Insights

Private Matters Newsletter

December 2013 edition

Perspectives

Recognition programmes

Are they important?

Recognition is not a new concept in the workplace; organisations have long appreciated and rewarded employees for certain behaviours and activities, with over 80% of organisations having some form of recognition in place. While it’s commonly accepted that recognition programmes have a positive impact, they are often hard to implement and measure. Do organisations really understand if (and how) recognition is bringing benefits? How is recognition changing in today’s workplace?

This article looks at why recognition is important today and what progressive organisations are doing, concluding with a summary of Deloitte’s approach to designing progressive recognition programmes.

Does recognition have an impact?

Recognition is highly correlated with improving employee engagement, in turn improving job performance and capturing business value. The right recognition programme can have measurable impact;

  • Employee engagement, productivity and performance are 14% higher than in organisations without recognition.
  • A 15% improvement in engagement can result in 2% increase in margins.

Research from our Talent 2020 survey shows that leadership support and recognition are among the top three most effective non-financial factors for retention.

However recognition programmes do not always have an impact, because of their tendency to focus on financial recognition, rewarding service or tenure, which employees may not value.

Recognition is changing

The way recognition programmes are incorporated into businesses is changing. Progressive organisations are taking a holistic approach. They are centralising initiatives and ensuring alignment with business goals, culture and talent management processes. They design their programmes to consistently reinforce key behaviours and outcomes necessary to drive business success, and they measure the impact of those programmes.

Why is recognition important today?

Recognition has long been valued for promoting desired behaviours and fostering positive attitudes. Recognition is even more relevant for organisations today due to five market factors:

Market factor

Context

Unstable economy

Many organisations have to do more with less. As salaries, bonuses and workforces were reduced, remaining employees were under additional pressure, but getting fewer rewards. Recognition was one way of tackling engagement, with many choosing the lower cost options.

Need for greater agility

Today’s organisations need to be able to reconfigure their workforce in response to faster business demands. Recognition can help attract new employees and retain existing ones, keeping both engaged and motivated enough to be able to respond to global demands while also allowing the organisation compete for top talent.

Flattening organisational structures

Many organisation structures are become more collaborative and less hierarchical, meaning less promotion opportunities. More innovative methods are required to recognise strong performance.

Technology

Transparency, collaboration and knowledge sharing have become the norm. Social media is now often used as part of recognition programmes, for example, peer-to-peer recognition via social media platforms.

Millennial generation

Millennial generation employees tend to require more feedback than others. Organisations are now searching for ways to keep this workforce engaged and productive.

The Deloitte approach - designing recognition

Recognition programmes aren’t “one-size fits all”. When it comes to design, different types of rewards and recognition work best in different situations, depending on the strategic objectives of the organisation, culture, and characteristics of the employees.

One trend in rewards and recognition is clear - providing employees with some choice and flexibility in how they are recognised is a key strength of many organisations’ programmes.

So, how do you create a Best Practice Recognition Programme?

Phase 1 - Recognition Strategy: Developing a holistic Recognition Strategy is crucial; without a clear strategy, recognition programmes run the risk of being a series of unrelated and unmeasurable events with little lasting impact.

Consider what you want to achieve through recognition. Research shows that only 60% of organisations tie recognition to business goals. People will alter their behaviours to desired behaviours in order to be recognised. If these desired behaviours are aligned with the organisation’s goals, you will achieve these goals quicker. If you establish the right kind of recognition, you can improve customer service for example or reduce accident rates (and costs). Any new recognition programme must define how it is going to change key goals, performance or behaviours. Otherwise you cannot determine ROI or know if you are helping achieve those business results.

Have you considered how to integrate recognition with Talent Management? For example, will it be integrated into performance management? Can it be used to attract top talent for open positions? Are there any conflicts with existing talent policies/programmes?

Phase 2 - Audience Analysis: Once the strategy is clearly defined, consider your audience. Will some recognition activities be unique to certain segments of the workforce or will they be open to all levels?

Phase 3 - Programme Design: The overall design of the programme is another critical element.

  • There needs to be a clear business case for investment before design begins. Is it clear how recognition aligns with business goals and what the expected impact is? What metric will change as a result?
  • Budget and financing will play a key role in the extent of a programme; it will take time to design, launch and maintain.
  • Consideration also needs to be given to a) execution; b) governance; c) criteria.
  • Consider who will be permitted to recognise staff; both internal and external (e.g. customers, 3rd parties)? Is there going to be top-down, peer-to-peer, bottom-up or combination recognisers?
  • What level of visibility will be given to those who are recognised; public or private, within departments or across the entire firm?
  • What, if any, rewards are going to be given? The choices vary from formal to informal, emblematic (e.g. praise, special projects, certificates), token (gift cards, points), monetary (conferences, paid time off). It’s important to think about the right mix of monetary and non-monetary. Financial rewards aren’t always the most effective, so it’s often best to combine with internal certificate/award ceremony schemes.

Phase 4 - Measurement: Once design is complete, metrics for measurement should be agreed in advance before launching and beginning communications. Despite spending $46 billion per year, it is surprising that most don’t track the return (87%).

The business impact of good recognition programmes is clear. When implemented and designed correctly, recognition has the potential to become a key strategic tool for organisations’ HR function to help drive change and improved performance. Since companies can more easily match compensation packages, Deloitte believes companies can differentiate themselves in the talent marketplace by going beyond financial incentives and creating customised engagement and retention strategies that address issues such as leadership, culture, learning opportunities, career advancement and greater recognition.

Note on Bersin by Deloitte

Bersin by Deloitte delivers research-based people strategies designed to help leaders and their organisations in their efforts to deliver exceptional business performance. Our WhatWorks® membership gives Fortune 1000 and Global 2000 HR professionals the information and tools they need to design and implement leading practice solutions, benchmark against others, develop their staff, and select and implement systems. A piece of Bersin by Deloitte research is downloaded on average approximately every minute during the business day. More than 5,000 organisations worldwide use our research and consulting to guide their HR, talent and learning strategies.

Authors

Valarie Daunt

Valarie Daunt

Director - Consulting

Valarie Daunt leads the Talent, Performance and Re...More

Vicky Menzies

Vicky Menzies

Manager - Consulting

Vicky Menzies specialises in strategic change with...More

People

Vicky Menzies

Manager - Consulting

People

Valarie Daunt

Director - Consulting

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