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The Business Case for Recognition

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Third-party global research commissioned by the O.C. Tanner Institute proves frequent and effective employee recognition is the leading cause of great work and is highly correlated to increased engagement, productivity, innovation, trust, and tenure. This research was further validated by 2014 O.C. Tanner client data pulled from more than 8 million recognition moments, with 91% of recognized employees reporting, “they felt highly motivated to contribute to the success of their organizations.”

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The Business Case for Recognition

  1. 1. THE BUSINESS CASE FOR RECOGNITION: The latest research, compelling insights, and the benefits of effective recognition O.C. Tanner Institute 41.8 82% 9.5X5X 126%
  2. 2. With only 1/3 of the workforce engaged in their organization, improvements need to be made. There is a proven solution that actively gives organizations a competitive advantage. It’s basic. It’s human. It’s cross-generational. actively disengaged 17.5% engaged 31.5% not engaged 51% 2014 GALLUP REPORT 1
  3. 3. Third-party global research commissioned by the O.C. Tanner Institute proves frequent and effective employee recognition is the leading cause of great work and is highly correlated to increased engagement, productivity, innovation, trust, and tenure. This research was further validated by 2014 O.C. Tanner client data pulled from more than 8 million recognition moments, with 91% of recognized employees reporting, “they felt highly motivated to contribute to the success of their organizations.” 2
  4. 4. EXECUTIVE SUMMARY Research proves recognition has a direct impact to: 1 increase engagement 2 encourage innovation and productivity 3 54 improve trust and manager relationships cause great work attract and retain talent
  5. 5. In a recent survey,3 employees were asked (without prompting), “What is the most important thing your manager or company currently does (or could do) to cause you to produce great work?” 1 The #1 cause of great work 37% RECOGNIZE ME 3% I DON’T KNOW 6% TRAIN ME 6% OTHER 7% PAY ME MORE NOTHING: I’M SELF-MOTIVATED 12% 12% INSPIRE ME GIVE ME AUTONOMY 13% 4% PROMOTE ME WHAT CAUSES GREAT WORK?
  6. 6. 35% say they would recognize their peers 22% say they would lead by example WHAT WOULD YOU DO TO MOTIVATE YOUR PEERS TO DO GREAT WORK?What would you do to motivate your peers to do great work? 94% of employees who work for organizations with “excellent” recognition practices rate recognition as effective at causing great work. Meanwhile, only 54% of employees who work for organizations with “excellent” raise practices rate raises as effective at causing great work.
  7. 7. PERCEIVED EFFECTIVENESS OF WORK PRACTICES 94% EXCELLENT RECOGNITION PRACTICE 75% EXCELLENT BENEFITS PRACTICE 74% EXCELLENT PROMOTION PRACTICE 64% EXCELLENT BONUS PRACTICE 54% EXCELLENT RAISE PRACTICE 54% EXCELLENT ENVIRONMENT PERKS
  8. 8. “I really appreciate sincere appreciation and recognition. I am paid to do a job. But my salary doesn’t drive my motivation; it doesn’t make me perform any better.” —SURVEY PARTICIPANT
  9. 9. Additional research commissioned by the O.C. Tanner Institute looked at the correlation between effective performance recognition and engagement.4 Increase engagement2 The finding: performance recognition for great work significantly impacts employee engagement at a rate of more than 2 to 1
  10. 10. EMPLOYEES WHO RECEIVE STRONG RECOGNITION ARE MORE ENGAGED HIGHLY ENGAGED WITH STRONG RECOGNITION HIGHLY ENGAGED WITH WEAK RECOGNITION 34% 78%
  11. 11. Research from Quantum Workplace reveals the number-one area employers need focus on to improve employee confidence is in fact recognition.5
  12. 12. 89% 44% SENSE OF DRIVE AND DETERMINATION WITH WEAK RECOGNITION SENSE OF DRIVE AND DETERMINATION WITH STRONG RECOGNITION 81% 35% FEEL CONNECTED TO THE COMPANY WITH STRONG RECOGNITION FEEL CONNECTED TO THE COMPANY WITH WEAK RECOGNITION EMPLOYEES WHO ARE HIGHLY ENGAGED WITH STRONG VS. WEAK RECOGNITION
  13. 13. 78% 35% HAVE STRONG WORK RELATIONSHIPS WITH STRONG RECOGNITION HAVE STRONG WORK RELATIONSHIPS WITH WEAK RECOGNITION 76% 28% UNDERSTAND HOW THEIR WORK MAKES A DIFFERENCE WITH STRONG RECOGNITION UNDERSTAND HOW THEIR WORK MAKES A DIFFERENCE WITH WEAK RECOGNITION EMPLOYEES WHO ARE HIGHLY ENGAGED WITH STRONG VS. WEAK RECOGNITION
  14. 14. A recent Aon Hewitt study found that recognition for strong achievement or performance is one of the top three expectations employees have in the workplace. Further findings conclude that 1 in 3 employees would like to see improvements in recognition.6
  15. 15. Encourage innovation and productivity3 Employees who receive strong recognition are: more likely to be proactively innovating 33% generating 2x as many ideas per month & 2x as likely to be highly innovative 2x
  16. 16. 27% 41% RECOGNITION FOR ONGOING EFFORT RECOGNITION FOR GOING ABOVE AND BEYOND 32% 5% SALARY BONUS EMPLOYEE’S CHOICE OF WHICH BENEFIT WOULD ENCOURAGE THEM TO BE INNOVATIVE AND PRODUCTIVE
  17. 17. RECOGNITION’S IMPACT ON INNOVATION AND PRODUCTIVITY 28% WEAK RECOGNITION 42% STRONG RECOGNITION FEEL THEIR IMMEDIATE WORK TEAM IS WORKING AT 80% OF CAPACITY OR HIGHER 40% WEAK RECOGNITION 53% STRONG RECOGNITION PERCENTAGE OF EMPLOYEES WORKING AT 80% CAPACITY OR HIGHER
  18. 18. Employees want more feedback on their job performance and recognition of efforts and achievements from their direct managers. According to 2015 research by Aon Hewitt,7 Improves trust and manager relationships4 of employees value communication and recognition from their leaders 72% report they don’t get enough 46%
  19. 19. Among those who receive strong recognition, 87% say they have a strong relationship with their direct managers; only 51% of those receiving weak recognition say the same.
  20. 20. EMPLOYEE’S CHOICE OF WHICH BENEFIT WOULD IMPROVE THEIR RELATIONSHIP WITH THEIR DIRECT MANAGER 50% 28% 22% RECOGNITION FOR ONGOING EFFORT RECOGNITION FOR GOING ABOVE AND BEYOND 5% SALARY BONUS
  21. 21. Attract and retain talent5 Recognition is no longer seen as a nice workplace perk, but rather a necessary strategy to attract and retain top talent.8 A global survey of 200,000 job seekers asked employees to choose the most important attributes in a new job from a list of 26. The number-one attribute was that their employer or manager showed “appreciation for my work.” This was followed by good relationship with colleagues, good worklife balance, and then good relationships with superiors. Attractive salary came in at number 8.9
  22. 22. Employees who consistently do great work in their organization were more likely to work at companies with excellent recognition and promotion practices.10
  23. 23. A study focused on the impact of celebrating career achievement (or years of service) over time found: 11 • Companies offering a years-of-service award program keep employees an average of two to three years longer than companies without a program. • Employees plan to stay at their current employer for an additional two years on top of that if the program is perceived to be effective.
  24. 24. AVERAGE NUMBER OF YEARS AN EMPLOYEE STAYED AT THEIR PREVIOUS COMPANY WITH AND WITHOUT A SERVICE AWARD PROGRAM 6.7yrs WITH SERVICE AWARDS WITHOUT SERVICE AWARDS 4.7yrs
  25. 25. When done effectively, years-of-service programs improve an additional set of key employee engagement metrics: • First, they communicate that the company cares about employees, which improves vertical engagement from employee to manager. • Secondly, they help employees feel they fit in and belong, which improves horizontal engagement from employee with peers.
  26. 26. Feel the company cares about its employees EMPLOYEES CO-WORKERS MANAGEMENT VERTICALENGAGEMENT TH E EFFEC T O F YEA RS-O F-SERV IC E AW A RD S Feel they fit in and belong HORIZONTAL ENGAGEMENT
  27. 27. Research has proven that great work, engagement, and overall business metrics are impacted by programs that reward performance—in both formal and informal ways—as well those that celebrate career achievement or years of service. DOWNLOAD FULL REPORT
  28. 28. O.C. TANNER AND THE O.C. TANNER INSTITUTE The O.C. Tanner Institute regularly commissions research and provides a global forum for exchanging ideas about recognition, engagement, leadership, culture, human values, and sound business principles. O.C. Tanner, number 40 on the 2015 FORTUNE 100 Best Companies to Work For® list, helps organizations create great work environments by inspiring and appreciating great work. Thousands of clients globally use the company’s cloud- based technology, tools, awards, and education services to engage talent, increase performance, drive goals, and create experiences that fuel the human spirit. Learn more at octanner.com.
  29. 29. 1 Gallup poll data 2014 www.gallup.com/poll/181289/majority-employees-not-engaged- despite-gains-2014.aspx 2 O.C. Tanner Client Survey Data 2014 3 “The Drivers of Great Work” (Cicero Group research commissioned by the O.C. Tanner Institute, 2014) 4 “The Effect of Performance Recognition on Employee Engagement” (Cicero Group research commissioned by the O.C. Tanner Institute, 2013) 5 www.quantumworkplace.com/resources/whitepapers/research-and- trends/2015-employee-engagement-trends-report/ 6 www.aon.com/human-capital-consulting/thought-leadership/talent/ inside-the-employee-mindset.jsp 7 www.aon.com/human-capital-consulting/thought-leadership/talent/ inside-the-employee-mindset.jsp 8 “The Workforce Crisis of 2030” Rainer Strack, Boston Consulting Group, TedTalk 9 www.aon.com/human-capital-consulting/thought-leadership/talent/ inside-the-employee-mindset.jsp 10 “The Drivers of Great Work” (Cicero Group research commissioned by the O.C. Tanner Institute, 2014) 11 Service Awards: Quantifying the Return-on-Investment Cicero Group research commissioned by the O.C. Tanner Institute, 2012) © 2015 O.C. Tanner. Photocopying or electronic storage, transmission, or reproduction of any portion of this publication is prohibited without written consent from O.C. Tanner.

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