Opinion by Kevin Skinner, Business Director of Employee Engagement at Achievement Awards Group

An effective employee rewards and recognition program helps businesses achieve their strategic objectives by attracting and retaining talent, increasing employee engagement, aligning employee behaviour with business objectives, and fostering a sense of ownership and accountability.

In Aon’s 2018 Trends in Global Employee Engagement survey, the leading determinant for employee engagement was Rewards and Recognition, with Senior Leadership, Career and Development, Employee Value Proposition and Enabling Infrastructure also playing a part.  Aon’s research also showed that a 5-point increase in engagement is linked to a 3% increase in revenue.¹  

A 2020 Gallup study showed that when comparing employee engagement levels, the top and bottom-quartile business units had the following differences in business outcomes - 81% less absenteeism, 18% less turnover for high-churn organisations, 43% less turnover for low-churn organisations, 64% fewer safety incidents, 41% fewer quality defects, 10% better customer retention, 18% better productivity and 23% better profitability².

Yet, despite their proven efficacy, employee rewards and recognition programs are one of the most underutilised engagement levers when it comes to achieving business objectives by driving organisational cultural and behaviour change. This stems from a number of factors - a lack of appreciation for the ROI that employee recognition programs offer, internal program ownership, leadership involvement and role-modelling, dated or inadequate enabling technology and the communications and activation strategies needed to keep the program current and top of mind.

For businesses that get it right, there is real opportunity to drive engagement, communicating how rewards are tied to performance and making employees feel like they are valued and part of something they can get behind.

The key benefits of employee recognition and rewards programs include:

• Increased motivation and engagement: Employees who feel valued and recognised are more likely to be motivated and engaged in their work. 
• Improved retention: Employees who feel appreciated tend to stay with their current employer, which means increased loyalty and retention.
• Better performance: Motivated and engaged employees perform better.
• Positive workplace culture: A workplace that recognises its employees is more likely to have a supportive culture which feeds into better teamwork, communication and collaboration.
• Align employee behaviour with strategic business objectives: Rewards and recognition provide a clear path of how employees can support business objectives.
• Ownership and accountability: A recognition program creates a sense of ownership and accountability, which leads to employees performing at a higher level.

Aligning strategy and culture in employee recognition programs

In developing employee recognition and rewards programs, the Achievement Awards Group points to the importance of aligning two key fundamentals:

• Strategy: focusing performance-based recognition around metrics such as service, sales and quality, relating to strategic goals, objectives and tasks.
• Culture: focusing values-based recognition on company values, practices and behaviours.  

The best business strategy is unlikely to be achieved if the culture of the business is not right and the workforce not engaged. The alignment model recognises this key aspect, and hence the program drives both performance and culture with equal measure. 

It's not just about the rewards – recognition is fundamental!

While tangible rewards and compensation benefits are a key part of any employee engagement strategy, non-monetary recognition is equally important, if not foundational. When formulating an employee recognition strategy, there are seven key principles to optimally drive behavioural change:  

• Inclusivity: Recognition needs to be inclusive, touching staff at every level.  
• Frequency:Recognition needs to be done at the right frequency to have sufficient impact.
• Visibility: People need to see and experience recognition to be motivated to be part of the process. Frequency and visibility drives a circle of recognition and performance. 
• Immediacy: Recognition should be immediate with a clear line of sight between the performance and the recognition. 
• Authenticity: Recognition needs to be genuine, meaningful and heartfelt.  
• Autonomy:Give the participants choice around how they fulfil their rewards, with flexibility rather than second-guessing what they might want.  
• Agility: Good recognition programs are agile, focusing recognition on what is most important in the business and keeping pace with priorities as they evolve. 

A recognition and reward framework spans both informal and formal recognition, starting from non-monetary, social recognition at the base of the recognition pyramid which drives company values and behaviours, then performance recognition in which a reward value is layered into the recognition driving company values and business goals, to celebrations and events encompassing divisional recognition, through to an annual pinnacle event with CEO recognition for top performers the business can’t afford to lose – with each stage of recognition increasing in its formality. 

The anatomy of a best practice employee recognition program

Achievement Awards Group has developed a ‘nine-box systems framework’ – a blueprint that ensures focus on each of the components of a successful recognition program:

1. Program management: Most recognition programs fail by not having resources in place to drive, manage and role model the program, along with C-suite buy-in. The involvement of line managers is fundamental - research shows that employees appreciate recognition from their immediate manager more than anybody else.
   
   
2. Employee recognition and engagement goals:Have a clear strategy for your recognition program that is aligned to the business objectives that you want to achieve, and factors in the alignment model’s performance-based recognition (strategy) and values-based recognition (culture).
   
   
3. Program metrics:A measurement framework is essential to keep track of the program and understand what does and does not work, providing a structure for reporting back to the C-suite and demonstrating the program’s tangible impact on the business.
   
   
4. Pre-launch, launch and onboarding:What is your plan to prepare your people, launch the program and onboard them, getting buy in and take-up. 
   
   
5. Communication and program sustainment:An ongoing communications plan is a must, playing a key role in sustaining your program and providing emphasis for specific initiatives.
   
   
6. Training and equipping: Training on the program should be customised for the needs of employees at different levels, covering the functionality of the platform, program objectives, how employees can engage and participate, and most importantly, what’s in it for them.  
   
   
7. Rewards: Research conducted in the US showed that when there are points with a tangible monetary value, the program participation rate was maintained at a constant high level, while in 18 months, there was a 50% lower participation rate when rewards weren't applied within the recognition program. Rewards add important traction and incentive. The next question is how much budget should be allocated to rewards? A good benchmark is to allocate between 0.5%-3.0% of the salary budget into rewards.
   
   
8. Enabling technology: Technology is an essential component of running a successful program, ensuring that employees can access the program anywhere, at any time, in the cloud, on their desktop or their mobile device. The Achievement Awards Group’s bountiXP platform provides a single interface to enable best practice recognition and manage every aspect of the recognition program. 
   
   
9. Feedback systems:Feedback and measurement capability are built in, allowing measurement of what has been achieved, what worked or did not, and how the program stacks up in terms of engagement and business outcomes.

In making recognition and rewards a strategic priority, make sure your program addresses the key aspects of alignment to business objectives, leadership support and sponsorship, rigorous implementation processes,  communication planning, resourcing, measurement and feedback.

 

References:

1 - Aon 2018 Trends in Global Employee Engagement – found at:  https://www.aon.com/getmedia/08c8d127-a8f0-4872-b03a-355361c7e000/trp_infographic_#:~:text=The%20best%20employers%20boast%2075,3%25%20increase%20in%20revenue.%E2%80%9D

2 - Gallup's 10th employee engagement meta-analysis – found at: https://www.gallup.com/workplace/236927/employee-engagement-drives-growth.aspx