Recognition equals profits

Investing in recognition is good for the company’s bottom line, says survey

Companies that invest the most in their recognition programs are the most profitable, according to a 2005 study.

The study of 26,000 employees in 31 organizations in the United States, commissioned by Salt Lake City-based recognition firm O.C. Tanner, shows the companies that report the most investment in recognition have more than triple the profits of those that invest the least.

According to the study, Recognition Pays, organizations wishing to improve the bottom line may want to take a look at employee recognition, typically an untapped business strategy.

“People are looking for a place where they’ll have a little fun at work, where they feel someone listens to them and where they’ll feel affirmed,” said Adrian Gostick, director of O.C. Tanner.

“We want to work someplace that makes us feel great about getting up in the morning and going to work. This study provides the financial benefit behind creating an environment like that. It’s not just slightly better. It’s vastly better to manage in a very people-affirming way,”

Not providing this kind of environment can have dire consequences, according to Jody Urquhart, a Delta, B.C.-based recognition consultant.

“One of the top three reasons people leave their jobs is because they don’t feel recognized in their work,” said Urquhart. “If they don’t feel like they’re being recognized on a daily basis they don’t feel like they should continue to go above and beyond.”

When a company has a recognition program, employees understand that actions aligned with corporate goals or values will be noticed, acknowledged and rewarded, said Gostick. Thus employees are more engaged in their work and simply care more about their team’s success.

But one of the challenges in developing a recognition program is to deliver the kind of recognition that’s spontaneous and unexpected, said Urquhart.

“Just think about when you put on a pair of pants and you find $10 unexpectedly and how good that makes you feel,” she said. “Any time something unexpected happens, it’s much more motivating and memorable.”

Companies often make the mistake of recognizing employees in expected ways for expected behaviour. While this is better than no recognition at all, it can foster competition among colleagues and isn’t as motivating as spontaneous recognition, said Urquhart.

“What we recommend is a tiered approach to recognition. Yes, there’s those formal ways, like the annual banquet, but there’s also these informal ways to recognize,” said Gostick. “It’s something that helps us remember the event, it’s public and it’s spontaneous. That’s where the great environment is created, not once a year at a banquet.”

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