Do You Know Your ROR?

Shockingly few organizations are measuring the return on their recognition programs                             

With shortages of skilled labour and increasing competition for talent, employers are scrambling for ways to attract and retain employees. Formal corporate recognition programs have long been a key to engaging employees, yet most organizations tend to rely on anecdotal information alone to gauge their actual success.

A 2017 Conference Board of Canada report, “The Power of Appreciation: Rewards and Recognition Practices in Canadian Organizations,” reveals that a mere 1% of organizations formally measure the return on investment (ROI) of their employee recognition programs and 33% do not measure the effectiveness of their program at all. Many leaders are now looking for more concrete measurements — a return on recognition (ROR) if you will — to maximize their investments in talent and ensure an engaged and motivated workforce.

Using science to improve engagement

Dr. Charles A. Scherbaum, Chief Analytics Officer at Rideau Recognition Solutions and associate professor of psychology at Baruch College at the City University of New York, is leading recognition research for Rideau. They have been investigating the ROI of recognition and how best to leverage recognition data for the past decade.

In one of their research studies, Scherbaum conducted a three-month clinical research pilot with a Canadian financial-services organization. Two groups were studied: in one, randomly selected branch managers received recognition coaching, and the other was a control group. The coaching group received in-depth support and training, while control group managers were only sent a brochure with suggestions on best practices for delivering employee recognition.

The research team looked at how often managers offered non-monetary and non-incentive recognition for several months before and after the study. They also measured sales and customer satisfaction at the individual branches before and after the program.

The results revealed that the group who received coaching performed better:

  • Formal non-monetary recognition occurred 8.2% more often in the coaching group
  • Informal non-monetary recognition occurred 23.5% more often
  • Training for recognition accounted for a 6.3% increase in sales and 5.4% bump in customer satisfaction

The results demonstrated immediate and lasting improvement. “It was all there in black and white, all that we were hoping for,” says Scherbaum. “The fascinating part was that when we removed the coaching, we kept measuring, and the group that had had the extra training continued to excel for months afterwards … Once you have learned the skill of properly using recognition, and the guys in the white coats have left the room, the results remain.”

Recognition, like any other managerial skill and behaviour, needs to be developed.

Hear Me ROR

Most organizations do not have the capability to undertake intensive studies to understand the effectiveness of their recognition initiatives, but many are sitting on a wealth of information based on usage of their programs. Transactional data about how often individuals recognize their team members through formal manager recognition and recognition gifts can be measured using any system.

Rideau Recognition Solutions recently released Vistance Analytics and Prescriptive Learning which includes Vistance RQ, an algorithm that helps companies measure their Recognition Quotient (RQ) — the IQ score of human capital.

Vistance Analytics and Prescriptive Learning can assess an organization’s recognition behaviours and identify areas of improvement. It then provides targeted micro learning — bite-size e-learning modules — to managers. Learning is geared towards improving the key performance indicators (KPIs) that are most significant to the organization: employee turnover, increased sales, engagement, productivity or anything else they seek to improve. With or without a high-tech algorithm, when it comes to measuring the effectiveness of recognition programs, organizations can follow Rideau’s example by:

  • Surveying employees and tracking formal rewards that can be measured
  • Assessing your recognition initiatives to suss out areas that require improvement
  • Identifying the KPIs you want to improve through recognition
  • Measuring those KPIs
  • And, most importantly, by providing managers with training and coaching designed to address areas that require improvement

Less than half of organizations (46%) believe employees are satisfied with their reward and recognition practices, according to The Conference Board of Canada’s report. Considering that the competition for attracting and retaining talent has never been fiercer, and that appreciation is the greatest factor in employee happiness, recognition has never been more important. Investing the time and resources to properly measure ROR can be a game changer to any organization willing to nurture their greatest resource — their people.

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WRITTEN BY
Isabel Rut
Isabel Rut is a freelance business writer working from Montreal, Quebec.