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.

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:

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, 3^rd 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.