Understanding the metrics of recognition

5 steps to help build the business case for recognition

Strategic recognition is critical to boosting employee morale and performance. Unfortunately, 38 per cent of 150 organizations surveyed in 2008 did not measure the results of recognition programs, leaving CEOs in the dark on program effectiveness, according to a survey by global recognition company Globoforce.

If organizations measure the results of these programs, the findings can help build a business case to support strategic recognition. For example, an internal survey in 2008 revealed Intel’s strategic recognition program contributed to a 26-per-cent increase in employee commitment, while a 2008 case study by the Stanford Graduate School of Business found a recognition program at Intuit motivated 93 per cent of workers to sustain high performance.

To build a business case for strategic recognition, HR departments need to demonstrate how the program will be measured against established corporate goals while illustrating the bottom-line value and long-term measurable outcomes of the program.

This can be done in five steps.

1.  Determine metrics of recognition success

The success of any program requires a clear understanding of what defines success prior to the program launch. Too often, if employee recognition programs are measured at all, they are measured on a tactical basis, such as the number of awards given and demographics impacted. These measures have no relevance to the impact on overall strategic objectives. While metrics of success vary based on company needs and goals, universal program metrics include:

Program costs: Demonstrate how program costs have gone down while results have increased. In the case of strategic recognition, this often requires a thorough audit of recognition and incentive initiatives to learn current spend.

Productivity and performance impacts: Show direct correlation to improvements in employee productivity measures, personal or group performance targets or other key performance indicators, relative to involvement in the recognition program. Key cross-reference measures can include impact on retention, absence rates and productivity per employee.

Company values and strategic objectives: By using these as reasons for recognition, executives can determine which divisions, regions or teams do not fully understand the strategic objectives or demonstrate the values necessary for success. This allows for direct intervention and training in lagging areas.

Program reach: Only those touched by the program can be measured for improvements in morale and productivity. Therefore, program-reach metrics are foundational to understanding the:

•‑percentage of employees awarded to show the successful communication of values and strategic objectives across the company

•‑geographic and demographic program penetration to show meaningful program deployment and acceptance into distributed locations

•‑match of award distribution to the performance bell curve to show successful motivation of the middle 70 per cent of employees, a critical component often ignored in traditional recognition programs

•‑frequency of awards, which reveals the adoption of a universal culture of appreciation across the organization.

2.  Establish a performance baseline for recognition

Once the metrics for success have been established, a baseline of current performance can be determined. This serves two purposes. First, the baseline illustrates the status of employee morale, productivity and performance relative to legacy recognition and incentive initiatives. Second, it gives a level against which future success can be compared. Without a baseline, it is impossible to accurately or credibly report percentage improvements in any of the areas discussed above.

3.  Measure regularly and consistently

Once a baseline has been established, measure program results regularly and consistently to ensure the program stays on target. Measurements should be taken in two ways — through the program itself and employee surveys. A strategic recognition program should provide: reporting functionality for money spent; reasons for recognition by team, group or division; and program reach.

Program understanding, adoption and true cultural impact, however, should be measured through a regular employee survey that targets all employees annually and a percentage of employees more frequently (such as one-quarter of the employee population randomly surveyed quarterly). Potential employee survey questions on recognition should refer specifically to employee understanding of why they receive recognition and the effect on their work.

4.  Analyze results and look for trends

Once recognition program results are available through the program itself and from employee surveys, analyze the results to look for trends. Be sure to compare the results between these two measurement tools as well. Any dissimilarities could uncover a communication disconnect. For example, though employee surveys may be anonymous, if a high percentage of employees surveyed in a division report they are not receiving adequate recognition, but a similarly high percentage of employees in that division are being recognized through the program, then two potential problems should be addressed.

Managers may be neglecting a “personal recognition moment” in which direct and meaningful appreciation of effort is called out, or the recognition program itself may not have been communicated clearly to employees at the outset.

Additionally, look for trends over time for improvements in the success metrics established before the program launch. Are there productivity improvements in areas where recognition is increasing? Have targets for program cost reduction been achieved? How do these results compare six months, one year or two years after the program launch?

5.  Report to target audiences in a way that matters

Solid results allow for custom reporting for various audiences.

Employees: Report recognition stories from colleagues across the company, demonstrated appreciation for employee efforts by the company and continued investment in recognition going forward. Stories, names, divisions and highlights are the best means of reporting to employees, likely in the format of newsletters or intranet reports.

Managers: Report on the performance of a group or division against program targets and retention of top performers. Stories of individual successes within the area of managerial responsibility and dashboard-reporting functionality are preferred to give both the flavour of recognition along with the hard metrics of success.

Executives: Report on program cost savings; understanding of values and objectives; and improvements in morale, productivity and performance. Easy-to-view dashboard reports that link program results to desired executive outcomes, including trends over time, are the preferred option.

The above information was provided by Globoforce, a Southborough, Mass.-based worldwide provider of strategic employee recognition and reward programs. For more information, call (888) 743-6723 or visit www.globoforce.com.

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