TOP 9 RECOGNITION BEST PRACTICES – AND HOW TO IMPLEMENT THEM

Introduction We are what we repeatedly do. Excellence, then, is not an act, but a habit. Aristotle It sounds like a simple concept: engaged employees perform more brilliantly and produce greater results than employees who are not engaged. Take the logic one step further and you could say that the end result of having engaged employees is greater business success. Despite this common sense value proposition, many organizations have not yet invested in a recognition strategy to engage employees and inspire them to excel. In this paper, we’ll look at how recognition plays an integral role in building employee engagement and making excellence a habit. We’ll share statistics and real-world examples that demonstrate how recognition – when it’s done right – boosts business performance and aids organizations in recruiting, retaining and inspiring the kind of talented people that drive business growth and results. We will focus on nine key best practices that you can put to use in your own organization to engage employees and achieve business success. You can R&D these proven recognition strategies in your own company – by R&D, we don’t mean research and development, but “rip off and duplicate.” Why reinvent the wheel when you can leverage the successful practices of organizations that have already built a culture of recognition based on engagement and results? We’ll also look at what not to do when designing and implementing a recognition strategy and point out common pitfalls to avoid. So, are you ready to become a recognition guru? Let’s get started.

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What is Recognition and Why Does Your Business Need it?

Receiving recognition for achievements is one of the most fundamental human needs. Rather than making employees complacent, recognition reinforces their accomplishments, helping ensure there will be more of them. “Stop Demotivating Your Employees!” Harvard Management Update, Vol. 11

Recognition is an important – and often overlooked – component of the total compensation and rewards package. Employee recognition has proven to be instrumental in contributing to a positive workplace and organizational success. In Maslow’s hierarchy of needs, the intrinsic desire for recognition ranks much higher than the need for salary or rewards. We all crave recognition for our efforts and a little praise can go a long way toward engaging employees. Top employers know that a sound recognition strategy can have a dramatic impact on the success of employees, managers and the company as a whole. What recognition does for employees:

What recognition does for companies:

73% of managers report getting expected results when they recognized others

The Fortune’s Best Places to Work list had a 233% higher financial return than companies not on the list (Souce: Russel Investment Group)

78% report it helps increase productivity

Companies with Higher Employee Satisfaction Scores have a 700% higher shareholder return (Incentive study)

80% say it makes getting work done easier

Incentive study found a direct correlation between Recognition & Profitability

84% claim it helps increase performance 90% say it helps motivate people better (Source: Dr. Bob Nelson doctoral research)

A comprehensive recognition strategy that focuses on the right things will yield results. There are countless studies on the causal links between employee engagement and financial performance and results.

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Impact of Employee Engagement on Financial Performance

19.2%

27.8% 13.7% -3.8%

-11.2%

-32.7% 12 Month Change In Operating Income

12 Month Net Income Growth Rate

12 Month EP Groth Rate

Highly Employee Engagement Low Employee Engagement

Source: Towers Perrin Sept. 2009

In the Towers Perrin 2009 study, for example, it is clear that companies that scored high in employee engagement had greater financial success. Engagement was linked to key business metrics including operating income, net income growth rate and EPS growth rate. These are the kinds of numbers your executive team needs to see in order to buy-in to the concept of recognition. It’s all well and good that you acknowledge that recognition is important, but like most things in business, sound execution is everything. You need the right tools and approach to see results from your employee recognition efforts. A loose collection of ad hoc recognition programs will not work, nor will antiquated approaches such as service awards, plaques and certificates at quarter end or speeches at the annual holiday party. An effective recognition strategy engages employers on a daily basis throughout the year, creating sustained and consistent results over time. In the next section, we’ll quickly look at where you should start to build a successful recognition strategy within your organization – one that is based on the latest thinking and research on employee engagement, as well as best practices from top employers who have turned ideas into action.

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Where Do You Start? In the past, companies rewarded the use of their employees’ hands. In today’s knowledge-based economy, employers also need to win their employees’ heads and hearts.

While we all crave recognition, providing that recognition doesn’t always come naturally – even for the most well-intentioned managers. Recognition best practices are seldom a core competency for business leaders or HR departments. As a result, many organizations don’t know where to begin when planning a recognition strategy. Below you will find some tips for getting started.

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Clear Your Mind – Forget everything you thought you knew about employee recognition. When it comes to recognition, many companies seem stuck in the 1900s when service awards – the proverbial gold watch – were given to employees to recognize their years of loyal service to the company. This industrial-age mindset recognizes presence, not performance – that is, recognition is given based on the employee showing up for work, not for how well the employee performs when he or she is at work. While service awards have their place, too much emphasis has been placed on this method of recognizing employees. Modern recognition strategies are more results-oriented.

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Ask Your Employees – Do you have a good idea how your employees feel about your current HR practices including rewards and recognition? An employee survey is a great first step in ascertaining where your organization is in relation to its employee engagement and recognition goals. The survey results will also give you ammunition when it comes to selling your recognition strategy to senior management and obtaining buy-in and budget. Start by asking some of these basic questions: Do you feel that your efforts on behalf of the company are recognized by your manager? How would you rate your level of engagement today? How would you like to be rewarded for doing good work? The results will also provide a baseline for measuring future success.

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Obtain Executive Buy-in (and Budget) – When it comes to obtaining executive buy-in and budget for a new recognition program, you need to make a strong business case for the investment and speak to your executives in their own terms. If you don’t, your CFO or CEO will send you back to the drawing board to explain how your requested budget for rewards and recognition will deliver a return on investment. There is ample research and statistics available that connect employee engagement with positive financial results. Use hard data to show the business validity of investing in a recognition strategy. For example, the graph below from the Russell Investment Group study shows that the Fortune 100 “Best Companies to Work For” have consistently outperformed the S&P 500 for the past 11 years.

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Fortune “100 Best Companies to Work For” Versus S&P 500 1998 - 2009

10.30% 6.44% 2.95%

“100 Best” Reset Annually

“100 Best” Buy and Hold

S&P 500

Executives hate losing, especially to their competition. When seeking buy-in, look at your competitors’ recognition and rewards programs. This competitive intelligence and analysis can be an advantage in convincing executives that a recognition program is needed. Organizing a pilot program within a single department and measuring the results can often make believers of the most resistant CEOs and CFOs.

Top 9 Recognition Best Practices – And How to Implement Them Let’s assume that you’ve done your homework to make a rock-solid business case and obtain executive buy-in for a recognition program. Before you start planning your vacation, there are still some key decisions to make and some heavy lifting to do in order to build the foundation of your recognition strategy. Below we’ll look at what works and what doesn’t – not only WHAT elements are important, but HOW to make your recognition program a success in the real world.when planning a recognition strategy. Below you will find some tips for getting started.

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Define Employee Behaviors You Want to Encourage What specific behaviors do we want to see more of in your workforce? When defining desired behaviors, think about results-based recognition: how do employee behaviors relate to company success and your high-level company goals? Remember that an effective strategy recognizes and encourages employee performance, not simply presence. Below are a few examples of specific actions and behaviors that our clients determined they wanted to see more of: UÊ Living Company Values – Your corporate values – you have values, right? – can provide a great base for a recognition program: Encourage employees to start living the company values – and recognize them accordingly when they do. Values are a key part of a unique corporate culture. A large majority of our clients use values as a base to build their rewards and recognition program. UÊ Cost Saving – Motivate everyone in your organization to look twice and how company money is spent. Recognize employees who spend wisely, treat company funds as their own and find innovate ways to save money. UÊ Innovation – Encourage employees to contribute innovative ideas and recognize managers who champion those good ideas, so that they can be put into action. Examples of innovation may include recommendations for process or productivity improvements, ways to better serve customers or ideas for new products or services. UÊ Employee Referrals – Referrals are the least expensive way to recruit talent – and generally deliver a higher caliber of candidate. Recognize employees who refer top talent to your organization and encourage your workforce to get involved in your recruiting efforts by posting open positions to their social networks. Make your employees ambassadors for your great company and its culture.

To motivate cost savings, several of Comm-works have implemented a simple automated solution to allow employees to submit savings claims, obtain approval from finance and qualify to receive a percentage of the savings back as a reward. One client saved over $1M in one year by implementing an online cost savings program as part of their rewards and recognition program.

UÊ Hitting Goals – We all want companies, departments and individuals to achieve set goals. For instance, a sales department may want to recognize their sales reps for meeting or exceeding goals set for up-selling, cross-selling or building the sales funnel. In this case, consider providing recognition not only for closing the deal, but for all the efforts along the way that go into closing that deal in order to encourage consistent results quarter after quarter and build a strong sales organization.

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UÊ Wellness – Support your employees in their efforts to better their personal lives and contribute to their community. Top employers care about their employees’ health and well-being, as well as about the community in which they are situated. They do this because it’s the right thing, but also because happy, healthy employees tend to be more positive and productive at work. UÊ Safety – Ensure a safe work environment and encourage employees to report unsafe conditions and/or recommend improvements to make the workplace safer. Promoting safety brings many operational benefits. Note that these positive activities and behaviors aren’t always HR driven. Business leaders and department heads can identify specific actions they want to encourage within their own department, business unit or across the entire company.

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Determine Your Budget How much should your organization plan to spend on rewards and recognition? Recognition Professionals International (RPI) recommends starting with 1-3% of your total employee compensation – a relatively small investment given the potential for real business returns. Even better is the fact that recognition – saying thank-you for a job well done – is free. Not all positive employee behaviors warrant a reward, but they do deserve to be recognized.

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Peer Recognition Rules! Perhaps the biggest trend in recognition programs is a peer component that allows employees to recognize one another. Peer recognition breaks down the notion of top-down recognition from managers and fosters a sense of camaraderie, teamwork and working together toward common goals. When setting up your program, think long and hard about who can be a recognizer or a recipient of recognition – all employees, supervisors, managers, senior executives, and so on.

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In launching our own internal program at I Love rewards, we structured and budgeted for our rewards as follows (using points for rewards):

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Program Type

What is it?

Who can give Recognition?

Who can receive It?

What is it worth?

Free Recognition

Free recognition based on our values and ‘thank yous’ for going above and beyond

All employees

All employees

Priceless

Living Our Values Everyday

Recognition of an employee by their peer for Living a Value of I Love Rewards.

All employees

All employees

X by All Employees

Reward Cards

"On the spot" recognition by People Leaders for great work.

All employees

Cost Saving

Points awarded to those who have saved money and approved by Finance – 10% of cost savings in points

All employees

All employees

Variable based on value creation

Spotlight Award

Monthly recognition, voted on by the senior leadership team, for the most outstanding employee.

Senior Leadership

All employees

X Points

Social Recruiting

Rewarded for becoming a social recruiter and for bringing in employee referrals.

N/A

All employees

Sign-up – X Points

New Hire

Awarded to a new I Love Rewards employee

N/A

All employees

X Points

Department Top 1

Recognition of each member of a department when the department achieves its Top 1 Result!

N/A

All employees

X Points

5X by Senior Team All employees

X from Leadership Team 10X from Senior Team

Referral – Y Points

Follow the SMT Approach to Recognition – Specific, Meaningful, Timely No matter what behaviors you choose to recognize, you should ensure that recognition follows the SMT approach: UÊ Specific – Recognize others for very specific reasons and do so with personalized notes and messages. Recognition is a form of feedback, and the more specific it is, the more likely that the specific positive behavior will be repeated. UÊ Meaningful – Ensure that recognition resonates with the individual and is meaningful in the way it is presented – especially if it is tied to a reward. We strongly suggest letting the individual choose a reward that is meaningful to them, rather than deciding what reward to provide. No one thing will work to motivate all employees, so offering a broad choice of rewards is a critical success factor.

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UÊ Timely – Ensure that you recognize employees as soon as possible after they meet a goal or behave in a positive manner. Immediacy of recognition reinforces the connection between praise and the positive behaviors and activities you want to see repeated. Many companies make the mistake of waiting till the end of a month, quarter or even year to recognize someone. By that time, the employee may well have forgotten all about the specific behavior you are recognizing – and certainly they will not have been encouraged to repeat that behavior.

Many organizations reward employees for providing personal referrals – typically only after the referral has been hired and has finished their 3-month probationary period. To make recognition more timely and immediate, I Love Rewards provided a smaller point reward for employees if their referral makes it through the resume screening process to the first interview, and a larger reward once the candidate has been hired.

5 “Employees may be motivated by many different things, but they all strive for recognition and praise. And they need that positive feedback at least every seven days.” Rodd Wagner and James K. Harter, The Elements of Great Managing (Gallup Press, December 2006).

Build a Recognition Rhythm An effective program provides a mechanism for regular employee recognition. It’s one thing to launch a recognition program and another to sustain it so that it has a positive impact on engagement month after month and year after year. If you want your program to have longevity, recognition has to be built into your culture and company rhythm. There are a few of simple tactics to make this happens: UÊ Don’t Recreate a Rhythm (if you don’t have to) – Use your current business rhythm, such as scheduled weekly meetings, regular town halls or social committee events, as an opportunity to allow people to recognize one another. It’s as easy as adding a line to the existing meeting agenda.

How does I Love Rewards do it? At I Love rewards, each employee is given a weekly budget of 500 points (equal to $5) to give to any other employee for living one of the company values. On a monthly basis, each employee provides a handwritten Recognition Card worth 1,000 points to any other employee, which can be redeemed on our online system and rewards catalog using a unique code printed on the card. We also include public recognition as a component of our daily leadership, departmental and full company meetings to help build the on-thespot component.

UÊ Managers Should Recognize Their Employees at Least Once a Week –Building this into the rhythm allows it to happen. What’s even better? If you have a system that can track and measure recognition, you can monitor who is recognizing employees and who isn’t. UÊ CAUTION: Combine On-the-spot Recognition with Rhythmic Recognition – You don’t have to wait for a regularly scheduled meeting or event to recognize an employee’s positive behavior. Recognition should be a 24/7 exercise and on-the-spot recognition can be a powerful motivator. Encouraging a good combination is key.

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Measure, Review and Improve Ensure that whatever your programs look like, that you can easily record the activities to make decisions on how to improve the program using data, not desire. We suggest the following: UÊ Define the metrics you want to change based on your corporate goals - and monitor them (see case study on the left)

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UÊ At the beginning of the program, define what data you need to track towards your overall goals (so it can be captured at front end)

ConAgra Foods set out to dramatically increase their employee engagement scores for their recognition efforts. They asked employees about what they thought about the current programs, and a year later asked the same questions again. The result from the question, ‘I am satisfied with the current recognition program’ went from 25% to 91% in one year – that’s a 264% improvement! Capturing these metrics was imperative to provide measurable data that has allowed the company to invest more heavily in these types of programs.

UÊ Set up weekly, and monthly reporting structures on what reports should go where, and who they should go to UÊ Place major milestones quarters away from launch to review, discuss, and decide on improvements Also, it is highly suggested to utilize the individual recognition data in your review process. Ensure managers have access to reporting to see what an employee has been recognized for over time. If you’ve allowed everyone to recognize others in the organization, you will see some great data here from their peers.

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Rewards Must be Meaningful There are many instances where recognition can be complemented with tangible rewards. Recognition that is tied to a meaningful reward reinforces positive work performance, allowing your organization to drive positive results. Rewards provide “trophy” value: every time the employee uses, sees or interacts with the reward item, he or she associates it with the company and the positive behavior that earned the reward. The reward helps employees recognize that their employer truly values employees and acknowledges positive work habits. Here are some things to consider when choosing rewards items: UÊ Employee Demographics – Will your selection of rewards appeal to all employees based on age, gender and geographic region? UÊ Fulfilling Rewards – Most organizations have moved away from purchasing and warehousing their own rewards due to security risks and tracking challenges. UÊ Choice of Rewards – Will employees be able to choose their rewards? It is a better experience if they can. The more choice, the better. UÊ Taxation – Ensure you are aware of the laws surrounding taxable benefits and how they impact your employees. UÊ Cash versus Non-Cash – Recent studies reveal that non-cash motivators are more effective than cash in building long term engagement.

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At I Love Rewards, customers have the option to have employees share recognitions to social networks with custom company branding and messaging to build a better company profile and employer brand.

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Make Recognition Public and Social One-to-one recognition is powerful on its own, but it is even more effective when it can be seen by others or shared via employees’ personal networks. Here are a couple of things to consider when designing and launching your program: UÊ Encourage Recognition Sharing – Whether it is shared electronically or in company meetings, it will help build a culture of recognition. UÊ Make It Public – Remember that everyone that witnesses a recognition moment internally may be inspired and encouraged. Public recognition reinforces teamwork and encourages the positive behaviors that you are trying to drive organizationwide. It is also a communication tool because it makes different departments more aware of each other and how their business functions contribute to corporate goals. UÊ Make It Social – Younger employees are taking over the workforce and social media tools like Facebook, Twitter and LinkedIn are the way this new generation of worker communicates. By allowing employees to share recognition with their personal networks, you will not only make e recognition more meaningful to them, but you will also be able to leverage their social networks to promote your employer brand online or support recruitment efforts.

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Keep Your Program Alive Launching a program with a big bang is great, however keeping the program going and sustaining momentum takes care and ongoing effort. Here are some tips for how to sustain your recognition program: UÊ Brand Your Recognition Program – Give your program a unique look, feel and name that the company can be proud of. Choose a name and look-and-feel that reflects your corporate brand and culture. UÊ Launch with a Bang – Launching a new program takes a lot of effort, change management and communication, but a wellexecuted launch can create hype and get people excited about the program: UÊ Train your managers so they are part of the launch and a source of information for employees – this helps get manager and employee buy-in.

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UÊ Tease that the program is coming – get people talking about it prior to launch. UÊ Actually LAUNCH it – create a buzz that is fun including a launch day so you can explain that you’ve been listening, want to improve employee engagement and this is what you’ve come up with. UÊ Don’t waver – you may get resistance from employees and managers, but stick with it. Identify a review process in six months to gather feedback on program effectiveness and employee support for the program. Make improvements as required. No program is static – change is good to keep the program fresh and engaging. To keep recognition top of mind, everyone at I Love Rewards gets a quick e-mail reminder weekly that asks ‘Have you recognized anyone lately?’ Our program also has a leaderboard showing the top recognized employees as well as the top recognizers.

UÊ Continuously Communicate; Don’t Let It Die – Build rhythm around communicating the top employees recognized and those who are recognizing others most often. Communicate who has provided value – give them recognition in department or team meetings. Chat with managers once a month to ensure they’re using the program and to flag issues. Our clients have created distinct brands for their 76>,9,+)@

Home        ShopNow        ThankYou          L.O.V.E.          Leader's  Center          CreateValue          RewardCard          CULTure          Contact          Logout My  Account Points  Balance:

48,000 Recognition  Budget:

1,000 My  Account Shopping  Cart Messages  (42) Administration

Thank  You

“Thanks

”

for making A difference. Rob Bianchin, Inside Sales Representative

Achievers  know  that  an  A  player  is  nothing  without  an  A  team. Take  the  time  to  thank  and  recognize  the  awesome  actions  of  those  that  contribute  to  our  success!

Search  Name  or  E-­Mail Start  typing  their  name  or  e-­mail  and  the  results  will  appear  below.  You  may  select  more  than  one  person.

Search  Results

Selected  Individuals

Select  the  names  of  people  you  would  like  to  recognize

Click  on  Remove  if  you  have  made  an  error

Next

76>,9,+)@

TERMS  OF  USE    |    PRIVACY  POLICY ©  2010  I  Love  Rewards  Inc.

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What Not To Do – Common Pitfalls to Avoid The working world has changed dramatically since the industrial age when manufacturers – faced with high turnover rates for assembly line workers – first started offering service awards to incent employees to stay on the job. Unfortunately, despite the changes in the workforce, service awards programs, which recognize presence instead of performance, have remained virtually unchanged. Razor Suleman, CEO, I Love Rewards

We’ve talked a lot about best practices in this paper, but what about the worst practices, the things many employers get wrong when they set out to launch a recognition strategy? Below, you’ll find three main “Don’ts” – the most common pitfalls to avoid when designing your program.

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1

Don’t Only Recognize Presence – If we could make one single recommendation, it would be to STOP over-emphasizing Years of Service awards. Recognition programs do not begin and end with years of service. Long-term service awards are also guilty of recognizing presence, not performance. I Love Rewards has made the conscious decision not to reward long service. We do, however, recognize years of service and employee career milestones at our company meetings and in our communications in a fun manner. We have colleagues contribute speeches, poems, songs and interpretive dances (not kidding, we’ve seen it all) to celebrate the employee’s time with the company and his or her contributions, as well as acts such as naming the company library after an employee.

2

Don’t Use a Lottery – Don’t reward or recognize the whole team through a lottery. Companies commonly mis-apply the lottery approach in two ways: UÊ The whole team hits a goal and the names of one or two team members are drawn from a hat to receive a lotterytype prize. These one or two lucky people may not have been integral in hitting the goal, in which case randomly rewarding them will only de-motivate the top performers on the team who actually deserve the recognition. With a lottery, you end up with a few winners and a lot of losers. For employees to support a recognition program, they need to believe that it is fair and equitable in the way rewards and recognition are handed out. UÊ Employees are given the ‘chance’ to win something based on achieving a result. If the recognition or reward isn’t certain, it won’t motivate people to act.

3

Don’t Lose Faith – Most recognition strategies take time to obtain buy-in and absorb the change management involved. Like any organizational change, you will encounter resistance. You will see results right at the beginning and then over time the results and momentum will taper off. You must keep the faith and stick with it until recognition becomes deeply engrained within your corporate culture. Ensure that you’re listening and recording feedback, which can be used to guide future improvements to your program. Capturing and acting on feedback will help make the next iteration of your program a positive one. It’s also important to keep the program fresh by continually introducing new elements, reward categories and reward items, and communicating program changes regularly to hold the interest of employees.

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Summing Up If you are considering implementing a new employee rewards and recognition program, the strategies and tips outlined in this paper will help you ensure that your program is built on best practices to effectively engage employees and contribute to your results-driven workplace. An effective rewards and recognition program will make a positive impact on your business. Good luck – and start recognizing!

Next Steps Request a Demo See a live demonstration of how an online employee recognition program can drive positive behaviors, performance and results. Speak with a Recognition Expert Speak with a certified Rewards and Recognition Consultant about best practices for launching and sustaining a successful rewards and recognition program. Contact Us To get started, visit us at www.iloverewards.com or call 1-888-622-3343.

1 Broadway, 14th Floor Cambridge, MA 02142 USA Phone: 1-888-622-3343 www.iloverewards.com

I Love Rewards is an employee recognition solution that helps companies recognize brilliant performance and empower employees to choose their own rewards. Unlike traditional service award programs, I Love Rewards creates authentic moments of recognition that resonate with workers of any age. © 2011, I Love Rewards, Inc. All rights reserved. All product and company names and marks mentioned in this document I LOVE REWARDS | 16 are the property of their respective owners.