“The Numbers Behind the Award”
Distributors are often asked by their corporate customers about the benefits of recognition and incentive programs. They may be “feel good programs,” but do they offer any real benefit to the company? Below are summaries from a number of independent studies that look at the hard facts and figures behind recognition programs and incentive programs. To view the full study, simply click on the study name in red below each summary.
Recognition Program ROI
Recognizing your employees leads to greater employee engagement - and greater engagement leads to greater profitability. A Towers Perrin study of 50 global companies over a one year period showed that companies with high employee engagement had a 19% increase in operating income and almost a 28% growth in earnings per share. Conversely, companies with low levels of engagement saw operating income drop more than 32% and earning per share decline over 11%.
Years of Service Award Programs
The Cicero Group conducted both qualitative and quantitative research across expansive geographic, industry and age groups. They found a strong correlation between years of service award programs and increased tenure. Numerically their research found:
[Dr. Trent Kaufman & Tyson Chapman, The Cicero Group – The Effect of Years of Service Award Programs; Quantifying the Return-on-Investment]
The International Society for Performance Improvement and The Incentive Research Foundation conducted a “meta-analysis” (study of existing, scientific research) on incentive programs to identify any trends regarding their effectiveness, and the elements that lead to success or failure. They compared research results with current practices by conducting surveys via the internet and telephone of 145 US organizations that use incentive system. Key findings included:
The Society for Human Resource Management (SHRM) conducted a survey focused on the effects of strategic recognition programs. It was sent to over 6000 SHRM members. Results of the survey included:
The study defines a strategic recognition program as one that moves beyond simple appreciation or scattershot recognition practices. A strategic recognition program links each recognition moment directly back to your organization’s core values and strategic objectives, giving those moments more meaning and reinforcing your core values in the minds of your employees. By tying recognition to your business objectives and then measuring and monitoring that activity, you are able to manage your culture and your talent and help shape behavior at all levels of the organization.
Strategic recognition is:
* Tied back to your core values and goals
* Measured, recorded and analyzed
* Universal, consistent and centralized for easy reporting
The Cicero Group conducted qualitative and quantitative research across a breadth of demographic groups. They found that performance recognition drives employee engagement. Using self assessment surveys, some key findings include:
88% of employees from companies that provide strong recognition believe they show drive & determination vs. just 35% from companies providing weak recognition.
82% of employees from companies that provide strong recognition believe they have a connection with their company vs. just 30% from companies providing weak recognition.
79% of employees from companies that provide strong recognition have work relationships (i.e. have good relationships with co-workers and managers) vs. just 31% from companies providing weak recognition.
77% of employees from companies that provide strong recognition believe they have personal standing with their company (i.e. know they uniquely contribute, make a difference, are valued and fit in at their company) vs. just 21% from companies providing weak recognition.
The Benefits of Tangible Non-Monetary Incentives
The SITE Foundation and Dr. Scott Jeffrey researched the psychological processes behind employee preferences for incentive awards. They found four processes that influence employees' percetions of incentive awards. They are:
Evaluability - Oddly enough, the more ambiguity in the price of a particular incentive, the more people tend to increase the value beyond the actual. Monetary awards have a known value, but non-monetary incentives are hard to "put a price on" so are actually more highly valued
Separability - Cash bonuses go into people's base salary mental account. Thus the value of the cash bonus as an award for performance "above and beyond" does not stand out.
Justifiability - A salesperson may not go out and buy a particular item, because it is expensive and "frivolous." However, if the award is earned for hard work and employee much "use it or lose it" there iws no need to justify accepting it. Hard work become an attractive way to acquire something that is not justifiable otherwise.
Social Reinforcement - Finally, most people are uncomfortable bragging about cash. However, tangible non-cash incentives are visible and socially acceptable to praise, question or bring up.