How employee recognition programs improve the bottom line.
Employee recognition programs have long been used to improve employee experience and loyalty. But as employee recognition programs have evolved to suit the modern workforce, many companies now also recognise the positive impact employee recognition programs can have on financial returns.
Traditionally, employee recognition programs consisted of an annual event where the CEO called the top two or three, maybe even ten, employees on stage to recognise their contribution. While the public recognition and handshake from the top is a good start, employee recognition programs have evolved to positively impact more employees, impacting them more frequently.
The best employee recognition programs today include social peer-to-peer employee recognition where employees can recognise other employees regardless of department, role or location. They include in the moment access to celebrate actions and achievements as they happen, milestone awards to celebrate significant moments in an employee’s career, a high level of manager and executive interaction, eCards, tagging of company values, opportunities to earn reward points, choice of how these points are redeemed, non-financial rewards and perks, events and much more.
So how do these company-wide employee recognition programs affect financial results?
Companies introduce employee recognition programs for a number of reasons and each company has their own reasons. Typical goals of employee recognition programs are employee focused - improve culture, increase productivity, build loyalty, engage employees, align employees with a new company direction and more. All of these can be addressed through well designed employee recognition programs but there are lots of other benefits as well that all result in improved numbers when it comes to end of year reporting.
Employee recognition programs typically allow recognition against company values, or core pillars, of an organisation. Recognising employees against these values sets the expectation of the organisation around employee behaviour. It demonstrates to all employees what is expected of them and exemplifies the kinds of activities or achievements that contribute to the company’s success. By having employees aligned to the values, employee recognition programs create an environment where all employees are working towards the same goals.
Employee recognition programs build teamwork and strengthen bonds between co-workers. The networking effect of a social recognition program is real. Employee recognition programs allow all employees to see recognition, typically on a social wall, and interact with the recognition much like they may interact on posts in their personal social channels. It is this interaction in employee recognition programs that strengthens bonds amongst teams and builds positivity.
Employee recognition programs increase the ‘discretionary effort’ employees put in, meaning they are more likely to go out of their way to keep customers happy. Employees that are recognised for their efforts, particularly when they go above and beyond, are more likely to repeat the behaviour. Subconsciously, we all seek approval from others and employee recognition programs provide a structured, transparent tool for this to happen.
With employee recognition programs encouraging employees to extend themselves to keep customers happy, metrics like Net Promoter Score (NPS), loyalty, average transaction value, repeat purchase, average size of basket, lifetime customer value and many others improve.
Discretionary effort is not limited to customers. Companies that have well designed and effectively implemented employee recognition programs see improved productivity and efficiencies across the board. When companies focus on recognising employees for their contribution, employees are more likely to want to contribute at a higher level. Companies with good employee recognition programs enjoy improved ideation, positive experimentation and greater innovation. Process improvement ideas, new product ideas, new approaches all come from employees. Employees are more likely to contribute positively in organisations with employee recognition programs.
Employee recognition programs are a great tool for managers, improving their relationships with their teams. When managers use employee recognition programs to recognise their teams, team members understand what is expected of them. They know what is important to their manager because what is important is what gets recognised. Employee recognition programs build trust and transparency, positively improving working relationships across the company.
Health and wellbeing improves with employee recognition programs, meaning the morning phone calls to managers reporting that an employee will not be in decrease. Employee recognition programs have been proven to reduce absenteeism significantly as employees feel like they are a part of something bigger. Not only does absenteeism reduce with employee recognition programs, mental health improves. There are indicators that the positive environment created through employee recognition programs improves overall happiness and can be a protective factor when it comes to mental wellbeing.
Research tell us that safety also improves with employee recognition programs in place. Employees at companies with employee recognition programs are more conscientious and aware of safety, looking for ways to improve their environment and working conditions, positively contributing to a reduction in safety incidences.
So with employee recognition programs improving teamwork, strengthening bonds, improving discretionary effort, setting behaviour expectations, improving manager relationships, increasing customer satisfaction, generating more ideas, improving employee contribution, increasing health and wellbeing, decreasing absenteeism, improving safety and aligning all employees around shared goals, reportable results improve too.
Companies with employee recognition programs have been shown to experience greater top line profits but also greater return to shareholders than companies that don’t have employee recognition programs.
It really is true that what you put in, you get out. As Richard Branson says, look after your employees and the rest will take care of itself.