This is Part 1 in a 6-part series.
So what is recognition and reward? It’s not bonuses or profit-sharing. It’s more than that. It’s an accelerator of performance. It’s turbo-charging your unique organization.
“Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is the one thing above all others; the ability to get and keep enough of the Right People.” Jim Collins, author of Good to Great
The Right People’s first needs are to cover their physiological and safety needs – food and shelter (competitive salary and benefits). Once these are met, they move on to love and belonging needs – they want to feel like they are part of the team (this is where your initial job orientation policies, on-going evaluation and employee feedback methodologies come into play – we’ll cover these in another Thought Leadership series), and finally they are looking to feel important and valued in their jobs. Validation. That is what recognition is all about. Fulfilling this final need.
Purposeful recognition means lower turnover rates and enhanced business results. In a major study that can be reviewed in the excellent The Carrot Principle co-authored by Adrian Gostick and Chester Elton, return on equity for companies that do not practice recognition and reward, averaged 2.4%, while companies that effectively recognize enjoy an ROE of 8.7%, or more than three times higher.
One of the leaders in recognition studies is the O.C. Tanner Recognition Company. In a multi-decade study, encompassing 100’s of thousands of interviews, here are some of the top predictors of job satisfaction:
- At work, I have the opportunity to do what I do best every day.
- My performance is evaluated in a manner that makes me feel positive.
- My opinions seem to matter to my manager.
- My manager shares all the information to make me feel part of the team.
- The company has developed work-life policies that address my needs.
- I have recently received praise or recognition for my work.
From these top predictors, you can see that #6 directly addresses recognition. However, if you look subjectively at #2 and 3, wouldn’t you surmise that how an employee is treated professionally (they are being listened to and taken seriously) also is a form of recognition?
From an employee’s point of view, being recognized makes them feel that every extra minute, every ounce of effort, was worth it. Especially when the recognition is meaningful. It is an experience that they won’t soon forget.
Additionally, being recognized means you are relevant to your superiors and your company. Relevance means you matter. Relevance means the boss is listening.
Your company’s reputation, once you integrate recognition and reward into your culture, is one of high engagement and high satisfaction – your employees are ambassadors for your organization, they believe in your goals and vision, and are committed to personal and organizational success. Recognition programs lower employee turnover, which as you fully comprehend, has so many benefits to your long-term bottom line.
So, this is a brief overview of what recognition and reward is all about. And why you want to begin to explore, then implement, a recognition and reward program into your organization.
In our ongoing 6-part series we will look at the four building blocks of a good recognition and reward program as outlined in The Carrot Principle, as well as the associated costs that are involved on a yearly/by employee basis. At the end of part 6 we’ll supply a list of recommended reading for those who want to delve deeper. Be sure to check out 1001 Ways to Reward Employees by Bob Nelson and Recognizing and Rewarding Employees by R. Brayton Bowen for great ideas on how to motivate your key assets.
Start practicing now. Today. Tell someone thank you for the hard work they are doing. It’ll make ‘em feel good. And you’ll feel like a better manager.
Part 2 – Everyday Recognition