A recent study titled “Restarting Recognition During the Recovery” by employee recognition provider and strategist Globoforce highlights business and HR leaders’ outlook on employee engagement and what needs to happen to reignite and re-engage their workforce.

The survey found that 46 percent of U.S. businesses said they had cut recognition budgets during the economic downturn, while just 12 percent increased spending on recognition. The tide for 2010 appears to be shifting, however. This year, 42 percent of companies that had cut spending plan to increase spending. Overall, 92 percent of companies plan to maintain or increase their spending.

The availability of metrics is driving this renewed interest in reinvesting in recognition programs. Through internal surveys, industry research and global examination, HR executives have learned firsthand the impact that abundant or scarce recognition can have on a workforce. This renewed understanding has helped senior management refocus recognition efforts and rekindle engagement and retention.

Correlation Between Recognition and Engagement
For many companies, there is a link between recognition and engagement. For those companies that cut recognition programs, there was a decline in employee engagement.

One survey respondent said that when a monetary recognition program was removed, employee satisfaction went from 72 percent to 32 percent. The majority of companies (71 percent) that held steadfast in their employee recognition programs and increased spending saw an uptick in employee engagement, whereas 59 percent of companies that decreased spending saw a dip in employee engagement.

Not surprisingly, respondents from organizations that increased spending were far more likely to report spikes in employee engagement, performance and retention than organizations that cut spending.

While hard numbers illustrate the direct correlation between recognition spending and engagement, external factors also have made HR executives pay more attention to recognition.