Create a culture that means business™
If you’re a supervisor or manager, you probably know how much more productive your team is when you make the effort to recognize your employees. In order to take employee recognition to the next level, however, and establish a company-wide system of rewards, you’ll need to be able to present the investment to your CEO or CFO in terms of the financial bottom line.
Fortunately, a growing body of research makes this easy. A Workplace Trends Report finds that recognition programs yield 50 percent higher sales, 27 percent higher profits and 21 percent better retention. With a solid positive ROI to back it up, an employee recognition program can be treated as part of your company’s overall strategy. A Cornell University paper on recognition in the workplace points out, “While recognition is not new, it is finally becoming more strategic as programs align recognition with business objectives and desired behavior.” Here’s some of the research that describes the nuts and bolts of why rewarding employees ends up boosting the company’s bottom line:
Reward and recognize your employees to boost engagement
The benefits of expressing your appreciation of employees begin with engagement. Unengaged employees can cost your business thousands of dollars, because they’re not concerned about being efficient during their work hours. Instead, they tend to waste time and engage in countless distractions, just trying to get through the day in whatever way they can. If you have an employee who wastes just 15 minutes a day, that’s an hour and a quarter per week, or 3.125 percent of a work week. Looking at a sample service business with $3 million in revenue, this lost productivity from just one worker can add up to $93,750 in a year.
To avoid the lost revenue of alienated workers, you might be tempted to block social media sites from company computers, or institute various rules about not coming back late from breaks. However, the fact is that what really motivates people is positive reinforcement. Recognition is the number one driver of employee engagement, according to our Achievers’ video, and every 1 percent increase in engagement results in an additional .6 percent growth in your company’s sales. The Cornell research paper mentioned above notes that when employee engagement varies, 41 percent of that variation is directly due to the amount and quality of recognition that the employee receives.
Engaged employees show up and pay attention
Balancing work and outside life is tricky for everyone as our lives become more complex, but when employees are highly engaged in their jobs, they manage to show up to work despite the outside commitments that compete for their time. A Gallup research study states that engaged employees take fewer than three sick days each year, on average, while disengaged ones take more than six sick days. Your HR department is probably all too well-acquainted with the high cost of accidents and absences, and anything you can do to reduce these figures will contribute to the long-term sustainability of your organization.
There’s space for your company at the front of the pack
Despite the proven fact that dedicating resources to employee recognition is financially prudent, many organizations still hesitate to follow through with this strategy. In a Forbes article, Ryan Scott, founder and CEO of Causecast, points out that “One of the top concerns for HR executives in 2017 is how to raise employee engagement, and for good reason. Engagement is on the decline across the world, and that spells trouble for business leaders everywhere.”
Gallup adds to this picture: Fewer than one-third of employees would strongly agree with the statement that they have received recognition or praise for doing good work within the last seven days. The authors of this Gallup study state that the role of recognition in producing engagement “might be one of the greatest missed opportunities for leaders and managers… in their search for new ideas and approaches, organizations could be overlooking one of the most easily executed strategies: employee recognition.” The fact that many companies are still missing out on the benefits of having a strong employee recognition and rewards program means that you can gain extra ground on your competitors by putting the power of recognition to work in your organization. When you recognize your employees, numerous benefits follow including improved retention rates to stronger productivity.
Employee recognition is key to staying competitive
It’s beautifully logical, when you put it all together: Embracing a system to optimize appreciation and recognition within your company will yield an abundance of benefits. According to the Cornell research, “Recognition programs, on their own, can help instill and reinforce corporate values, help with retention, and positively impact financial results. They also boost productivity, engagement, profit margins, customer retention, employee retention, ROE and ROA.” Taken together, these advantages will provide a robust return on your investment in employee recognition. Furthermore, they will add luster to your employer brand and help you compete for the top talent in your industry.
To learn more about how to boost employee recognition and business results across your organization, download our ebook. “Employee Recognition: More Than Just a Day.”