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OF
THE
recognition
ROIeffective
A business case for leveraging appreciation to drive business results.
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:
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.
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.’
IMPACT ON
engagement
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:
PERCENTAGE OF EMPLOYEES WHO ARE HIGHLY ENGAGED
Highly engaged withweak recognition
Highly engaged withstrong recognition
34%
78%
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
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
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
IT’S WORTH ASKING WHAT COMES FIRST:
Or does that matter?
recognition or engagement?
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
discouragement, disenchantment,and the possibility of driving even
top performers away.
The same research also points out the adverse effects of weak 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
““
INNOVATION &
productivity
What about the recognition’s impact on innovation and productivity?
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.
Further, companies that provide effective performance recognition are more than 2x as likely to be highly innovative.
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%
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
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
““
TRUST & MANAGER
relationshipsFor years we’ve heard 79% of employees leave managers not their companies.
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.
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%
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.
IMPACT ON TENTURE &
companyconnection
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:
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
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
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.
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.
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.
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.
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