MANAGEMENT GURU, PETER DRUCKER, once said that “economic incentives are becoming rights rather than rewards.” He added that in no time at all, these incentives become a right, and that therefore their usefulness as an incentive and management tool is limited. So if material incentives have a limited shelf-life, what is the alternative? How can companies build engagement in their teams without spending wads of cash? Why, using recognition, of course!
And not only can recognition be used as an instant gratification for a job well done, it can also help reduce turnover of staff, build team culture and increase overall performance.
Take staff turnover. A 2013 Gallup report titled State of the Global Workplace research report found that China has one of the lowest levels of engagement in the world, at only 6%! But if recognition improves engagement and engagement reduces turnover of staff, why is China performing so poorly?
A 2013 Gallup report titled State of the Global Workplace research report found that China has one of the lowest levels of engagement in the world, at only 6%!
Improved and attractive team culture
We know that a culture of recognition breeds employee engagement. It also builds an employer brand, and this alone can reduce costs in hiring. The Corporate Leadership Council in 2006 found that “strong employer brands provided access to 20% more of the potential talent market than weak or unmanaged employer brands.”
Emile Mac Gillavry, of Maximum Employment Marketing Group, adds that there are also other benefits in building a strong employer brand. “With successful employer branding campaigns there is also an increase in efficiency. Companies with a strong employer brand decrease their cost per hire, because less executive search and head hunters are needed, the quality of the hire is better and overall the time to hire improves.”
Bob Nelson and Dean Spitzer highlight recognition’s importance in their book, ‘The Complete Guide – The 1001 Rewards & Recognition Fieldbook’. They say that recognition isn’t just about making an employee “feel better, but also because it makes good business sense, too.” Their research of United States-based employees showed that 84% of managers agreed that recognising employees when they “do good work helps increase their performance.”
84% of managers agreed that recognising employees when they “do good work helps increase their performance.”
But if those statistics on the importance of recognition aren’t convincing enough, think about the research conducted by ClarkMorgan on desired leadership qualities in 2010 that found that the top leadership quality admired in by Chinese employees is ‘compassion’. Yet, ironically, there is a cultural contradiction between the home and workplace. At home, children are not required to say ‘please’ and ‘thank you’ to close members of the family. It’s understandable that without this habit developing early in childhood, that an innate habit is unlikely to spontaneously manifest in adulthood. So while recognising staff may appear to be ‘common sense’ by many with international experience, it may be anything but, for those Chinese without this international cultural awareness.
Timing is everything
That being said, even those who are aware of the importance of recognition may be lessening its effect because they are too slow in their praise. Nelson and Spitzer’s research found that 73% of employees prefer to be recognised either ‘immediately’ or ‘soon thereafter’.
73% of employees prefer to be recognised either ‘immediately’ or ‘soon thereafter’.
Says Wade McKittrick, President of McKittrick Consulting Group, an organisational development firm based in Minnesota, “Praise immediately. What are you waiting for? If it’s praiseworthy it’s praiseworthy now. The longer you wait the less effective the praise becomes as it can easily appear to be an afterthought on your part. Seek the person out, let them know as soon as it is appropriate that you saw or heard what they did and you appreciate it. Don’t wait.”
But let’s face it; at the end of the day measuring the direct impact of recognition on profitability is difficult because it can be one of many factors, such as salary, working conditions and even the weather, that influences employees’ engagement in the workplace. That being said, companies like the Walt Disney haven’t shied away from adopting recognition programs. The company, famous for happy cartoon characters has linked happy staff to happy customers, and in doing so has increased sales through repeat business.
Tom Rath and Donald Clifton, in their book ‘How Full is Your Bucket?‘, highlighted the results of Disneys’s employee recognition program, which resulted in a 15% increase in staff satisfaction. This increase correlated with an increase in guests’ satisfaction, measured by their indication that they had a “strong intent to return” on surveys. The Walt Disney company was ranked 66th amongst the Fortune 500 companies in 2012 and no doubt this success can be attributed to the positive return on investment of their recognition program.
That’s a trillion dollars lost due to a lack of recognition!
So how important is recognition in the workplace? The answer is clear – it is critical, for both your company and the economy as a whole. Just take the US economy, for example.Rath and Clifton highlight that the damage to the United States’ GDP by extremely negative or ‘actively disengaged’ workers has resulted in a drop of about 10%! That’s a trillion dollars lost due to a lack of recognition!
But how do I recognise my employees?
According to BambooHR, a Utah based human resource software firm, when it comes to the types of recognition employees want:
– 30% of employees want an opportunity to grow in the company,
– 28% just want praise,
– 24% want a physical reward, like money or a gift card, and
– And only 10% say “Hey! No reward is necessary!”
BambooHR goes on to say that employees “want some form of recognition every 7 days”! So if you are only relying on monetary rewards, it’s likely you company will be bankrupt before the end of the year.
That means relying more on praise. And if you think you are already recognising your employees enough, you’d be an anomaly. Only 12% of employees say that they often receive appreciation for great work. To make up the difference, that means you’ll have to celebrate both the big and small achievements. Says the Harvard Business Review, “Regular minor boosts from ordinary activities can have a cumulative and lasting effect.”
But don’t feel overwhelmed. Recognition does not only need to come from top-down. Forbes magazine states that “it’s recognition by your peers, the people you work with every day” that makes a company thrive.
So if recognition isn’t part of your culture, that needs to change. After all, a simple “good job!” or pat of the back could equate to a stronger bottom line in 2015.