Dealing with intangibles like employee morale and engagement, rewards and recognition (R&R) programs do not lend themselves to traditional forms of measurement. Consequently, organizations must devise new ways to measure the ROI of these engagement programs, determine their efficacy, and justify the continuation of the program. With the increase in the amount of employee data available to people managers, a data-driven approach to analyzing the ROI from R&R is the need of the hour.
And companies are recognizing this. The IRF 2020 Trends Report found that 44 percent of organizations conducted analyses on how programs change behavior, compared to 25 percent in 2019. As suggested by the report, several tangible and intangible impact indicators work together to give a complete picture of the R&R ROI. These include key areas that tell you how much your recognition program supports your business’s basic performance measures, as well as focused metrics.
- Employee retention: Even in the digital era, talent remains the most precious resource in any firm. An effective employee recognition program will ensure that managers have a higher chance of keeping the talent they worked so hard to recruit in the first place. A Deloitte study found that organizations with a recognition-rich culture had 31 percent fewer voluntary turnover than companies with poor recognition cultures.
- Employee engagement: Employee engagement research repeatedly shows that having highly engaged employees leads to lower absenteeism, more productivity, greater sales, and higher profitability. Consider the state of employee morale and enthusiasm after the introduction of the R&R program. If you see an uptick, be assured that you have nailed the essence of R&R.
- Employee advocacy: This is no secret in the corporate world – the best advertisement for any company is a happy employee. Thus, brand advocacy and brand trust are critical points to measure the success of your R&R program. Reviews posted on Glassdoor, comments under company posts on LinkedIn, and the general grapevine buzz about your company are key measurements of the success of your employee recognition program.
- Program adoption trends: Look at the reception to the program across teams, departments, and locations. According to the IRF 2020 Top Performer Study, 54% of top-performing companies design their incentive programs with the goal of reaching each participant. How can you find this out? Look at answering questions such as:
- What does the program participation look like?
- What is the percentage of employees who received recognition?
- Where are they based? Are there any common trends?
- What is the frequency of the program across geographies and branches?
This data will help you gauge the reach of the R&R program, and consequently, its impact.
- Surveys: Employee surveys help capture employee feedback, get qualitative insights into your program’s performance, and contextualize data around ROI. Use regular opinion surveys to learn how employees and management feel about fairness in the employee award program. You can also look into targeted surveys at focus groups, which will help gauge the level of understanding about the program.
Some key questions you might ask include:
- Are you aware of the existence of an employee R&R program?
- Do you feel that the program has helped increase visibility into your contributions?
- Does the presence of the program motivate you to reach targets?
- What part of the program do you feel doesn’t work?
- Digital R&R platforms: These include personalized smart admin interfaces with reporting dashboards, which provide increased visibility into spend, engagement scores, and intelligent insights into KPIs. Decision-makers can readily track the performance of the recognition program on numerous metrics, such as team bonding, reward frequency, and employee reactions, by using data. Employee analytics data can be easily segmented, and recognition programs can be tailored to employee patterns and preferences. Simple-to-use mobile apps, integration with social networks, and notifications on mobile and email are other benefits of embracing digital platforms.
These platforms are a part of the larger HR tech landscape. Today, every forward-looking organization needs a pragmatic tech adoption plan for its digital R&R program. Not only does technology replace time-consuming manual processes with simple workflows, but it also helps companies better harness resources and increase employee engagement. With technology becoming the heart of modern R&R best practices, incentives and recognition software have become one of the most popular HR tech tools today. However, care must be taken to balance the use of technology, digital recognition, and virtual medals with a high-tech and high-touch approach.
Communicate results, act on insights
You have now identified the indicators that enable you to measure your R&R program’s success against established business goals and general performance. What are the next steps you should take?
The first step is to analyze data gathered from feedback and surveys and communicate the results to all stakeholders. Tailor your report to suit the audience. Remember, different stakeholders will perceive the same data differently, so present results that are relevant to your target segment. For example, a regional manager will be interested in knowing the performance of their particular branch against program targets. A CEO, however, will want to get the overall picture.
Now, turn insights into an action plan to continually improve the program. Review the data and the feedback and compare it with your goals.
- Remove or reduce the importance of rewards that are viewed as ineffective or undesirable.
- Determine the awards that your employees value the most. Find out if your budget allows you to enhance the size or frequency of that particular award.
- Compare the benefits you’re getting from each reward against the expense incurred to see if it makes sense to keep doing it.
Finally, continuously track the progress of changes made over time. This will drive a constant culture of appreciation and increase the ROI of your employee recognition programs.