4 Examples of How to Prove the ROI of Recognition
By: Mitch Stearns
The sophistication of HR analytics has increased rapidly in recent years and for good reason.
The insights that can be drawn from analyzing your people data are critical to creating the employee experiences that will help you compete in the war for top talent.
It’s also an invaluable way to drive success in your programs by identifying continual opportunities for optimization. Plus, if you’re able to tie your programs’ impact to organizational success measures, these insights can even help you justify the continued use and expansion of the strategies you’re offering to your employees.
It makes sense then that while 34% of HR leaders are dealing with budget cuts (twice as many as last year), only 9% expect those cuts to reduce their HR analytics budgets, according to Gartner research.
Changing Philosophies on How to Measure Employee Engagement Programs
In the employee experience solutions we provide for our clients we’ve seen proof of this shift as our clients increasingly rely on solution analytics to demonstrate the impact of their programs on larger measures of organizational success. That includes evaluating metrics like talent retention, eNPS, financial performance and customer experience.
To do this, transactional measures like how many recognitions were issued or how many points were redeemed are significantly less important. Instead, clients are asking deeper questions like:
- Is my solution driving desired behaviors among my people?
- Is the data showing us that our leaders are becoming more effective?
- Is this solution helping me keep my talent?
- What’s the next area of opportunity for impact?
The underlying inputs that inform the answers to these deeper questions will vary for each organization. That’s because factors like the desired behaviors they’re looking for, how they characterize “effective leadership” and the attrition trends they’re trying to correct will all vary.
This is too important of an opportunity to miss out on. To help bring clarity to this somewhat murky territory, I’m taking you behind the scenes of several of our client’s solutions to show you how they’ve been validating the impact of their solutions (and gaining buy-in to continue expanding them!).
Case Study #1: The One Where We Focused on Activating Specific Employee Behaviors
Sometimes recognition programs are viewed as “set it and forget it” strategies that require upfront planning and implementation of recognition tech then will operate unassisted ongoing. This enables organizations to “check the box” that they have a program in place—but it’s often also lulling them into complacency.
If you’re using recognition as a strategy for encouraging desired employee behaviors and improving your culture and other business outcomes that matter to executives, it’s important to continue maturing your program by proactively optimizing your strategies.
One client well-versed in using values-based recognition to show appreciation recently rolled out new core values. However, they were unsure how much their team members had internalized how those original values connected to specific behaviors.
Using a combination of cross-media communication, leadership enablement and a challenge to each team member to recognize each other for a specific core value during a given month, our client saw significant improvement in recognition of each value being emphasized.
Takeaway: Use a recognition strategically to both help employees internalize the behaviors you expect and create a groundswell of support and enthusiasm at your organization around a specific behavior to ultimately improve culture.
Related: 50+ Ways to Motivate Your Employees for Measurable Results
Case Study #2: The One When Leaders Set the Tone for Where Culture Change Took Root—and Where it Didn’t
We all know how important leaders are in guiding employee behaviors. But, proving that with data can sometimes present a challenge.
That’s why we were so excited when we helped a client do just that.
We were able to prove a strong—and statistically significant—positive correlation between getting leadership buy-in to create a recognition-centric culture and the engagement buy-in from their people.
Not only did this give our client hard data to take back to the leaders who they felt deserved recognition (and those who needed some additional encouragement), it has given them proof that will help them make the case for additional funding to further expand their efforts because the correlation is getting stronger quarter-over-quarter.
Case Study #3: The One Where Recognition Supported Local Level Financial Performance
Not many metrics speak as loudly as financial performance when you’re building the business case for your recognition program.
We helped a retailer with more than 2,200 stores show the impact of their program by evaluating the relationship between recognition being issued and store financial performance.
When we compared stores in the top quartile and bottom quartile, we found that across every region there is a correlation between recognition being issued and store profitability.
Plus, despite natural market fluctuation, the top quartile stores continue to outperform the bottom quartile counterpart stores when viewed over multiple years.
Case Study #4: The One Where Recognition Saved the Company $11.5M
It’s no secret turnover costs organizations an extraordinary amount in hard costs like recruitment and onboarding but also in less quantifiable ways like decreased productivity and added stress on team member who are picking up extra duties. Our client was particularly struggling with turnover of new hires, so keeping them engaged—and employed—was top priority.
After implementing a solution that focused on mitigating risk of “attrition cliffs” we were able to significantly improve the retention of new hires.
In fact, when team members were recognized—even just once—in their first 30 days, they were retained at a 15-percentage point higher rate at month three. When they received AND issued at least one recognition, 91% were retained at month three.
This trend toward higher retention of new hires spells significant savings for our client to the tune of $11.5M annually!
Related: Employee Recognition Ideas that Actually Help Retain Your Team Members
Break the Mold to Validate the ROI of Recognition
At ITA Group, we believe that the days of writing off recognition as a “soft” benefit without quantifiable impact are gone. Organizations have more data available now than we could have imagined just a few years ago. The combination of data and understanding the metrics that matter most to your organization’s success are the key to validating your investment in what should be a critical component of your culture. These examples are just a few of the ways we are seeing HR leaders exercise creativity and strategic thinking to validate the need for and continued evolution of their recognition programs.
If you’re looking for a place to start, check out our Engagement Savings Calculator. By entering just a few figures specific to your organization you’ll receive an estimate of just how much savings you too could capture (and reinvest!) by using recognition to improve employee engagement.