Recognition & Reward Program Best Practices

Recognize This! – Reinforcing behaviors in a timely way will always be at the top of my recognition best practices list.

Ascent Group recently came out with their annual Reward & Recognition Program Profiles & Best Practices. The report is well worth the investment. Highlighting just a few of the key findings:

“Reinforce behaviors and reward results. Recognize the right behaviors and communicate such that the employee’s behavior becomes a model within the work group.”

When you define the behaviors that reflect your values, your employees begin to see the values come alive in their daily work.

“Be timely, specific, and communicate! Make sure you recognize behavior and reward results in a timely manner so employees know exactly why they are being recognized.”

Recognition given at the annual banquet or performance review does nothing to reinforce in the moment precisely what it is you need them to repeat. Make sure messages of recognition are specific and reference the value demonstrated.

“Match the reward to the person and the achievement.”

Every person is different. A BBQ isn’t motivating for a person who lives in a high-rise apartment building. A gift-card to a steakhouse isn’t rewarding for a vegetarian. Let your employees choose what’s personally memorable and culturally relevant for them – from 2,500 brands and 25 million options around the world.

“Involve employees in the design and refinement of your reward and recognition programs.”

One of our 10 tactics discussed in Winning with a Culture of Recognition, involving employees – from every division, region and level – turns employees into program evangelists, ensuring rapid program adoption.

“Don’t just offer rewards and recognition for front line employees – extend the program to cover all employees in the department so the entire group is working towards the same goals.”

One of our 5 tenets of strategic recognition also discussed in our book, giving the opportunity to all to participate not only reinforces the needed behaviors and values across your entire workforce, but makes it possible to measure the understanding and demonstration of those values by employee, division, region and company as a whole.

“Look to technology to facilitate program administration and tracking.”

Doing any of this strategically – especially on a global scale – is far beyond the capabilities of an Excel spreadsheet. Take advantage of our Global Strategic Recognition solution to eliminate the administrative overhead, hassle and risk associated with old-school tactical approaches to recognition and reward.

“Measure the effectiveness and impact of your reward and recognition programs.”

Without a strong technology solution, it’s impossible to measure results. Our real-time In*telligence reports let you customize dashboards and reporting elements to deliver the status updates and success metrics your executives demand.

I encourage you to download the full report. Tell me, what other best practices would you highlight for recognition and reward programs?

The Golden/Platinum Rule of Business

Given unlimited resources (and unlimited understanding from the powers that be), what would you want to change in your organization?

Knowing what’s broken, what’s not delivering desired results, what’s simply not registering high enough in employee surveys is the first step in fixing a problem. It’s also a key question in the first tactic of creating a strategic recognition program – “Establish Program Goals and Objectives.” As we discuss in our new book, Winning with a Culture of Recognition:

“Often the goals of a recognition program begin with the question, ‘What do you want to change?’”

If you fail to establish clear goals for a program before you begin designing it, then you’ll always lack direction for what you’re trying to accomplish and you’ll never be able to measure success. To figure out those goals, it’s often helpful to look at what you’d want to change, whether it be problems or deficiencies in an existing incentive, recognition or employee rewards initiative or in the overall culture of the company.

A post I wrote on “Employee Trust in Its Death Throes” sparked a good deal of conversation in the HR blogosphere. Charlie Green of the excellent “Trust Matters” blog took my post and dove into the issue much more deeply. I encourage readers to click through and read the comment stream to Charlie’s post. In my comment, I focus on something I’d like to see change in organizations:

“[Create] the new golden rule of business: Look out for each other’s best interests.”

Think about it. If we’re all looking out for each other’s best interests, then that means I’d have tens to dozens of people looking out for mine. And if we’re consistently doing that, it’s natural that we begin to care more about those we work with.

Skip Weisman, blogging on an entirely separate topic, introduced the Platinum rule:

“Do unto others as they would like to be done unto.”

This is much more difficult than the traditional golden rule of “do unto others as you would have them do unto you” because the golden rule presumes everyone wants the same things you do. The platinum rule requires you to step outside that comfort zone and actually come to know and care about what the other person wants, likes and needs.

But you can’t achieve the platinum rule unless you first adopt the new golden rule of business. Regardless, both are critical to goal setting in strategic employee recognition programs – look out for the interests of others, notice them, appreciate their efforts, and recognize them in the way they want to be recognized.

What about you? Did we get these new rules correct? Did I miss a “silver rule?”

Analytics & Employee Recognition: Finding the Recognition ROI

An article in the Harvard Business Review last month discussed the value of analytics in HR, describing how detailed analytics let, for example, Best Buy prove the value of a 0.1% increase in employee engagement at a particular store is an additional $100,000 in the store’s annual operating income. The article points out:

“Analytics takes the guesswork out of fresh management approaches. … Analytical HR collects or segments HR data to gain insights into specific departments or functions. … Data needn’t be perfect to be appropriate for analysis – just sufficient to understand trends that matter. HR can no longer confine employee data to its silo; organizations need access to those data to be successful.”

What kind of analytics do you look for from your Human Resources numbers? Beyond compensation and Total Rewards budgets, I mean? Turnover? Retention? How about employee engagement or employee recognition?

Do you think those last two are too “soft” to measure? That there is no value in measuring the amount of recognition given, to whom, or for what reason (beyond keeping track of the budget)?

We’ve proved that false in our new book Winning with a Culture of Recognition in which we discuss how properly measuring and reporting on recognition allows you to actively manage your company culture to drive greater employee productivity and performance on precisely those objectives you’ve identified as strategic, but always within the parameters of the values you consider important.

Back to that Best Buy result I mentioned in my first paragraph. What if that Best Buy store had increased employee engagement by 10%? What would that mean? Just by simple math, that one store could have increased their annual operating income by $10 million.

That’s no small change. Now keep in mind our customers regularly achieve employee engagement increases in the double digits after implementing strategic recognition programs based on our best practices. And they do it in less than a year after implementation.

What would adding $10 million to your operating income mean to you?

Employee Engagement Continues to Fall, along with Shareholder Return

Why should you care about employee engagement? Because it directly impacts shareholder return, EPS, financial improvement and competitive advantage.

Hewitt research found a 63% differential in total shareholder return for companies with high employee engagement vs those with low engagement:

“Organizations with high levels of engagement (where 65 percent or more of employees are engaged) outperformed the total stock market index even in volatile economic conditions. During 2009, total shareholder return for these companies was 19 percent higher than the average total shareholder return. Conversely, companies with low engagement (where less than 40 percent of employees are engaged) had a total shareholder return that was 44 percent lower than the average.”

Gallup research found companies in the top 25% for employee engagement have (as compared to bottom 25%):
• 37% less absenteeism
• 25% less employee turnover in high-turnover organizations (such as retail)
• 49% less turnover in low-turnover organizations
• 27% less shrinkage
• 49% fewer safety incidents
• 60% fewer product defects
• 12% higher customer metrics
• 18% higher productivity
• 16% higher profitability

And that’s just the start. Gallup also found :
• EPS exceeds competition by 28% (top 25% for employee engagement)
• EPS exceeds competition by 72% (top 10%)
• Growth trajectory (for financial improvement): 2.5 times the competition (top 25%)
• Growth trajectory: 3.9 times the competition (top 10%)

What did the level of employee engagement mean to companies during the recession?
• Those in the top 25% that were trailing competition before the recession surpassed the competition in 2008.
• Those in the top 10% were already ahead of their competition in 2007, but widened the gap further in 2008.
• Those in the bottom 25% for engagement in 2007, however, followed the same downward trend as their competition during the recession.

Still think employee engagement doesn’t matter?

Strategic recognition is one of the most powerful methods for improving employee engagement. Be sure to check out our new book "Winning with a Culture of Recognition," available on Amazon now!

Strategic Recognition * The Fastest Path to Talent Management Metrics that Matter

What do you think? Are we in for a double-dip recession? Seems to me that the economic pundits are waffling hard on this topic. In a Bnet article, Margaret Heffernan seems to think so, but she offers great advice for what to do in a double-dip – grow! Click over to read her case study of Timken and how they, “Invest when times are tough so we can capitalize on those investments in the good times.”

A Towers Watson survey found many US and Canadian companies are following this advice, at least in terms of their investment in “talent/performance systems,” citing these as the most critical HR Service delivery issues in 2010 (quoting):

• Talent/performance management systems (42% versus 35% in 2009)
• Streamlining processes/systems (35% — unchanged from 2009)
• Increased involvement in strategic business-driven issues (27% versus 23% in 2009)
• Defining human capital metrics and dashboards (22% versus 17% in 2009)

It’s great to see companies beginning to invest again, but it’s still important to remain frugal and wise in those investments. That’s why I advocate strategic recognition as the fastest, most cost effective means to talent management data. Within just months (not years), you can track and analyze trends in performance against your key objectives and values based on the wisdom of crowds through recognition, you can streamline processes by blending recognition and performance management metrics, you can create on-the-fly dashboards that report on the metrics your CEO and CFO care about, which increases your contribution to strategic business issues – and you can prove it.

Stop investing in talent management and invest in your talent instead. How are you beginning to invest?

Moving Beyond Engagement to Enablement

Why should you care about employee engagement and enablement? Hay Group in the UK recently released these numbers:

• 59% of UK employees started 2010 planning to find a new job
• Organizations that engage and enable employees reduce voluntary turnover by 54%
• Employees who are both highly engaged and enabled are 50% more likely to outperform expectations

That’s great… But what’s enablement? Hay group defines an enabling work environment as one that “empowers employees to ‘go the extra mile’ and provides the tools and processes to actively deal with employee frustrations.”

Sounds a lot like what I talked about in my last post on removing obstacles so employees can make progress – which they define as their own greatest factor of engagement.

What’s that look like in real numbers?

"Revenue: A typical company with $5 billion in revenues in an industry with average revenue growth of eight percent would see revenues increase by $400 million. A company with top quartile levels of employee engagement could expect an increase of $1 billion. And a company in the top quartile on both engagement and enablement could anticipate an increase of a full $1.8 billion.

"Turnover: For an organization with 20,000 employees and an annual voluntary turnover rate of eight percent, the cost of turnover is approximately $56 million (assuming an average salary of $35,000). Reducing the voluntary turnover rate by 40 percent would yield annual savings of $22.4 million. But reductions in turnover through high levels of engagement and enablement would yield savings of over $30 million annually, a difference of more than $7.5 million.

"Employee performance: For an organization producing $10 billion of product with 20 percent of employees exceeding performance expectations, increasing the percentage of high performers by 1.5 times (by transforming average performers into superior performers) would increase output by $350 million (ie, if 10 percent of population improves performance by 35 percent, overall performance improvement across entire population is 3.5 percent)."

I’ve often argued that you cannot engage employees; you can only create a work environment in which employees want to engage. Enabling employees – listening to them, removing obstacles, resolving frustrations – is one way you can create that environment. And it will pay off.

BlogTalk Radio: The Difference between Compensation & Rewards (and bringing them together)

Last week I had the pleasure of participating in my first BlogTalk Radio show. Hosted by Paul Hebert of i2i, I joined a panel of fellow Compensation Café bloggers to discuss “Compensation & Rewards: What’s the Difference?”

I truly enjoyed the experience. It’s not often that you get people from the compensation side of the table and those from recognition and incentives on the same conversation. It quickly became apparent that those versed in compensation (the “spreadsheet jockeys” as Ann Bares referred to herself and fellow compensation colleagues) and those focused on recognition and incentives rarely collaborate.

Why is this? We dove into a couple of main reasons:

1) Compensation consultants look after the employee’s financial contract (competitive, appropriate, etc.). Those of us on the other side (in recognition and incentives) look after the psychological contract (reinforcing the right values and attitudes, feeding psychic income needs, creating an engaged environment).

2) Measurement – We know how to measure compensation. People aren’t so comfortable measuring the social or psychological aspects. Are they culturally aligned? How do we measure that?

That’s why we focus so strongly on measurement of recognition and reporting on the bottom-line impact. One problem has long been the technology available to make this possible. But now, technology is stepping up, allowing us to record and celebrate recognition with the same degree of depth as compensation.

And this is driving the convergence of what senior leaders are looking for – Total Rewards. As I said on the show, compensation constructs the building, but recognition adds the decorative “flair.” Both are necessary for creating a workplace people feel safe working in and want to come to and engage in.

Check out Paul’s summary of the show, and listen in to the entire show (just over an hour). Let me know your thoughts on the convergence between compensation and rewards.

Join Me at SHRM * 2 Sessions on CEO Role & Measuring Recognition

Join me at SHRM's 2010 Annual Conference and Exposition in San Diego, June 27-30, 2010. I'll be leading two sessions:

In “The CEO’s New Role in Recognition,” Monday, 28 June, from 4:00-5:15, I will demonstrate to HR leaders how strategic employee recognition — when championed by the CEO — can transform a company’s culture, ignite motivation, and positively impact an organization’s workforce and business performance.

I will also discuss:

* Why today’s employee recognition programs require the support and attention of CEOs to be truly strategic and effective.
* How to generate executive support for employee recognition programs by demonstrating the short and long-term impact on employee and business performance.
* What actionable steps every HR leader should take today to foster a culture of appreciation across their company.

In Wednesday's Mega Session, “Measuring Recognition for Maximum Business Success,” 30 June, from 10:00-11:15 a.m., I'll share best practices for measuring recognition for maximum business success. This session will help HR leaders build a business case for strategic recognition by demonstrating how the program can be measured against corporate goals.

I will also discuss:

* Why employee recognition is on the path to become the must-have HR program of the 21st century due to its measurable impact on key employee and business metrics.
* How forward-thinking HR leaders are applying best practices to measure recognition by reaching the vast majority of their workforce with awards tied to core values and strategic objectives.
* What new technologies and trends are elevating employee recognition and how HR leaders can leverage them to make a quantifiable impact on employee engagement.

If you're at SHRM, please do introduce yourself. I look forward to meeting you.

Defining Employee Engagement * It Is What You Need It to Be

I’ve followed and been involved in discussions too numerous to count on the proper definition of employee engagement, is engagement real or just the latest HR buzz word, and similar. The reality is well expressed by APQC in a recent Workforce Management article about a study of various leading organizations and their engagement efforts:

“Each organization in the study is clear about what it means to be an engaged employee. That definition is reinforced through standard processes and practices for collecting employee engagement information.”

Each organization defined engagement differently, depending on their company’s priorities, goals and experiences. And this is just fine. The catch is that companies must be able to define engagement for their environment, and then set clear processes and metrics to measure engagement consistently on an ongoing basis. These processes and metrics must be established before engagement efforts begin in earnest or results will be skewed. As I’ve said before, if you don’t know what you’re working towards before you begin, how will you know when you’ve arrived?

APQC indicates the benefits of high levels of employee engagement based on both qualitative anecdotes and quantitative research as:

• Increased quality, productivity and attendance
• Increased new product innovation.
• Reduced in team member turnover (19%) and workers’ compensation claims (27%)
• Increased net revenue (22%)
• Increased EBITDA (43%)

But what are the risk factors of creating an environment in which workers cannot engage? A poll cited on the Engagement Factor blog found those who are disengaged:

• See job responsibilities and assignments as tasks to get done with less regard for the impact
• Strive for the path of least resistance versus working toward maximum results
• Exhibit self oriented behavior versus an interest in their customers and team Procrastinate

If you’re ready to begin measuring employee engagement in your organization, a succinct resource is from HR Magazine, offering suggestions for defining engagement for your organization, distinguishing employee engagement from employee satisfaction and what that means for how you measure both, who should be involved in structuring the surveys, and tricks of the trade.

Paul Hebert of i2i just reminded me in a comment to include the Enterprise Engagement Indicator, which provides both a measure of how ready your organization is for engagement activities as well as what your current level of engagement is within your organization. Thank you for the recommendation, Paul!

How do you define engagement in your organization?

Excellent Recognition Guidance from the Corporate Executive Board

The Corporate Executive Board (CEB) recently ran an excellent three-part series on recognition and reward best practices. Highlights are below, but be sure to click through and read the full series.

From Beyond the Bonus: Four Ways to Recognize and Reward with Little or No Money:

“There has been much written about the limitations of salaries and bonuses to motivate people to work hard and produce results. If it isn’t all about money, what is it about? Most management experts emphasize appreciation, recognition and building a sense of pride over increasing monetary rewards. This is not only good practice but for most companies these days, it is also a necessity.

“It’s a sad fact of work life that most leaders don’t thank their employees enough. A simple thank you goes much farther than you think, especially if it is connected to a job well done and delivered authentically. Acknowledging employee accomplishments and good behavior through meaningful words or gestures can boost employee’s emotional commitment. Be specific about the accomplishment and describe what helped the employee succeed.”

In Choosing the Right Approach to Employee Recognition, the CEB gives much the same advice we’ve been preaching for years:

“Even employers who are committed to recognizing and rewarding their employees have a hard time doing it right. Deciding what to reward and how is not easy, and that difficulty leads many employers to rely solely on financial compensation to motivate their people. … Here are five requirements for effective recognition and questions to help you evaluate your approach: connected to business goals and values, sincere, meaningful and adaptable, relevant, timely.”

In this post, CEB also points out the deviant behavior that can result from recognition done wrong. This is where the “strategic” component of recognition becomes critical. You must positively reinforce employees only for those actions that reflect the company values while achieving the strategic objectives. This approach ensures employees who, for example, increase productivity but do so by harming the environment will not be rewarded for their efforts. Values-based recognition is the key to ensuring employees display the right behaviors in achieving the company goals.

From Balancing “I” with “We”: Rewarding Teams and Teamwork:

“In a team-oriented environment, employers must pair individual employee awards with collective team recognition in order to effectively motivate teams. … Recognize team behavior and accomplishments. It’s one thing to recognize a team for achieving a particularly difficult goal. It’s another to hold them up for the way in which they achieved that goal. … Encourage employees to recognize peers. Recognition from superiors isn’t the only form of recognition that matters, or motivates. Knowing that your team thinks you’re doing a good job is important to keeping people engaged.”

There’s another aspect here as well. I was recently asked in another forum how to appropriately recognize in a situation involving a very long, complex project in which a team member had completed their portion of the work in its entirety long before the entire project came to fruition. My answer: recognize the individual in the moment for his great work and delivery that helped the team project stay on track. Then when the project is complete, recognize the entire team.

Disparate, Unconsolidated Recognition "Islands" Are Putting You at Risk & Adding Unnecessary Expense

Once you’ve aligned your strategic recognition program to reflect your changed company objectives to help communicate new strategies, approaches or even organizational structure, how do you know your efforts are succeeding?

Disturbing results from a survey of senior managers at more than 500 blue-chip organizations in the US, UK and Ireland found:

“More than half the respondents said their organisations are structured in a way that prevents data and analytical talent from generating enterprise-wide insight.

“For instance, almost half of the respondents (45%) said data are housed in isolated parts of their organisation, and more than half the respondents (52%) said that analytical talent is housed separately from the relevant data at their organisation. In addition 13% of employers in the UK and Ireland said that their organisations do not have any professionals dedicated to analytics.

“Overall, four out of 10 respondents said their current technological resources and systems greatly hinder the effective use of enterprise-wide analytics in their organisations. And 51% said they have more opportunities to use analytics to improve the business than they have analytical resources to exploit them.”

There are three distinct problems highlighted here:
1) Information isolated in often inaccessible silos with poor tech resources
2) Data separated from the people that know how to analyze it
3) No people tasked with understanding what the data is telling them

We find this to be true with many companies we work with to develop truly strategic employee recognition programs. Often, large global organizations are operating many different recognition initiatives within silos of business unit, division or geographic area. Managers, trying to do the right thing, will reward deserving employees out of their own pocket, and then file for reimbursement of that expense on their expense forms. Years of service or long service programs are completely disassociated from behavior-based recognition efforts, which are also unrelated to ongoing results oriented incentives schemes.

The cost of running such disassociated programs is exponentially higher than necessary and the risk of hidden, untracked, unreported and untaxed recognition efforts is high. Simply by consolidating all of these disparate efforts into a single, strategic program can save 50% of costs. Consolidation also enables single-site reporting for true analytical insight into spend, usage, and other patterns that, once understood, can help management change the company culture itself.

Too often, companies will choose to leave disparate programs in place because “units prefer to do what they want to do for recognition.” That is no good reason to throw money away and put your company at risk.

The Role of Quotas in Employee Recognition

I recently received an email newsletter from Bob Nelson in which he advocates strongly against recognizing people on a quota. His point is:

“You can’t manage by a formula. It just doesn’t work. You have to manage from the heart. You have to e real in real time, which can be a messy thing, not something you can simply check off your ‘to do’ list. You have to be honest and open, giving of yourself to others in a way that isn’t a fine-tuned, manipulated image. As Ken Blanchard used to say, ‘Management is what you do with people, not what you do to them.’”

While I agree with the sentiment of Bob’s message, it is idealist – especially if you as a leader are working to foster a culture of recognition across your workplace. As I wrote about the effective management method of Trust and Track, yes, you have to trust your employees to do what is right (even in recognizing others as Bob suggests), but then you must also track their efforts and success in doing so.

Trust and track is a two sided equation. Rest only on one side and while being idealist, you run the risk of being foolhardy. As management guru Peter Drucker famously said: "If it is not measured, then it is not managed."

The logic behind this is not about setting hard goals (nor quotas) for recognition, but rather setting guidelines or parameters for where you expect the level of recognition to be to achieve your strategic program goals. Leave managers to their thing with recognition (from the heart), but collect and share the data of the power of that recognition.

It’s truly incredible what happen out of simply sharing the data. Managers want to track well against what they perceive to be best practice. Steve Kerr speaks well about the power of a quota in overcoming the irony of scarcity in his recent book Reward Systems: Does Yours Measure Up?

In this case, careful definition of terms is important. Setting hard quotes, if understood as penalty inducing, is certainly not appropriate. However, setting guidelines/parameters is very important, as is bringing tremendous visibility to that data afterwards. If instead the word quota is understood to mean "use it or lose", then it is worthwhile. For example, tell managers their available budget for recognition and to use it or lose it! No one wants to leave value on the table.

Understanding the Difference between Engagement and Satisfaction

Let’s be clear. The terms employee engagement and employee satisfaction are NOT interchangeable. This article is one of the worst examples I’ve seen of the terms being used interchangeably, to great confusion.

Why does this matter? Employees can be quite satisfied with their job, your company and their place in it without ever engaging in the work. Think about it. Have you ever had an employee or colleague who was perfectly satisfied to come to work every day where they could happily surf the web, Facebook with their friends or play computer games? Perhaps that’s a bit extreme, but we all know employees who are satisfied with being left alone in their mediocrity.

Engaged employees, on the other hand, are passionate and alive with the desire to perform well and do so in alignment with your strategic objectives. These are the employees you need to be focused on. These are the employees for whom you need to be creating an environment in which they want to engage for the long-term. Measuring employee engagement with a goal for improving that environment is always worthwhile.

A new book, Engagement: Winning the Battle for Customer and Employee Hearts and Minds, explains why this is important – to both employees and customers:

“We know that emotionally engaged employees feel like they are doing something valuable for their organizations and that their efforts will make a difference. Customers know when they are talking to emotionally engaged employees. The positive feelings that employees have about their jobs and employers influence the level of service they give to customers. When these positive experiences continue to happen, then customers become engaged, and they become advocates for the company’s products and services.”

With this in mind, are you measuring and trying to improve employee satisfaction or employee engagement?

Governance over Global Recognition

Do you know where your recognition budget is going? Most multinational companies have multiple disparate recognition programs operating in different departments, plants and countries, contributing to increased risk, costs and confusion among the workforce. The full level of investment in these programs is often not fully understood as the funds are buried in dozens of different line items not visible at the corporate level, not compliant with corporate governance standards or local taxation laws, and not man-aged consistently everywhere.

Governing recognition programs is an exercise is getting the most out of your investment. In a recent article in The Conference Board Review (read the entire article as it is truly excellent), Carol Pletcher describes the problem well:

“No one, presumably, needs convincing that showing appreciation and thanks to employees is a good thing. But few top executives have taken the time to really think about recognition and make it a priority, and it shows. Studies demonstrate a strong link between recognition and enhanced financial performance, yet companies often delegate these programs to an HR staff person to run with little executive oversight. Some 90 percent of large U.S. organizations have recognition programs, but in surveys, relatively few employees say they feel recognized. The problem isn’t lack of funding, since companies spend more than you might realize on these programs—4 to 6 percent of salary per employee.

“So most likely, your recognition program is simply ineffective in its stated purpose. Worse, it’s a wasted opportunity to gather key information and ideas, and to drive home strategic thinking in the organization. For most companies, recognition is an underutilized asset, one that you can—and should—set on the right track. Your recognition programs telegraph what you value and what you want to happen; recognition is how your employees perceive what they are supposed to do. So if you’re unsure of whether your message—or strategic plan, or shift in culture—is getting through, a well-run recognition program can tell you.”

A recent article in Human Resources Executive on “A Global Response” addresses the same problem of governance on a global scale as a fundamental challenge of “gaining a clear picture of what what’s actually going on in their far flung overseas subsidiaries.” Cisco Systems’ global benefits design manager, Jeremy Hollister, put it this way: “Understanding who’s responsible for what, and how things get done, setup up that governance structure and putting in place accountability.”

Keying off just one point in Pletcher’s article – companies are already spending 4-6% of salary per employee, but they don’t always know where it’s going or if it’s being used to its full effectiveness. Globoforce’s In*form service guides companies through the process of uncovering all recognition initiatives and investments, from corporate sponsored loyalty programs to local manager efforts usually reimbursed through expense accounts.

Do you know where your recognition budget is going? What more could you do if you could consolidate globally scattered and ungoverned programs into a single, compliant platform?

ROI of Employee Recognition

Have you ever been asked, “Yes, I see why recognition may be helpful in boosting employee morale, but what’s the value of the program? Where’s the ROI?”

An interesting report on The Value and ROI in Employee Recognition, recently issued by The Forum for People Performance Management and Measurement, the Incentive Research Foundation, and the Human Capital Institute, offers interesting insight.

In a concise format, the report offers clear definitions for recognition, incentive, engagement, total rewards and other often misused terms. These definitions are derived from summaries of the research in this space in the last two decades from Watson Wyatt, WorldatWork, Towers Perrin, Gallup and others, offering a nice overview of the relevant research and findings in this space.

The report also positions the role of recognition in a total rewards program, how to measure the ROI of recognition and suggests the need for a VALUE on Investment (VOI) metric for recognition programs. VOI considers both the financial and the intangible benefits of recognition. Employee Lifetime Value would be one example of a VOI metric.

I was particularly pleased to see how completely the researcher’s “best principles” for implementing recognition align with our own best practices:

• Build a culture of recognition
• Provide a wide variety of recognition rewards to appeal to individual preferences
• Recognize workers regularly – sporadic recognition may be worse than no recognition
• Link reward activities to business objectives and/or cultural values
• Measure the cost of the recognition reward system and the benefits gained

Take a read through the research and let me know what you think.

Engaging "Hamsters & Honeymooners"

A final post on recent industry research on engagement comes from BlessingWhite’s recent advice to “Align Your Hamsters & Honeymooners.” Adding to Aberdeen’s definition of engagement, BlessingWhite offers:

“Full engagement represents an alignment of maximum job satisfaction (“I like my work and do it well”) with maximum job contribution (“I help achieve the goals of my organization”). Engaged employees are not just committed. They are not just passionate or proud. They have a line-of-sight on their own future and on the organization’s mission and goals. They are enthused and in gear, using their talents and discretionary effort to make a difference in their employer’s quest for sustainable business success.”

BlessingWhite’s definition hits the key points of discretionary effort focused on the company’s mission and goals. And their explanation of “Hamsters and Honeymooners” in the organization neatly describes the difference between those who are satisfied in their work, versus those who are truly engaged. These groups are those who have “relatively high levels of job satisfaction, but low levels of contribution.” Hamsters are those spinning their wheels: “working enthusiastically – but on the wrong things so they don’t deliver the results you need.” Honeymooners are “new either to the organization or their role. They’re excited about this new stage of their career and about making a difference in your organization, but they aren’t fully productive.”

So the question becomes, how do you advance your Hamsters and Honeymooners from Satisfaction to true Engagement? BlessingWhite offers four steps to communicate, translate, drive accountability, and leverage managers.

What other ways are there to engage Hamsters and Honeymooners? What methods have you used?

Achieving an Engaged Workplace * Aberdeen Reports

Continuing our look at recent industry research Aberdeen Group just issued “Beyond Satisfaction: Engaging Employees to Retain Customers.” A few interesting tidbits from the report:

Following up on my comments in Monday’s post that there is no single definition for engagement, Aberdeen offers this one:

“Engagement is all about aligning individuals with the mission and priorities of the organization in order to deliver business results. Engagement only really matters if it is driving business results. In fact, this is what differentiates employee engagement from employee satisfaction (that personal needs are being met).”

I would argue true engagement goes a step further such that employees give additional discretionary effort. This additional effort, in alignment with the strategic objectives of the organization, is what delivers those needed business results.

Aberdeen goes on to identify three attributes of an engaged workplace – meaningful work, aligned goals/values, and strong leadership. These three are best summarized in the report with this statement:

“Organizations seeing the most impressive business impact from engagement strategies are those that are focusing time and attention on helping leaders and managers continually communicate the mission and priorities of the organization, setting individual goals around those priorities, and providing frequent feedback and check-ins on progress toward those goals.”

Per the report, achieving engagement requires executive sponsorship (“Best-in-Class organizations are far more likely to have a senior business leader, the CEO or President of the company, championing engagement efforts.”), measurement (“Employee engagement efforts must be managed and measured in terms of business impact. Best-in-Class organizations are 29% more likely than Industry Average organizations to have a standard process to measure engagement.), and a system to recognize the right behaviors (“When individuals are recognized for exhibiting the right behaviors and achieving business goals is reward visibly, it has a positive impact on that individual and serves as an example for others in the organization.’)

Would your organization be considered “Best in Class” according to Aberdeen’s criteria of meaningful work, alignment of goals and values and strong leadership? Do you have executive sponsorship of engagement efforts, a consistent measurement structure, and a tool to recognize the right behaviors? Where do you need help or improvement?

New Pocasts * Measuring Recognition & Voice of the Employee

I’m thrilled to say we have two new podcasts available for those who prefer to keep up on their employee recognition strategy via their MP3 player of choice or online. Both are available via iTunes subscription or download through the links below.

The first podcast is Measuring Recognition, which tells you how to build the business case for a strategic recognition program by showing the program’s value and success through clear measurement and reporting against needed business results. Subscribe in iTunes | Download Now

The second podcast is Voice of the Employee, the results of our recent market research on the perspectives and desires of HR leaders and employees during this recession. You’ll learn the employee perceptions and reactions to layoffs, salary freezes and benefit cuts and what you need to do to motivate and inspire those who are left behind. Also discussed are the surprising disparities between employee reality and HR assumptions and what employees want you to do to increase their morale and productivity. Subscribe in iTunes | Download Now

Once you’ve had a chance to listen to the podcasts, let me know what you think in comments.

Reading between the Lines * What Survey Results REALLY Mean

SHRM (the US version of CIPD) released its 2009 Employee Job Satisfaction Survey earlier this summer. Keep in mind, this is a satisfaction survey (measuring, per SHRM, satisfaction with career development, relationship with management, compensation and benefits, and work environment), not an engagement survey (measuring employee commitment to the company, understanding of where the company is going and how the employee can help it get there, and willingness to give discretionary effort to make it happen). Some of SHRM’s findings:

“According to this survey, 86% of employees indicated overall satisfaction with their current position, with 41% of employees reporting they were very satisfied. What’s more, majority of employees (58%) reported that the current economic climate has not made any difference in their level of satisfaction—and this is good news for employers, especially during the economically challenging time.”

I question, is this really “stiff upper lip” syndrome at work? Another study reported in CNN Money found:
• 54% of employed Americans plan to look for a new job once the economy rebounds
• Of those aged 18-29, 71% say they are likely to look for work once the economy turns

I do agree with (and our own research supports) how important SHRM reports communication and recognition are to both managers and employees:
• 97% of managers report management recognition of employee job performance to be important or very important and 91% of employees agree
• 98% of managers report communication between employees and senior management to be important or very important and 92% of employees agree

My take is this: Many employees are “satisfied” with their jobs right now because they have one and know the market is tough, but they are not deeply engaged with their companies or their work and will look elsewhere as soon as they see a reasonable chance. How do leaders counteract this? By communicating clearly and frequently with employees and sincerely recognizing their efforts.

What do you think? Does satisfaction equally a desire to stay or are employees just grinning and bearing it right now?

Employee Engagement * WHEN Should I Measure

In my last post, I shared more tips for what to measure to determine employee engagement levels and program success. Today, I want to talk a bit about when you should measure. The timing of measurement is critical because results can be so easily manipulated depending on when you establish metrics and then measure against them.

Jacqueline Kosecoff, chief executive of Prescription Solutions, a UnitedHealth Group company, expressed this well in a recent interview in the New York Times.

“Before I begin the execution phase of any project, I sit down with my team and we ask ourselves: ‘What are the metrics against which we’re going to measure our success?’ Another thing I learned was that when you’re involved in a large development project, projects often morph. And when people become advocates of their project, they change some of those metrics so that they can claim success when perhaps it’s not 100 percent legitimate to do so.”

And therein lies the rub – determining your metrics before execution begins, then faithfully measuring and reporting against those metrics, even if the outcome isn’t what was hoped. Negative results can be the most valuable as they show you the areas where you most need to improve. Creating a culture in which such failure is permitted is important to allowing the space for continual improvement.

But the bottom line is, if you don’t know what you're working towards before you begin, how will you know when you’ve arrived?

What has been your experience in establishing metrics for program measurement? Do you have specific targets for success (e.g., 5% improvement in X by the end of year)? Or do you simply ask for “improvement?” Such wishy-washy goals can easily be manipulated, keeping you from understanding the reality of your program and achieving the real results you need – increased employee commitment to the company and desire to contribute discretionary effort in the areas necessary for company success.