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Recognize Your Employees and Strengthen Your Bottom Line

If you’re a supervisor or manager, you probably know how much more productive your team is when you make the effort to recognize each person’s contribution. 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:

Rewards and Recognition Strengthen Employee 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.

 
The Value of Recognition and Engagement 

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 rewards program means that you can gain extra ground on your competitors by putting the power of recognition to work in your organization.

Employee Recognition Is Key to Staying Competitive

It’s beautifully logical, when you put it all together: Embracing a system to optimize employee appreciation and recognize others 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 to recognize employees. 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 recognize employees and build a strong business in a time of declining employee engagement, download our ebook Employee Recognition: More Than Just a Day.

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Shift to Recognition

The Shift from Years of Service Awards to a Culture of Recognition

We’ve all been there. Your coworker Sam is moving on to a new opportunity. Goodbyes are being said. Personal email addresses are being exchanged so everyone can “stay in touch”. Sam’s cardboard box is filled with the usual suspects: family photos, a mousepad with the Dallas Cowboys logo, the chrome stapler he secretly lifted from the supply closet and a Ziplock bag full of client business cards he has gathered over the years.

employee turnover

Now, here is where the real fun begins. Sam’s footsteps can still be heard in the hallway when the vultures swoop in at his desk. The Pilot 2.0 pens, the ones that draw the super clean lines without smearing, go first. The post it notes and desk calculator go next. Bill from accounting grabs the XXL Chili Cookoff sweatshirt for his 6’4” nephew who plays nose tackle in Idaho. By the time the dust settles, inventory has grown scarce. However, a few items have remained unclaimed despite numerous scavengers passing by. Sam’s three “Account Executive of the Half” awards have zero bids. What is Sam supposed to do with these? Set them up on his desk at his new gig? Another drawer holds the faux leather briefcase with the company logo stitched on it that he received for his five-year work anniversary. Sam only had three options for his award and he selected the briefcase over the whiskey decanter (he already has one) and the cherry wood desk clock (his watch works fine). Sam won’t need it in the future as this company is now firmly in his past.

Why would Sam leave his years of service award behind? These type of awards are meant to be a reward for the culmination of five years of hard work! Does an unused briefcase truly represent the appreciation his previous company had for him? Sam has worked his tail off for 260 weeks and his big thank you comes in the form of a pleather bag to carry to work – the same bag that has been gathering dust in his desk drawer since the day he received it. To make matters worse, every employee next to Sam receives the same type of awards at their five-year work anniversary which makes the gesture less personalized. Whether your work performance is the strongest or the weakest in the company, everyone gets the same reward. Logic would assume that a costly rewards program would focus on performance yet 87 percent of recognition programs focus on tenure.

This brings up a legitimate question –  is a tenure of 5 years the benchmark to define loyalty? Do employees not take actions on a monthly, weekly or daily basis to benefit their company and confirm their commitment? For Sam, there were dozens of moments during that time span that were worthy of recognition. Like the time he renewed his biggest client despite them having given a verbal commitment to his competition. What about the time Sam worked 10 hours on Thanksgiving Day to finalize the forecast projections the CFO dropped on everyone at the last minute? Or maybe the 11 folks he acted as a mentor to when they were new hires. If you demand Sam’s loyalty, you must recognize him in the moments he displays it. After all, 59 percent of employees are not recognized at their preferred frequency. Nobody is sticking around for half of a decade just to get a lapel pin, gold watch or acrylic awards. In fact, the high majority of employees will never make it to a 5-year anniversary at a company. According to the Bureau of Labor Statistics, the average job tenure in the US is just 4.2 years. And the millennial workforce, who is expected to make up 75 percent of the workforce by 2025, will switch jobs four times in their first decade out of college!

What’s the solution? How do you build loyalty in the modern job-hopping workforce? The secret lies in building a true culture of recognition. Employee recognition should be given frequently and in the moment. This can include performance achievements, learning and development accomplishments and even celebrations such as birthdays and work anniversaries. Below are six keys to a successful recognition strategy.

  1. Speak to employees in their preferred language
    The modern employee wants convenience and information delivered in a manner that is easy to use, available via mobile and in the flow of work.
  1. Increase the frequency in which you recognize to drive behavior
    Letting employees know that their positive contributions are noticed drives discretionary effort because what gets recognized gets repeated.
  1. Celebrate milestones in the moment
    Find reasons to show employee appreciation such as finishing an onboarding checklist, completion of modules in a learning management system, birthdays, service anniversaries, etc.
  1. Integrate multiple programs into your recognition and engagement platform
    Make your recognition and engagement platform into a one-stop shop. Integrate other company programs such as HRIS, LMS, Wellness, Charity, Innovation and Referrals.
  1. Incorporate a non-monetary recognition strategy
    Not all recognitions have to include a monetary reward. Allowing for social recognitions increases frequency and drives incremental effort.
  1. Research successful employee recognition programs
    You’re not alone when it comes to building an impactful recognition strategy. Take a look at how other companies are successfully engaging their workforces through employee recognition. For example, you can gather inspiration from Horizon BCBSNJ’s and Smart & Final’s success stories. Access more HR success stories from leading companies here.

As the modern workforce shifts from year of service awards to sophisticated recognition and engagement platforms, it’s important to keep in my mind my six keys to a successful recognition strategy. From now on, avoid having the next Sam walk out your door by showing him appreciation from the start and on a regular basis.

To learn more, download Achievers eBook Recognition Culture: The MVP of Employee Experience.

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We’re excited to share that Achievers has been nominated for the Canadian HR Reporter’s 2018 Readers’ Choice Awards in two categories: Employee Engagement Programs and Recognition Programs & Awards. Share your love for Achievers and vote for us today before the March 19, 2018 deadline. Vote here.

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About the Author
Clinton Bean Headshot
Clint Bean is an Enterprise Account Executive at Achievers dedicated to helping large corporations better understand the evolution of engagement. He resides in Texas with his wife and 3 sons and can often be found on the sidelines coaching basketball and soccer or enjoying a round of golf. Connect with Clint on LinkedIn.

 

 

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The Power Behind Engagement

Top Four Benefits of Employee Engagement

People are always complaining about their jobs; whether it’s a boss who drives you up the wall, work that bores you to tears or even the nagging suspicion that you’re being underpaid, each unhappy employee has their own reasons for dreading a Monday morning. But when all this unhappiness and discontent gets added up, it turns out it’s having a profound impact on economies everywhere: we’re in the midst of a global employee engagement crisis, with just 13% of employees worldwide engaged with their jobs.

So what exactly does this mean? An easy way to think about employee engagement is to look at your existing staff. Engaged staff are often your best performing employees – they’re efficient, motivated, understand their role and tackle it to the best of their ability. Naturally, we think all employees will be like that when we hire them – otherwise, why bother?

During job interviews, most candidates are very enthusiastic about the job on offer and if you hire them, it’s normally this enthused and engaged person that you actually want working for you. Yet if you find yourself looking at that same excited candidate a year into the job and seeing that they’re unmotivated, checked out and unhappy, it’s clear that they’ve become disengaged. If that’s the case with many of your employees, you might have a problem brewing.

employee engagement table

It doesn’t matter if your business is a tiny start-up or huge multinational corporation – disengaged staff can run it to the ground. As employee engagement drops off, business owners find that deadlines start getting missed, staff are constantly off sick and employees start leaving the business in droves. Work slows down to a crawl, leaving engaged staff to pick up the slack and heightening their stress levels (possibly leading to them hating their jobs too!)

Luckily, by focusing on employee engagement and happiness, you can revive even the most lifeless of workforces. Read on to find out about the top benefits of employee engagement, along with some tips on how to improve it throughout your business.

1. Cost-Savings

Disengaged staff are slowly draining the life out of your business. In the UK, employee disengagement is costing businesses around £340 billion every single year in lost productivity, while in the USA Gallup estimates this figure rises as high as $550 billion.

It’s easy to see how – if you’re paying someone to do a job and they’ve only put in half the effort necessary, they’ll still get paid even if you don’t get the results you need. As for very disengaged employees (often easily identified by their miserable and disruptive attitudes), you may as well be giving money away. Employee disengagement can easily decimate the return on investment on salaries.

On the other hand, engaged employees will improve your profitability and drive revenue. In fact, workforce opinion surveys show that highly engaged employees can boost business performance by 30%. This is because engaged employees are emotionally committed to their company, its values and its goals. They want the business to do well and will do their best to help it succeed. The hard numbers prove this too – companies with engaged employees outperform those without by 202%.

Luckily, there are ways you can help to foster this sort of commitment. For instance, people who are bored to death at their jobs are unlikely to care about it much, whereas 78% of employees who say their companies encourage creativity and innovation are committed to their employer. It’s easy for businesses to get into a “this is how we’ve always done it” rut and resist change, but data like this shows that this attitude is detrimental to employee engagement. Instead, actively encourage employees to innovate and explore new ways to do things. They’ll enjoy their jobs more, be more committed and help to power your business forwards.

2. Lower Turnover

Did you know that whenever a staff member leaves, it can cost 33% of their salary to replace them? Hiring recruiters is expensive, but even if you look for someone independently you’re going to need to spend valuable time and money on advertising the position, and screening and interviewing candidates. And that’s not the end of the problem – it’s unlikely a new person will be as comfortable in the role as their predecessor – they’ll require training and time to acclimatize to their new job. In fact, a new employee can take up to 2 full years to reach the same level of productivity as an existing staff member. In the vast majority of circumstances, that’s going to mean some degree of lost productivity.

It’s clearly in a business’ best interests to retain as many of their staff as possible, but with widespread disengagement becoming more and more of a problem, employees are more likely to leave their jobs than ever before. A job for life has become a thing of the past. Estimates vary, but research suggests that as many as 51% of employees were looking to leave their jobs in 2017. And for those who are worried about employees being poached by recruiters and competitors, you might have reason to be paranoid – 81% of employees would consider leaving their current role for the right offer.

On the other hand, a marker of engaged staff is company loyalty. Highly engaged staff are 87% less likely to leave an organisation than less engaged staff. So if you want to reduce staff turnover, it’s worthwhile to take a look at exactly what’s ruining engagement and driving people to leave:

With this in mind, who you hire as a manager and the way you train them is absolutely vital for employee engagement. Audit your existing managers to ensure that they’re fit to lead, and be selective when hiring new ones. An effective manager prioritizes supporting their staff, leaving employees feeling far less disenchanted with their jobs. Furthermore, by implementing company-wide recognition programs, staff will feel more appreciated and motivated to work (rather than just motivated to find a new job).

3. More Productive Employees

As Albert Einstein once said, “The best creative work is never done when one is unhappy.” This remains true in the modern workplace, with overall productivity increasing by 20-25% when employees are engaged.

A big factor in reducing productivity and engagement is work overload and excessive stress. Some managers think that by setting more work and piling the pressure on, they’ll get better results. If you’ve ever felt overwhelmed at work, you probably know that the opposite is true:

It’s clear that stress is not an effective motivator. Instead, take a positive and constructive approach to each employee’s work to ensure that workloads are manageable. Implement effective and personalized feedback and communication structures that allow employees to raise any problems they’re having in a non-judgmental setting.

4. Happier Customers

Happy employees create happy and satisfied customers, and the numbers prove it: companies with a formalized employee engagement program enjoy 233% greater customer loyalty. It makes sense, really – if you’re unhappy at work, the last thing you want to do is have a chirpy, helpful conversation with a customer.

It’s worth noting that part of the reason for this is that engaged employees are often well-trained employees. Far too often, companies neglect thorough training programs in favor of ad-hoc and informal “on-the-job” style training.  This sort of training often delivers inconsistent results, with employees feeling they lack the skills and knowledge to perform their role properly: 28% of employees feel they’d be more productive with better training.

Meanwhile, employees who have received comprehensive training deliver superior customer service and achieve better results for their company. For salespeople, formal and dynamic coaching can improve their win rates by 28%. Furthermore, a lack of training frustrates employees and gives the impression there’s little room for development in their current role. Indeed, ongoing employee development programs beyond initial training periods are absolutely crucial; in a survey by CV Library, 31% of respondents cited a lack of development opportunities as the top reason for wanting to quit their job. If you want engaged employees, you need to invest in their future. After all, you stand to benefit too!

The Bottom Line: Employee Engagement is Worth the Investment

At the end of the day, your employees are more valuable and important to your business than any other asset. People spend a third of their lives at work, and it’s in your best interests to make sure they’re not miserable that entire time.

Management shouldn’t be about forcing as much work as possible out of employees at any cost. You want employees that are happy at work & want their company to succeed, rather than someone who’s looking for a quick exit because they’re unhappy.  By prioritizing employee engagement, you can enjoy all the above benefits: greater profits, lower turnover, more productive employees & happier customers…It really is a win-win situation!

To learn more about the importance of employee engagement, take a look at Achievers white paper The True Cost of Employee Disengagement.

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About the Author
Becca Armstrong Becca Armstrong is a content writer for MadMax Adventures, a purpose build outdoor activity center near Edinburgh, Scotland. They run corporate away-days for businesses that want to improve organisational performance by developing more cohesive teams, rewarding high performance or building relationships with valued customers.