Unlocking the Secret to Employee Engagement: Effective Recognition Programs
By Josh Bersin, Principal, Bersin by Deloitte, Deloitte Consulting LLP

Culture and engagement emerged among the most important issues affecting organizational performance in Deloitte’s recently released report: Global Human Capital Trends 2015. In fact, the proportion of respondents citing culture and engagement as a “very important” issue nearly doubled this year from 26 percent to 50 percent, according to the report. As a result, almost two-thirds of the study’s HR respondents are looking to update or revamp their entire strategy to measure, manage and improve employee engagement.

With many baby boomers starting to retire, and with top performers in the workplace in short supply, savvy executives understand that they must tailor their talent-management strategies to leverage their organizations’ most critical asset — employees. And one of the most effective ways to do this is through effective employee recognition programs. Such programs help to engage employees, and they support the creation of a vibrant organizational culture that distinguishes a company from its peers.

How do we know this? A Bersin & Associates’ study, The State of Employee Recognition in 2012, found that modern, re-engineered recognition programs can have a huge impact on organizational performance. Companies that scored in the top 20% for building a “recognition-rich” culture had 31% lower voluntary turnover rates. Many CEOs would pay millions of dollars to reduce voluntary turnover. Moreover, the research shows that employee engagement, productivity and customer service are 14 percent better in workplaces where recognition occurs. That 14 percent is what sets stellar companies apart from their peers.

Five Essential Pillars of Recognition
So what does a well-designed recognition program look like? Below are the five leading practices we discovered:

1. Recognize people based on specific results and behaviors
Forget giving someone a reward for being “employee of the month.” Give them an award for delivering outstanding customer service when a particular problem occurred. This approach creates a culture of “doing the right thing.”

2. Implement peer-to-peer recognition — not top down
Recognition from leaders has less impact than you think. HR managers may believe this is a key criteria for success, but employees told us that they feel much better when they are recognized by their peers. That’s because peers know what you’re doing daily, so when they recognize your efforts, the gesture is more meaningful. Employees often view recognition from more senior leaders as political, and it rarely reaches the “quiet but critical high-performers” in an organization.

Today’s high-performance recognition programs let anyone in the company recognize anyone else through social tools that often use “points” or “dollars” to reward specific behaviors or a job well done. The thank-yous are public and displayed on a “leader board” that allows everyone to see them.

3. Share recognition stories
Story telling was one of the most powerful practices we identified. When a colleague does something great and is recognized by peers, tell people about it in a company meeting, a newsletter or blog. These stories create employee engagement and demonstrate positive behaviors and leading practices.

In our team’s weekly conference call, we make a point of recognizing someone for strong contributions. Not only does this make that person feel great, it helps our leadership team promote behaviors and results that we expect from everyone.

4. Make recognition easy and frequent
Make it simple for employees to recognize each other. Many modern programs we have studied give employees an allotment of “points” or “dollars” that they may give to others online in seconds. People who do great things are now visible to everyone else, and this visibility encourages others to excel.

5. Link recognition to your own company values or goals
Companies, including Deloitte, have recognition programs that focus on the organization’s mission and goals. When you give someone a “thank-you” award, the award is tied to your own organization’s strategy (customer service, innovation, teamwork, or even a revenue or cost-cutting goal).

This may not sound very business-like, but believe me it works. Too often, CEOs and managers focus on bottom line results without thinking about how it feels to slog away and work without anyone recognizing your efforts or saying “thank you.”

The Psychology and Biology of Recognition
In Maslow’s hierarchy of needs, two of the most valuable psychological needs we have as human beings are the need to be appreciated and the need to belong. These needs are met through peer-to-peer thanks and recognition.

Recognition has a physiological impact on performance as well. Well-known as the “love hormone,” oxytocin is created in our bodies when we feel loved or appreciated. Even shaking someone’s hand or giving them a hug can trigger this hormone. Research (Wall Street Journal article “The Trust Molecule” by Paul J. Zakon) shows that when we trust people at work, they may behave in a more trustworthy way. As an organization implements a modern recognition program and people start thanking each other, trust and engagement go up — improving employee morale, quality and customer service.

This does not mean that recognition replaces the need for feedback, accountability and goal-setting. Organizations badly need these performance management programs to drive alignment and performance. However, our research shows that 83 percent of the organizations we studied suffer from a deficit in recognition — that these companies are underperforming their peers.

So next time you see someone doing good work or the right thing, thank them openly.

HR Pulse is a bi-monthly resource published exclusively for the members of the Cable and Telecommunications Human Resources Association.

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