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great expectationsbuilding the employee recognition program your ceo wants

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Recognition programs, properly and strategically executed, have the potential to support an organization’s financial objectives, improve talent outcomes and reinforce cultural values for a low cost with a high return on investment.

Most companies are already investing significantly in an incentive or recognition program of some sort, but the majority of those programs are disparate, unfocused and do not deliver the full return on investment possible with strategic recognition.

Simply by consolidating multiple disparate programs into one, implementing efficient global administration, and measuring results, human resources leaders can actually deliver savings to the bottom line through a properly deployed strategic recognition program while simultaneously boosting morale and productivity. Now executives can track spend in all divisions and groups and compare to the results achieved in terms of productivity, demonstration of corporate values, and achievement of strategic objectives.

At a time when many CEOs increasingly look to Human Resources to identify and execute strategic initiatives that improve productivity while keeping costs low, HR leaders can demonstrate their value with strategic recognition programs. CEOs want HR to be a business partner, but are HR leaders responding to the challenge?

Globoforce asked middle- and senior-level HR and HR-related personnel about CEO perceptions of recognition programs as they relate to corporate objectives within their organization. The survey reveals HR leaders may believe their recognition programs align with company values and strategic objectives but they are not seeing bottom-line results. However, HR leaders cannot validate these concerns as the majority are not measuring results often enough or even at all.

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Key Findings* A clear majority of respondents believe their recognition programs need improvement and

that their CEO would agree.

* A majority of respondents (58 percent) believe their CEO would say their recognition program reinforces the strategy, values and desired behaviors of the organization, almost an identical number of the HR leaders (59 percent) share the same beliefs.

* However, many feel their programs fall short in driving bottom-line results; one-third (33 percent) said their CEOs don’t believe their programs drive bottom-line results, and 45 percent of HR leaders agree.

* Alarmingly, more than a third (38 percent) said their organizations do not measure results.

* More than 40 percent don’t believe their international employees have the same access to recognition programs as their domestic employees.

* A number of opportunities exist for improving recognition programs, including:

* Communicate with employees* Implement training programs* Keep rewards criteria simple* Recognize 80 to 90 percent of employees, not just top performers * Reward domestic and international employees consistently* Measure results consistently and in a way that matters to the CEO

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Implementation is really the primary differentiator between employee reward programs at companies on America’s Most Admired Companies list and their peers—communication, aligning reward programs with business priorities and operationalizing the pay for performance relationship.

– world@work, hay

group insight, 2008

In today’s workforce, more and more companies are looking for alternatives to compensation increases and bonuses to motivate their workforce. Successfully implementing recognition programs presents multiple challenges for companies when employees are based in the same location and share the same culture. For multinational organizations, the degree of difficulty is much greater. In a business environment where human resources departments are expected to align their programs with business results, how are recognition programs faring at multinational corporations?

Survey respondents believe there is much room for improvement—75 percent believe the CEO would say their recognition program needs improvement, and 88 percent of HR respondents said their company’s recognition program needs improvement.

Although 46 percent of respondents said they believe their CEO would say their recognition program drives bottom-line results, a similar number of HR leaders (45 percent) don’t believe their current recognition program is making the grade.

In today’s workforce, more and more companies are looking for alternatives to compensation increases and bonuses to motivate their workforce. Successfully implementing recognition programs presents multiple challenges for companies when employees are based in the same location and share the same culture. For multinational organizations, the degree of difficulty is much greater. In a business environment where human resources departments are expected to align their programs with business results, how are recognition programs faring at multinational corporations?

Survey respondents believe there is much room for improvement—75 percent believe the CEO would say their recognition program needs improvement, and 88 percent of HR respondents said their company’s recognition program needs improvement.

Although 46 percent of respondents said they believe their CEO would say their recognition program drives bottom-line results, a similar number of HR leaders (45 percent) don’t believe their current recognition program is making the grade.

Respondents were almost evenly split on whether or not their organization’s international employees have the same access to recognition programs—46 percent say their CEO believes international employees have the same access to the same recognition programs as domestic employees, and 50 percent of HR leaders agree.

most see room for improvement in their recognition programs

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Research indicates that while values and cultural attitudes provide a foundation for employee engagement, to drive performance and results, there must be a clear link between executable strategy and behavior. Achieving this link is a top priority, and in most cases the CEO—not HR—appears to be leading the charge.

—deloitte,

the economist

intelligence unit, 2007

CEO Expectation

HR Reality

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

75

88

520

12

Agree No OpinionDisagree

CEO Expectation

HR Reality

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

46

4542

2133

13

Agree No OpinionDisagree

CEO Expectation

HR Reality

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

46

4250

1242

8

Agree No OpinionDisagree

CEO Expectation

HR Reality

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

58

4159

834

Agree No OpinionDisagree

Our recognition program needs improvement.

Our recognition program drives bottom-line results.

Our international employees have access to most or all of the samerecognition programs that our domestic employees receive.

Our recognition program reinforces our organization’s strategy, values and behaviors.

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Most respondents indicated the Human Resources functions in their organizations and their recognition programs were structured strategically.

In organizations viewing recognition strategically, these programs must be on the agenda in the C-suite, as is the case with the majority of respondents to our survey. More than two-thirds (71 percent) of respondents said the recognition program in their organization has a C-level champion or executive sponsor, and 38 percent said the recognition program champion had an HR background. Additionally, 67 percent said HR in their organization is a stand-alone department lead by a C-level officer.

Most respondents also understand the value of formally recognizing employees broadly throughout the organization, not just the top performing 10 or 20 percent. A majority of respondents (54 percent) said their recognition programs are designed to recognize more people with smaller awards; far more than the 29 percent who said their programs reward fewer people with larger awards.

And while most organizations believe it is important to run strategic, company-wide programs, measurement seems to be where these programs fall short. Nearly three-quarters (71 percent) of respondents measure their programs only once a year or less. Shockingly, 38 percent do not measure their program results at all.

most indicate their program takes a strategic approach to recognition

0 5 10 15 20 25 30 35 40 45 50

46

38

25

25

21

17

17

17

12

12

12

Decreased employee turnover

Increase in employee performanceor productivity

We don’t measure our program

Increased employee engagement

Increase in job satisfaction/morale

Increase efficiency or overall cost

Increased use of one commontool to run all programs

Increased sales or distribution

Increased retention rates

Increased shareholder value

Other

0 10 20 30 40 50 60

54

29

12

5

Other

More people with smaller awards

Fewer people with larger awards

I’m not sure

How often does your organization measure these indicators?

Does your program recognize more people with smaller awards or fewer people with larger awards?

How often does your organization measure these indicators?

Monthly

Quaterly

Annually

Not at all

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17

33

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Human Resources leaders need to take further steps to develop strategic recognition programs that meet the CEO’s expectations. HR can better align recognition programs with organizational goals to demonstrate their value to the C-Suite in the following ways.

develop training programs For managersAlmost half (48 percent) of respondents said their company does not have a formal training program for managers about the recognition program and its rationale. Unless your organization is explaining your program’s rationale and procedures to leaders at all levels of the organization, how can you expect successful implementation and long-term achievement of strategic goals?

CommuniCate with employeesA majority (54 percent) of respondents said their company does not have a comprehensive communication plan to raise awareness of the program, increase participation and build an appreciation culture. Effective communication is essential to program understanding and acceptance.

Keep the rewards Criteria simpleAlmost two-thirds (62 percent) of respondents don’t believe their organizations have three or four concise and easy-to-understand recognition criteria that reflect the organization’s goals. Keeping the objectives simple increases the chances the organization will embrace the program.

reward everyone, not just the top perFormersMore than two-thirds (70 percent) of respondents say their recognition program does not just recognize top performers. Although it is undeniable that top performers drive value in an organization, the middle 80 percent of employees also make meaningful contributions and deserve to be recognized at an appropriate level.

reward Consistently aCross the organizationA majority of respondents (55 percent) don’t believe their organization has appropriate and consistent awards across business units in different countries. Developing an organizational culture that transcends borders requires a consistent approach with culturally appropriate awards whether employees are in Boston or in Bangalore.

measure results a Ceo Cares aboutExecutives want to know how recognition drives performance and productivity as well as how well different divisions or groups understand the company values and help achieve company objectives. To positively impact these aspects, program measurement and reporting must

aligning program obJectives with organiZational goals

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Using recognition to reinforce desired employee behaviors, attitudes and actions drives precisely the sustained performance and productivity improvements needed for success. Strategic recognition programs require measurement and management similar to the Six Sigma DMAIC structure. Only by establishing metrics your executives care about can you convince them of the value of strategic recognition.

– andrew liveris,

president and ceo,

dow chemical company

Human Resources leaders need a set of best practices to help develop recognition programs that are true human capital strategic initiatives.

Formulate a Clear global strategy For reCognitionDevelop a philosophy of recognition that mirrors company strategic objectives and use this as the basis for a manager training program.

Incorporate targets for recognition into management by objectives (MBOs) or key performance indicators (KPIs). As the Forum for People Performance Management and Measurement explains, many rewards programs underperform because they are designed and implemented at very tactical levels and are not connected to strategic outcomes.

Well-designed programs connect to personal goals, career objectives and lifestyle requirements, and, most importantly, to organizational objectives.

seCure an exeCutive sponsor to CommuniCate regularly with employees

Use the global reach, influence and visibility of an executive to promote the recognition program across the company. Be sure to incorporate multiple media such as posters, videos, email messages, and newsletter articles so all employees are impacted by the communication program.

According to leading worldwide management consulting firm Towers Perrin, an engaged workforce is virtually impossible without engaged leadership. Senior management and line leaders need to be actively involved and committed to going the extra mile for their organizations and their employees.

oFFer a global reward oF ChoiCePersonally meaningful and, critically, culturally relevant rewards are the lynchpin of a successful global strategic recognition program. All employees deserve to have a wide range of choice available to them. As an article in Talent Management explained in 2007, “HR departments need to research what their employees truly want and develop total rewards systems that match the value they bring to the organization and align to corporate ROI.”

Globoforce enables companies to give employees more than 25 million reward options from more than 2,000 physical and online companies on all six continents – options that are much more memorable than cash without the hassle of international shipping.

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We’ve seen the tremendous value ongoing recognition has brought to our organization in terms of creating a more engaged and motivated workforce united around our company’s core values. We firmly believe that expanding this effort – particularly during this recessionary economy – will serve to strengthen our positive corporate culture and provide the necessary ‘thank yous’ that employees need now more than ever.

—susan mcgowan,

associate director of

benefits, biogen idec

tie reCognition to the Company values and strategiC objeCtivesBy linking all behaviors and actions recognized to a company value demonstrated or strategic objective achieved, employees understand how their daily actions impact the success of the organization as a whole, which gives them purpose and satisfaction in their work. This approach also clearly defines criteria for recognition that apply universally for all employees, everywhere in the world.

As global consulting firm BlessingWhite explains, aligning employees’ values and aspirations with those of the company is the best method for achieving sustainable employee engagement.

maKe the program available to allBy opening a recognition program to all employees via a peer-to-peer recognition model, all employees are encouraged to notice the above-and-beyond efforts of their colleagues and reward them accordingly.

Moreover, Jack Welch, author of Winning and former CEO of GE, once famously noted in regards to his differentiation bell curve, that in addition to the top 20 percent of performers, everyone in the middle 70 percent needs to be motivated and made to feel as if they truly belong. The results are clear: regular informal feedback has been linked to a 40 percent increase in employee performance and a 20 percent increase in discretionary effort.1

Almost 40 percent of companies are encouraging workers to acknowledge the achievements of others through peer-to-peer programs.2 “Recognizing employees for their contributions to our strategic initiatives has proven its mettle,” said Bruce Colligan, Vice President of Human Resources, Global Crossing. “When people feel they’re valued, they become more motivated, and that drives better overall performance.

1 HRZone, 2008 2 World@Work, 2008 3 HRO Europe, July 2008

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The survey was sent via email to HR, finance and procurement professionals during the third quarter of 2008. Each respondent answered the questionnaire via an online survey tool and was assured of his or her confidentiality. Their responses were used to drive the results and conclusions of this report and will be used only in this aggregate analysis. The Key Findings herein are based at the 95 percent confidence level with a +/- 10% margin of error.

The demographic composition of this survey included 50 percent of respondents from director level or above. All respondents worked for companies with employees based globally, and 17 percent of respondents worked for companies with more than 25,000 employees, 33 percent for companies with 10,000 to 25,000 employees, 25 percent for companies with 5,000 to 10,000 employees, and 25 percent for companies with 2,500 to 5,000 employees.

When asked to list their job responsibility, 79 percent of respondents said their job responsibility was within the broad category of human resources, and 68 percent of respondents listed employee recognition as part of their job description, 68 percent listed compensation and 63 percent listed performance management.

methodology & demographics

Number of Employees in Respondents’ Companies Respondents Who Listed Human Resources as Their Job Responsibility

21%

79%

25,000-plus 2,500-5,000

10,000-25,000 Less than 2,500

Human Resources

Other

5,000-10,000

25%

25%25%

17%

8%

79%

21%

Founded in 1999, Globoforce is the world’s leading provider of SaaS-based employee recognition solu-tions. Through its social, mobile, and global technology, Globoforce helps HR and business leaders elevate employee engagement, increase employee retention, manage company culture and discover the power of real-time performance management. Today, employees across the world are living their company values and achieving peak performance through the Globoforce platform. A private corpora-tion, Globoforce is co-headquartered in Southborough, Massachusetts, and Dublin, Ireland. To learn more, please visit www.globoforce.com or the company’s blog at www.globoforce.com/globoblog.

© 2012 Globoforce Limited. All rights reserved.

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