The Value and ROI in Employee Recognition: Linking Recognition to Improved Job Performance and Increased Business Value — The Current State and Future Needs The Value and ROI in Employee Recognition

1 Today's economic challenges require organizations to find new ways to not only reward top performers, but to motivate all workers to improve performance while maintaining or increasing business value. Both must be done as cost-effectively as possible. Traditional methods for keeping and motivating workers utilize compensation and benefits. However, as this report emphasizes, those are only two parts of an organization's " Total Reward " package. In fact, organizations can reward their workers in many ways, including with pay, benefits , work-life improvements, and incentives for predetermined job performance—as well as with various forms of recognition. WorldatWork defines recognition as practices that: Acknowledges or gives special attention to employee actions, efforts, behavior or performance. It meets an intrinsic psychological need for appreciation for one's efforts and can support business strategy by reinforcing certain behaviors (e.g., extraordinary accomplishments) that contribute to organizational success. Whether formal or informal, recognition programs acknowledge employee contributions immediately after the fact, usually without predetermined goals or performance levels that the employee is expected to achieve. Awards can be cash or non-cash (e.g., verbal recognition, trophies , certificates, plaques, dinners, tickets, etc.). This report highlights recognition's role by demonstrating that n Recent studies by Gallup, the Corporate Leadership Council, Towers Perrin and others show that recognition is highly correlated to improved employee engagement with both the employee's work and organization. n Increased employee engagement has a dramatic positive effect on improving job performance and capturing business value. n Organizations actively seeking to improve employee engagement, including through the use of formal and informal recognition, financially outperform their competitors. n Unlike compensation and incentive-based programs, recognition programs potentially can create a positive cycle of ever-increasing employee engagement and motivation with resulting improvements in job performance-related behaviors to optimum levels with a limited investment. In addition, we present three cases stud-ies—Scotiabank, Delta Airlines and MGM Grand—that illustrate how some organizations are restructuring their recognition programs to better align them with employee engagement and business strategy. A key finding, exemplified by these case studies, is that recognition programs need to include multiple forms of awards—e.g., what is recognition for one worker will not necessarily work with all. In addition, recognition programs need not be expensive. In fact, many of the studies we discuss show that non-cash awards, including simple verbal recognition , usually work best. What matters is that the recognition is valuable to the worker and is awarded …