The Power of Recognition

Effective employee recognition boosts performance—but what makes a program effective?

May 8 2013 by CJ Prince

4. Make it specific.

Softtek CEO Blanca Treviño sees employee recognition as built into the foundation of the company. When it first opened its doors in the early 1980s, the IT services company competed with the likes of IBM for top tech talent. Having a culture of recognition had to be a key differentiator.

Today, Softtek is a global IT company with over 7,000 associates and offices around the world and Treviño maintains a keen focus on employee recognition with six different programs that reward based on very specific metrics. For example, the “Annual Quality Award” recognizes the associates with the best understanding of quality with 1st, 2nd and 3rd place awards. The winners are then announced in a large, virtual event with participants from offices around the globe. “My Awards” allow employees to rack up points by fulfilling specific goals, such as receiving positive feedback from an internal or external customer, demonstrated problem-solving and even attending company events.

In terms of measuring program effectiveness, Treviño points to retention as one key metric. She notes that most of the awards are not given to employees within their first couple of years, and it’s during those first couple of years that Softtek sees its highest turnover due to competitor poaching. “We have very strong training programs and [our competitors] appreciate them, too. But if you take a look at our turnover after the third or fourth year, it’s quite low. Employees are engaged in the company and the culture and they don’t want to leave.” She also looks at the participation rate and the efforts to which employees go to win one of the awards. “They really work for it,” she says, adding that, for the company, “the investment [in recognition] is rather small, and the return is amazing.”

5. Measure results.

“When you’re growing, it’s hard to take the time to just say ‘thank you,’ ” says Jenny Vance, president of Indianapolis-based LeadJen, a fast-growing B2B provider of lead-generation services. Vance discovered that creating a little healthy competition for rewards enabled her to recognize her employees, motivate positive behavior and—at the same time—generate new business and money-saving ideas. She created two competitions. The first, called “My Contribution” challenged employees to collaborate in small teams to generate ideas that would have a positive impact on customers, company processes and the team or employees. In addition to noting the heavy participation amongst employees, Vance measured productivity levels before and after the contest and saw the number rise by 30 percent following completion of the contest. “That has a value of around $34,000 for the month based on labor costs for the team,” she notes. Since many of the ideas generated will be implemented, the results continue to have a payback for the company. Figuring in the labor and reward costs for the contest, Vance estimates a return of approximately 25 times investment.

The second contest was used to reach some aggressive growth targets and asked client account managers to come up with ways to grow existing accounts. The reward was $500 for the client account manager able to obtain the most incremental revenue over the time of the six-week contest. Ultimately, the four winning client account managers drove $202,448 in additional revenue for LeadJen. “That equates to around $120,000 incremental gross income for the organization based on our cost structure,” she notes. With the contest costing only $500, the estimated return was 240 times investment.

Ken Oehler notes that there really is no silver-bullet strategy for recognition. “[The] best practice that we see is companies really addressing the recognition issue from multiple angles,” he says. Both formal and informal recognition are important, depending on the goal, and leadership and CEO communication can be as effective as peer-led recognition. “Best practice is addressing at all those levels and then looking at it from an organizational perspective and getting down to that individual employee’s contribution to performance.”

The Recognition at Yum! Brands

For more on the power of effective recognition systems, see Chief Executive’s profile of 2012 Chief Executive of the Year David Novak of Yum! Brands (CE July/August 2o12). Novak, author of Taking People with You, is well-known for developing the lighthearted “rubber chicken” and “chattering teeth” awards credited for motivating Yum! employees.