SPRING 2008 : VOLUME 6, ISSUE 2www.HROEurope.com

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C O V E R S T O R Y

Engagement WorthCelebrating

GLOBAL CROSSING WANTED A RECOGNITION PROGRAM THAT WOULD ELICITCOMMITMENT FROM ITS EMPLOYEES WORLDWIDE. GLOBOFORCE HAD A CUSTOM-MADE SOLUTION. BY RUSS BANHAM

This is just one of the conclusions culledfrom Towers Perrin’s recent annual GlobalWorkforce Survey. The study revealed that onlyone out of every five employees of global com-panies gives his or her best efforts to their work,creating an “engagement gap” that poses seriousrisks to corporate financial performance.

At Global Crossing, a global provider oftelecommunications solutions, employeeengagement is a strategic imperative. A long-time believer in the value of recognizingemployees’ contributions with a range of finan-cial rewards, Global Crossing recently took thispractice to a new level, entering into an out-sourcing relationship with Globoforce Inc. Theprovider will run, manage, and monitor GlobalCrossing’s recognition program worldwide.

“Recognizing employees for their contribu-tions to our strategic initiatives has proven itsmettle,” explained Bruce Colligan, vice presi-dent of human resources at Florham Park, NJ-based Global Crossing. “When people feelthey’re valued, they become more motivated,and that drives better overall performance.”

Employee recognition programs to improvesales, earnings, and customer service have beenaround since the beginnings of commerce andindustry (see sidebar). In recent years the con-cept has become more organized, efficient, andautomated, with many organizations turning toexpert providers like Globoforce to administer

their programs. One reason for outsourcing is thereturn on investment—an estimated 109 percentthree-year median return to shareholders forcompanies utilizing such programs, versus a 52percent return for those not using them, accord-ing to a study by Watson Wyatt Worldwide.

ENGAGEMENT = GOOD BUSINESSOther studies posit similar conclusions. A Gallupsurvey of millions of employees worldwide indi-cated organizations with higher-than-averagelevels of employee engagement realized 27 per-cent higher profits, 50 percent higher sales, 50percent higher customer loyalty levels, and 38percent above-average productivity than thosewithout. Towers Perrin affirms these figures,gauging that a 15 percent improvement in lev-els of employee engagement will produce a 2 per-cent improvement in operating margin.

With such returns possibly in store, one won-ders why more companies aren’t effectivelyengaging their workers: Four out of 10 employ-ees are either “disenchanted” or “disengaged,”Towers Perrin stated, and are “not performinganything near their true capability, chieflybecause they don’t have the kind of rational,emotional and motivational connections to thecompany that help drive discretionary effort.”

But Global Crossing won’t fall into this trap.Its EDGE program—Employees Driven toGlobal Excellence—is predicated on recogniz-

ing employees worldwide for contributing to itsstrategic objectives, such as “exceeding cus-tomer expectations” or “being an outstandingteam player.” A provider of telecommunica-tions solutions over the world’s first integratedglobal IP-based network, Global Crossing hasapproximately 5,000 employees located in morethan 35 countries. All are eligible for the EDGEprogram’s Gold, Silver, and Bronze awards.“We’re averaging about 300 awards per month,and that number is growing,” said Colligan.“We’ve had tremendous positive feedback.”

Winners of the Gold award receive a $100 giftcertificate from one of Globoforce’s 3,000 mer-chants worldwide, including such retailers asMacy’s and Amazon.com. Added up, the mer-chants collectively offer an astonishing 25 mil-lion items from which winners can select.

“We have the world’s largest selection ofmerchandise for companies awarding theiremployees to choose from,” said Derek Irvine,vice president of global strategy at GloboforceInc., which is co-headquartered in Dublin,Ireland, and Southborough, MA. “In the past,companies would have programs in whichemployees were given cash or a gift based onthe employee’s perceived tastes. The problemwith cash is that employees confuse the awardwith compensation and don’t get the sensethat it is really about thanking them for doingsomething special to assist a strategic initiative.They tend to spend the money on gas and gro-ceries, rather than on something just for them.”

Selecting a gift based on perceived tastespresents a different drawback. “You hear thatTim likes a particular sport and then buy himmerchandise relating to that sport, only tolearn it was the wrong gift,” Irvine said. “We’vefound the best way to reward an employee is togive them a gift card of their choosing. With25 million items to choose from, they’re sureto pick something of meaning.”

An engaged, committed workforce can makethe difference between winning and losing inhighly competitive industries, and yet manycompanies are populated with workers whofeel little kinship or commitment.

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Global Crossing’s VP of humanresources, Bruce Colligan, talksto a colleague at the company’sFlorham Park, NJ, offices.

Global Crossing’s Bruce Colligan(center) spearheads the company’sglobal recognition program.

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GLOBAL CULTURAL CONNECTIONSAnother advantage of a gift card is that iteffectively addresses the varied tastes ofemployees from multiple cultures and spreadacross different generations. “Whether you’rein Australia, South Africa or New York, youget to choose something that is local and cul-turally sensitive,” Irvine explains.

Global Crossing and Globoforce hooked upin January after the former ended its engagementwith another employee recognition serviceprovider. The reason for the termination wasthat vendor’s inability to keep pace with GlobalCrossing’s geographic expansion. In 2006, thecompany had acquired high-speed data net-working company Fibernet Group Plc in theUK. In addition, it bought Impsat, a leadingprovider of IP, hosting, and value-added datasolutions in Argentina, Colombia, Brazil,Venezuela, Ecuador, Chile, and Peru.

“We wanted a vendor that would be able totake care of us globally,” Colligan said. “We alsowanted them to help us drive a culture change.Our overarching goal is to make GlobalCrossing the preferred employer of choice, aplace where people want to come and stay.”

Globoforce is well positioned to do justthat. The privately held company operates in135 countries and tallies more than 1.7 millionemployees worldwide using its strategicemployee recognition solutions. Among its100-plus clients are such global giants as DowChemical, Amgen, Intel, Intuit, Nortel, andProctor and Gamble. The company’s softwareis built on a dynamic J2EE platform, and isscalable from one user to millions of them.

Here’s how it works: An employee is nom-inated by his or her manager or a peer on theEDGE site, which resides on the company’sintranet. The nominator passes through a sin-gle sign-on process to obviate security issuesand then enters the EDGE site, where he orshe reads a message from the CEO about theprogram, its intent and benefits, and nomi-nating guidelines. The nominator then usesthe site’s search feature to select the nominee’sname from a database of employees, and makesthe nomination for a Gold, Silver or Bronzeaward, based on the company’s chosen param-eters for the awards—the strategic benefit.(Silver brings a $75 award and Bronze, $50.)

“If a company has determined that ‘passionfor customer excellence’ is a corporate value,the nominator will align the nomination tothat subject,” Irvine explains.

Once the nomination is made, it undergoesan approval hierarchy, again based on the com-pany’s parameters. Globoforce maps and push-es the workflow to the appropriate managerdeemed responsible for approving the award. Ifmore than one person must sign off on theapproval decision, the nomination is pushedfarther up the chain. Once approved—depend-ing on the client’s stated wishes—the nomineeis either notified of the award through theautomated system or his or her supervisor isnotified and an event is quickly put together tomake the award in person (this is how GlobalCrossing does it). Given the dashboardingcapabilities of the Globoforce platform, othersin the company right on up to the CEO mayalso be notified of the recognition award win-

ner. Global Crossing, for example, has a site onits EDGE program where all employees acrossthe world can read about the winners.

Three months after signing with the provider,the system was ready for beta testing at GlobalCrossing. “We sailed through it without any hic-cups,” Colligan said. “We’ve been getting ravereviews ever since—not just from employees,but also from our CEO (John Legere).Whenever he visits one of our locations, he doesa town hall meeting and recognizes the Goldwinners in attendance at that site. My teamgives him a list of the winners, and he con-gratulates them and gives them a little plaque.We also do a story on the Gold winners in TheCrossing, our monthly in-house magazine.”

Colligan won’t reveal what Global Crossingis paying to outsource its employee recognitionprogram to Globoforce, but he maintains thatthe return on investment is worth every penny.“We budget for the program each calendar year,and then my team tracks and monitors usagevery closely,” he said. “A good thing aboutGloboforce is that it offers very sophisticatedtracking services in this regard. We’re able toensure we’re awarding truly only those peoplewho go above and beyond, and not someonewho was able to get us a deal on more pencils inthe storeroom. The system also allows us toreceive a nomination, question its validity, andthen tell the nominator we need more infor-mation to proceed further.”

Recent awards made by the company showthe spirit of the program. In the U.K., an employee received a Gold award for helpingget a customer site up and running in China wellbefore the deadline date. Another employeewon the Gold for fostering an environment ofcooperation with customers and contractors inPanama, while a U.S.-based employee receivedthe award for going above and beyond in final-izing and negotiating key contract amendmentsand settlements, dropping everything else froma busy workload to address items on the fly.

Although Global Crossing hasn’t evaluatedthe ROI of the recognition program in harddollar terms, its softer analysis of employee sat-isfaction surveys indicates it is succeeding inits intent. “Feedback has been tremendous; wehear nothing but really good stuff,” Colligansaid. “This is money well spent, and we are con-vinced it will be part of our DNA going forward.”

Irvine said virtually all its clients have thesame response. “A well-executed strategic, asopposed to tactical and ad hoc employee recog-nition program, assures an employee’s commit-ment to the employer, while aligning this

Derek Irvine, Globoforce’sVP of global strategy,keeps an eye on the cultural relevance of

clients’ recognition efforts.

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engagement to the company’s strategic goals,” hesaid. “This, in turn, assures an employee’s engage-ment is directly driving demonstrable increasesin profits, sales, customer loyalty, and so on.”

REGIONAL RELEVANCEHe added, “In addition to this strategic focus, wealso provide the client the ability to recognizeemployees globally, assuring rewards are equitableand fair one country to the next.” The mer-chandise offered by some recognition companiesmight suit an employee in India, but not one inItaly. Globoforce not only has this covered, butit also makes necessary foreign currency adjust-ments to reflect variances in financial value,taking into account such economic factors asinflation and currency exchange fluctuations.

Globoforce clients are urged to set clear goalsinsofar as what they expect at the outset of theprogram, and then measure this over time.“Clients obtain information on the success oftheir programs via employee satisfaction scores,but more and more we’re seeing them puttogether surveys that really take a deep look atthe current psychic of the workforce,” Irvineexplained. “We’ve seen time and again double-digit percentage improvements from one surveyto the next in satisfaction rates.”

The firm’s literature notes a particular clientwith more than 40,000 global employees that,in the space of 24 months, increased employeesatisfaction and engagement from 60 percent tothe high 80s percentile. In part, this may bedue to Globoforce’s recommendation to recog-nize more than just a few employees, based onthe theory that the more people receive awards,the greater the awareness is among all employ-ees that the company is engaged in recognizingand rewarding its people. As Irvine put it, “Betterresults are guaranteed by frequently rewardingmore people with smaller rewards, than fewerpeople infrequently with bigger awards.”

It goes without saying that a happy, satisfied,and appreciated employee is likely to work hard-er and more productively. When that occurs, thebottom-line results are enticing. RussellInvestment Group found that the cumulativestock return for companies cited in Fortune

magazine’s “100 Best Companies to Work For,”is a staggering 200.6 percent (1998–2005), com-pared to the cumulative stock return of theStandard & Poor’s 500, a comparatively measly45.6 percent over the period.

Disengaged employees generate financialmetrics of a different kind. According to theGallup survey, organizations with a lot of dis-satisfied employees have higher rates of absen-teeism and lower productivity, not to mentiona 51 percent higher turnover rate than organi-zations with engaged employees. The lower pro-ductivity alone costs the U.S. economy about$328 billion annually, the survey estimated.

“Engaged employees are strong word-of-mouthambassadors who spread the word about howgreat a place they think their company is,”Irvine said. “This percolates within the organ-ization and without, helping to build a culturein which every employee is driven to succeed.”

By fostering a “thank you” culture in anorganization, motivating employees to take pridein their work, and encouraging workers to rec-ognize the service of their peers, recognitionprograms are differentiating companies fromthe competition. Senior executives may get thebig bucks and much of the kudos, but it’s therank and file that truly make a difference. HROE

Recognizing the contributions of employees has been around since the formation of thefirst companies, from a simple pat on the back and encouraging words to the more finan-cially fulfilling bonus compensation. While more formalized recognition programs may bea bit “touchy-feely” for some organizations, those that subscribe to the notion that anengaged employee is a more productive one are in the far greater majority.

In the hunter-gatherer days of formal employee recognition programs (read: the1990s), corporate efforts tended to be internal and tactical. “Companies would awardthings like going above the call of duty by gathering a few people and taking the personout to dinner,” said Derek Irvine, vice president of global strategy at employee recognitionprovider Globoforce Inc. “Many programs were limited to awards simply recognizingyears of service. Most were ad hoc and not really well thought out.”

Globoforce takes a different tack. The firm links employee recognition awards to thestrategic initiatives of the client. In doing this, the client is assured that employees areengaged in actions that drive improved results and rewarded for the effort.

“When employees display appropriate behaviors in line with achieving specific goals andinitiatives, it reinforces what the company is trying to do strategically,” Irvine explained.

The tangible financial benefits are many. For example, engaging employees throughfrequent and consistent recognition of their efforts binds them more tightly to the organ-ization, thereby reducing costs associated with recruiting and training new employees.According to a survey by the Gallup organization, employees who feel recognized are halfas likely to leave their employ as those who do not feel recognized.

How best to provide recognition? Globoforce data indicate companies run the gamut interms of the financial size of the employee’s award, from $50 in merchandise bought witha gift card to upwards of $2,000. Whatever the value, Irvine comments that more awardsacross the workforce are better than few and certainly far better than none at all.

As famed Chinese philosopher Lao Tse once said, “Fail to honor people, and they willfail to honor you.”

The Business Case for Recognition

Reprinted with permission from HRO Europe, Spring 2008. On the Web at www.hroeurope.com.© Crossing Media, LLC. All Rights Reserved. FosteReprints: 866-879-9144, www.marketingreprints.com.

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