The ROI of Effective Recognition
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The document summarizes research from multiple studies that show a strong correlation between effective employee recognition programs and positive business outcomes. The research found that frequent and meaningful recognition is linked to increased employee engagement, productivity, innovation, trust in managers, and employee tenure. Recognition was shown to motivate employees, improve relationships between managers and employees, and strengthen employees' feelings of connection to their organization. The studies demonstrated that recognition delivers tangible benefits like higher profitability, lower turnover and absenteeism, and fewer safety incidents and defects.
The ROI of Effective Recognition
- 1. OF THE recognition ROI effective A business case for leveraging appreciation to drive business results.
- 2. 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:
- 3. 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.
- 4. 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.’
- 6. 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:
- 7. PERCENTAGE OF EMPLOYEES WHO ARE HIGHLY ENGAGED Highly engaged with weak recognition Highly engaged with strong recognition 34% 78%
- 8. 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
- 9. 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
- 10. 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
- 11. IT’S WORTH ASKING WHAT COMES FIRST: Or does that matter? recognition or engagement?
- 12. 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 commit to success
- 13. discouragement, disenchantment, and the possibility of driving even top performers away. The same research also points out the adverse effects of weak recognition:
- 14. 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 “ “
- 15. INNOVATION & productivity What about the recognition’s impact on innovation and productivity?
- 16. 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.
- 17. Further, companies that provide effective performance recognition are more than 2x as likely to be highly innovative.
- 18. When asked which benefit would do the most to encourage innovation and efficiency, employees reported: Recognition for ongoing effort 5% salary bonus Recognition for going above and beyond 27% 41% 32%
- 19. The same research also calls out the impact strong recognition has on both individual and team output. Weak Recognition Strong Recognition Weak Recognition Strong Recognition 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
- 20. 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 “ “
- 21. TRUST & MANAGER relationships For years we’ve heard 79% of employees leave managers not their companies.
- 22. 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 receiving weak recognition say the same.
- 23. Again, when asked which benefit would most improve their relationship with their direct manager, employees reported: Recognition for ongoing effort 5% salary bonus Recognition for going above and beyond 50% 28% 22%
- 24. 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.
- 25. IMPACT ON TENURE & company connection
- 26. 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:
- 27. 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 Service Awards With Service Awards 4.7 6.7 years years
- 28. 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
- 29. MANAGEMENT EMPLOYEES CO-WORKERS The Effect O f Years O f Service A w ards Horizontal Engagement VerticalEngagement Feel the company cares about its employees Key Insight: Career achievement programs touch every employee, at every level.
- 30. 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, organizations should see recognition not as an optional nice to have perk, but rather a necessary strategy to deliver the business results they seek.
- 31. 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.
- 32. 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.
- 33. JOIN OUR COMMUNITY Get 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