget that all have merit, such as: 

• Percentage of compensation
• Percentage of achievement levels
• Fixed budget design
• Open-ended design

 While these standard guidelines can help create a structure to track a program once approved, they won’t help you get the approval. In the end result you will also need to be able to analyze results and determine how the budget was spent.

Over the years we have seen many guidelines of how to determine budgets.  One of the best we have seen that also includes information on now to sell the budget to executives comes from Citizen Watch Company.  You can download a copy of that guideline here.

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

Employee Engagement Research…Why Not Just Engage Them?

Surveying employees about their thoughts on a variety of issues is a time worn tradition within the HR world.  Today they are used mostly to establish a benchmark measurement for employee engagement levels. The research output is then used to respond with an enterprise level remedial plan to improve on those outputs.

If you are at the stage where you believe you have an employee engagement issue, you probably do.  And if you do use some type of employee research to determine your engagement level, what does that really tell you?  What should your employee engagement score be?  Is 100% employee engagement possible…of course not.  It is a constantly moving target. 

The concepts of "employee engagement" have been with us for many years. More than 30 years ago Gallup and other companies pioneered the concept of the "engagement survey." The roots of these surveys started in the late 1800s when Fredrick Taylor, a pioneering industrial engineer, studied how people's attitude impacted their productivity in the steel industry.

Today there are hundreds of different vendors who provide you with validated benchmarking tools to assess your employee’s level of engagement.  The problem is however that most companies feel these are not keeping up, not detailed enough, not in real time.  And they don’t consider all other work related issues which are drivers of employee commitment.

Building a highly engaged workforce takes combination of many things, each impacting people in different ways.  One thing we do believe is that employee recognition and engagement are inextricably linked.  If you have the money to research an expected employee engagement problem, why not spend your budget attempting to improve it instead?  That way the money will get into the hands of the employees where it will probably do more good than just knowing what “level” they’re on.

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

Collection of Compelling Research on Employee Recognition

Over the last few years we have collected many quotes on statistics about employee recognition and employee engagement.  Taken as a whole they seem to be formidable evidence that employee recognition is a valid business strategy.  Viewed one at a time most of these would require additional facts to determine if employee recognition was a valid way to improve engagement.  Viewed collectively however they certainly make a valid argument why your organization should consider employee recognition.

Here are a few of those quotes tats that we feel have merit when considering a program for your company:

“Career opportunities, recognition, and organization reputation are consistently top engagement drivers.” (Aon Hewitt, Trends in Global Employee Engagement)

“The number-one reason most Americans leave their jobs is that they don’t feel appreciated. In fact, 65% of people surveyed said they got no recognition for good work last year” (Gallup, Tom Rath and Donald Clifton, How Full Is Your Bucket? Positive Strategies for Work and Life)

“Organizations with recognition programs which are highly effective at enabling employee engagement had 31% lower voluntary turnover than organizations with ineffective recognition programs.” (Bersin by Deloitte, The State of Employee Recognition)

“Only 14% of organizations provide managers with the necessary tools for rewards and recognition.” (Aberdeen Group, The Power of Employee Recognition, 2013)

“60% of Best-in-Class organizations stated that employee recognition is extremely valuable in driving individual performance.” (Aberdeen Group, The Power of Employee Recognition)

“41% of companies that use peer-to-peer recognition have seen marked positive increases in customer satisfaction.” (SHRM/Globoforce Employee Recognition Survey)

“46% of senior managers view recognition programs as an investment rather than an expense." (WorldatWork, Trends in Employee Recognition)

“Being able to track the effectiveness of engagement and recognition efforts can help organizations better align engagement with business objectives and improve performance.” “43% of Best-in-Class organizations have access to metrics on recognition efforts, compared to 18% of All Others.” (Aberdeen Group, The Power of Employee Recognition)

“Companies with strategic recognition reported a mean employee turnover rate that is 23.4% lower than retention at companies without any recognition program.” (SHRM/Globoforce Employee Recognition Survey)

In 2013, “67% of Best-in-Class organizations have a formal recognition program in place, compared to 58% of Best-in-Class organizations in 2012.” (Aberdeen Group, The Power of Employee Recognition)

"In those environments where opportunity and well-being are part of the culture, strong manager performance in recognizing employee performance increases engagement by almost 60%." (Towers Watson, Turbocharging Employee Engagement: The Power of Recognition From Managers)

"Organizations with the most sophisticated recognition practices are 12 times more likely to have strong business outcomes." (Bersin by Deloitte, The State of Employee Recognition)

"Peer-to-peer recognition is 35.7% more likely to have a positive impact on financial results than manager-only recognition."   (SHRM/Globoforce Employee Recognition Survey)

"Praise and commendation from managers was rated the top motivator for performance, beating out other noncash and financial incentives, by a majority of workers (67%)" (McKinsey Motivating People, Getting Beyond Money)

"Organizations invest in recognition in a big way – spending roughly 1% of payroll on recognition activities." (WorldatWork, Trends in Employee Recognition)

"When companies spend 1% or more of payroll on recognition, 85% see a positive impact on engagement."  (SHRM/Globoforce Employee Recognition Survey)

"In those organizations in which individual employees or teams are recognized, the entity’s average core for employee results was approximately 14% higher than in organizations in which recognition does not occur." (Bersin by Deloitte, The State of Employee Recognition)

"Recognition is an important psychological need. Employees who know that they will receive recognition for acting on the brand promise will have a strong incentive to do so". (Gallup, State of the American Workplace)

"Our research finds that those organizations with the most mature employee recognition approach are 12 times more likely to have strong business results" (Bersin by Deloitte, The Employee Recognition Maturity Model)

"When asked what leaders could do more of to improve engagement, 58% of respondents replied “Give recognition.” (Psychometrics, A Study of Employee Engagement in the Canadian Workplace)

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

A Good Checklist for Successful Employee Recognition Programs

Following is a collection of ideas that we pulled from HR sources over the last few years.  We feel it contains a good framework for anyone attempting to implement formal employee recognition in your organization and help you avoid potential problems that may come as you recognize people in your workplace.

Determine what you want your outcomes to be

At face value this may appear to be an obvious step, but too many companies don’t start with this.  When you put serious thought into this step, you will increase the chance that your program will be successful and produce results.  Recognition should reinforce behaviors that lead to successful conclusions

Emphasize fairness and be consistent

Anyone who contributes should have an equal likelihood of receiving recognition for their efforts.

Recognition is not just for the top 10%

Except for the poor performers who need to be dealt with in other ways, your entire workforce can be motivated to improve performance.  Make sure you look for all the opportunities to recognize the things that are important to you.  Recognizing only the highest performer will defeat or dissatisfy all of your other contributors. 

Set guidelines so leaders can acknowledge equivalent and similar contributions

Monitor the performance of your managers to ensure fairness to all your workers. 

Employee recognition approaches and content must also be inconsistent 

Contradictory? No, not really. You should do what is necessary to make sure your employee recognition efforts do not become expectations or entitlements.

Be as specific as you can in telling the individual exactly why he is receiving the recognition

The purpose of feedback is to reinforce what you’d like to see the employee do more of; the purpose of employee recognition is the same. In fact, employee recognition is one of the most powerful forms of feedback that you can provide.

Avoid “Employees of the Month” type programs

The most overused employee recognition system is the “Employee of Month”.  If you want to build a strong culture of engagement, you should always be looking for ways to recognize your employees!  You shouldn’t be meeting once a month to try to find just the right one.  Having a recognition culture that recognizes and rewards on an often basis, even using diminimous awards to save budget dollars, will provide a great deal more engagement and employee satisfaction than an Employee of the Month program. 

Offer employee recognition as close to the event you are recognizing as possible

When a person performs positively, provide recognition and a thank you immediately.  This will positively affect the employee’s confidence and ability to do well in your organization.

Remember that employee recognition is viewed differently by different employees

Each individual has a preference for what he finds rewarding and how that recognition is most effective for him. One person may enjoy public recognition at a staff meeting; another prefers a private note in her personnel file. The best way to determine what an employee finds rewarding is to ask.

Recognition programs are about changing behavior

Any time you reinforce employee performance with recognition, you are in the process of changing behavior.  Tangible reinforcement (an award) can go a long way to changing this behavior into a habit.  Awards do not have to be expensive to be appreciated.  Whenever possible, allow the employees to choose what they want instead of giving them something you want them to have.

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net