the roi of effective recognition

33
OF THE recognition ROI effective A business case for leveraging appreciation to drive business results.

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Third-party global research commissioned by the O.C. Tanner Institute, featuring quantitative and qualitative studies, proves frequent and effective employee recognition is highly correlated to increased engagement, productivity, innovation, trust, and tenure.

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Page 1: The ROI of Effective Recognition

OF

THE

recognition

ROIeffective

A business case for leveraging appreciation to drive business results.

Page 2: The ROI of Effective Recognition

Look at many of the world’s top performing companies, and you’ll see a

commitment to people strategies.

Is appreciation nice or necessary?

Does strategic recognition deliver business results and directly impact the bottom line?

The question remains:

Page 3: The ROI of Effective Recognition

Third-party global research commissioned by the O.C. Tanner Institute, featuring quantitative and qualitative studies, proves frequent and effective employee recognition is highly correlated to increased engagement, productivity, innovation, trust, and tenure.

Page 4: The ROI of Effective Recognition

This research was further validated by 2013

client data pulled from more than seven million recognition moments, with 90%

of recognized employees reporting,

‘they felt highly motivated to contribute to the success

of their organizations.’

Page 5: The ROI of Effective Recognition

IMPACT ON

engagement

Page 6: The ROI of Effective Recognition

In 2013, The Cicero Group conducted global quantitative and

qualitative research to understand the correlation between

effective performance recognition and engagement.

performance recognition for great work significantly impacts employee engagement at a rate

of more than two to one

The finding:

Page 7: The ROI of Effective Recognition

PERCENTAGE OF EMPLOYEES WHO ARE HIGHLY ENGAGED

Highly engaged withweak recognition

Highly engaged withstrong recognition

34%

78%

Page 8: The ROI of Effective Recognition

Employee engagement affects nine performance outcomes. Compared with the bottom quartile, top-quartile engaged units have:

25%lower turnover (in high-turnover organizations)

65%lower turnover (in low-turnover organizations)

41%fewer quality incidents (defects)

48%fewer safety incidents

10%higher customer metrics

22%higher profitability

34%lower absenteeism

21%higher productivity

Page 9: The ROI of Effective Recognition

In fact, when employees receive formal recognition for going above and beyond, as well as informal

recognition for every day effort—they have...

more drive and determination

better work relationships

improved personal standing

stronger connections to their organization

Page 10: The ROI of Effective Recognition

Percentage of employees who are highly engaged in each of these areas with strong vs. weak recognition

81%

35%

76%

28%

weak recognitionstrong recognition

89%

44%

78%

35%

Drive & Determination

Connection to the Company

Work Relationships

Know How Their Work Makes a Difference

Page 11: The ROI of Effective Recognition

IT’S WORTH ASKING WHAT COMES FIRST:

Or does that matter?

recognition or engagement?

Page 12: The ROI of Effective Recognition

This 2013 research illustrates that recognition makes all employees—both the unengaged and highly engaged—feel motivated, appreciated, and satisfied at work. This in turn increases a commitment to success, which leads to more recognition. It’s a mutually reinforcing cycle.

recognition

feel motivated

committo success

Page 13: The ROI of Effective Recognition

discouragement, disenchantment,and the possibility of driving even

top performers away.

The same research also points out the adverse effects of weak recognition:

Page 14: The ROI of Effective Recognition

Recognition makes me feel valued and recognized. It gives me pride in my personal work and the company as a whole.

— Focus Group Participant, Cicero Research 2013

““

Page 15: The ROI of Effective Recognition

INNOVATION &

productivity

What about the recognition’s impact on innovation and productivity?

Page 16: The ROI of Effective Recognition

The same research found employees who receive strong recognition are 33% more likely to be proactively innovating...

generating 2x as many ideas per month compared to those who aren’t recognized well.

Page 17: The ROI of Effective Recognition

Further, companies that provide effective performance recognition are more than 2x as likely to be highly innovative.

Page 18: The ROI of Effective Recognition

When asked which benefit would do the most to encourage innovation and efficiency, employees reported:

Recognition forongoing effort

5% salarybonus

Recognition forgoing above and beyond

27%

41%

32%

Page 19: The ROI of Effective Recognition

The same research also calls out the impact strong recognition has on both individual and team output.

WeakRecognition

StrongRecognition

WeakRecognition

StrongRecognition

40%53%

28%42%

Percentage of employees working at 80% capacity or above

Percentage of employees who feel their immediate work team is working at 80% of capacity or higher

Page 20: The ROI of Effective Recognition

Recognition makes me want to help out more. It makes me want to work harder and develop new ways of doing things.

— Focus Group Participant, Cicero Research 2013

““

Page 21: The ROI of Effective Recognition

TRUST & MANAGER

relationshipsFor years we’ve heard 79% of employees leave managers not their companies.

Page 22: The ROI of Effective Recognition

Not surprisingly, the Cicero Research reported that among those who receive strong recognition 87% say they have a strong relationship with their direct managers; only 51% of those receivingweak recognition say the same.

Page 23: The ROI of Effective Recognition

Again, when asked which benefit would most improve their relationship with their direct manager, employees reported:

Recognition forongoing effort

5% salarybonus

Recognition forgoing above and beyond

50%

28%22%

Page 24: The ROI of Effective Recognition

Performance recognition has been proven to drive business results such as innovation and productivity; increase engagement helping organizations realize the return on critical metrics; and improve trust with managers, team members, and the company overall.

THE KEY: offer a solution that provides a variety of ways to appreciate everyday efforts as well as results for going above and beyond.

Page 25: The ROI of Effective Recognition

IMPACT ON TENTURE &

companyconnection

Page 26: The ROI of Effective Recognition

Additional research by The Cicero Group was conducted to specifically focus on the impact of celebrating career achievement over time, or years of service.

Two findings of this study were found to be true both globally and cross-generationally:

Page 27: The ROI of Effective Recognition

Years of service programs are strongly correlated with increased tenure:

1

Companies offering a years-of-service award program maintain employees an average of two to three years longer than companies without a program

Employees plan to stay at their current employer for an additional two years on top of that if the program is perceived to be effective

Without ServiceAwards

With ServiceAwards

4.7

6.7

years

years

Page 28: The ROI of Effective Recognition

When done effectively, years of service programs improve an additional set of key

employee engagement metrics:2

First, they communicate that the company cares about employees, which improves vertical engagement from employee to manager;

Secondly, they help employees feel they fit in and belong, which improves horizontal engagement from employee with peers

Page 29: The ROI of Effective Recognition

MANAGEMENT

EMPLOYEES CO-WORKERS

The Effect Of Years O

f Service Awards

Horizontal Engagement

Ve

rtic

al

En

gag

em

en

t

Feel the company cares about its employees

Key Insight: Career achievement programs touch every employee, at every level.

Page 30: The ROI of Effective Recognition

Both studies show how engagement and business metrics are impacted by programs that reward performance—in both formal and informal ways—as well those that celebrate career achievement. As proven, organizationsshould see recognition not as an optional nice to have perk, but rather a necessary strategy to deliver the business results they seek.

Page 31: The ROI of Effective Recognition

ABOUT THE RESEARCH

The two studies referenced here were conducted by The Cicero Group

in 2012 and 2013. Service Awards: Quantifying the

Return-on-Investment and The Effect of Performance Recognition on

Employee Engagement both followed the same methodology and

were conducted in two phases. Both studies included qualitative and

quantitative research across an expansive breadth of demographic

groups. In the first phase, qualitative research comprised of interviews

and focus groups across varying geographies, cultures, and ages. This

was further supported by international focus groups with full-time

employees as well as in-depth interviews with human resource

executives and business managers.

The second phase of both studies comprised of a global survey

completed by employees and managers in 10 countries.

Page 32: The ROI of Effective Recognition

O.C. TANNER AND THE O.C. TANNER INSTITUTE

O. C. Tanner helps the world inspire and appreciate great work.

Through our innovative cloud-based software, tools, awards,

education, and research, we provide thought leadership and strategic

recognition solutions for thousands of clients globally. Designed to

engage talent, increase performance, and drive corporate goals, our

solutions create personalized recognition experiences delivered

through a smart technology platform.

The O.C. Tanner Institute regularly commissions research and provides

a global forum for exchanging ideas about recognition, engagement,

leadership, culture, human values, and sound business principles.

Page 33: The ROI of Effective Recognition

JOIN OUR COMMUNITYGet the latest recognition insights and best practices.

Download the research paper:

SOURCES: O.C. Tanner Client Survey Data 2013 | Gallup 2012 surveys of 1.4 million employees | The Effect of Performance Recognition on Employee Engagement 2013 | Service Awards: Quantifying the Return-on-Investment 2012