Why Employee Recognition Still Matters

Today’s business environment is still dealing with a “doing more with less” attitude, yet strong and steady productivity levels continue, leaving some business executives wondering why they should invest in or optimize workforce recognition programs.

However, the hard corporate decisions made in the deepest parts of the recession still define employees’ perception of normal, making the current rates of employee retention and productivity unsustainable long-term. Progressive talent leaders understand this and are using their recognition investments more strategically to increase the impact of recognition for workers as well as budget-mindful executives.

Given the changes businesses have made since the recession — from layoffs to program cuts — and their impact on employees, recognition today is even more important as a tool to renew corporate cultures, promote collaboration across today’s dispersed teams and help drive new employee innovations.

The Case for Recalibration

The effect of the recession extended beyond productivity and workforce numbers — corporate cultures were hard hit as well due to layoffs and other cost-cutting measures that caused employees to operate defensively rather than cooperatively to protect their territories, responsibilities and, ultimately, their jobs.

Now organizations need to renew constructive cultures that encourage idea creation and sharing, and align corporate strategies with behavioral expectations. Recognition can play a strong role in positive culture building. In these types of environments, workers are more likely to trust their managers and co-workers; they are more prone to share information and ideas freely; and they will contribute discretionary effort toward a shared outcome more willingly. In other words, employees work together.

Global organizations are recognizing that a centralized recognition program motivates teammates to share insight, information and experiences with one another. It also promotes a seamless and coordinated customer experience, as a vertical department mentality can hamper the ability to share relevant information between groups.?

This free flow of information is essential. Organizational knowledge is the driver of productivity and economic performance. In work situations that may still have some workers on edge, recognition either funded — combining praise with a tangible award — or non-funded — praise alone — is the most effective way to acknowledge desired methods, behaviors and outcomes, and in the process, set a culture on a more cooperative course.

Promote Virtual Collaboration

With an increasing number of dispersed workforces, companies have invested hundreds of millions of dollars in technology in an effort to virtually integrate geographically displaced and cross-functional teams.

Forrester Research estimated in its November 2011 report, “Social Enterprise Apps Redefine Collaboration,” that spending on enterprise social collaboration software will grow to $6 billion by 2016, compared with $600 million last year. This is a significant financial outlay, yet it isn’t enough to overcome the social conditions that influence collaborative outcomes. When it comes to getting knowledge workers — many of whom are in various parts of the world — to share their insight and work together, employee recognition programs can not only help, they are often less expensive.?

Fundamentally, the issue of collaboration is based around people — it is a human endeavor, but one that is increasingly difficult due to the characteristics of the modern-day work structure. Knowledge-driven business models have configurations that allow them to compete more efficiently on the global stage. These business teams are highly adaptive units where people migrate virtually across different work assignments. That distance can create an emotional disconnect between teammates — real or perceived — and that can impede the free flow of ideas.?

Further, the cross-matrixed organizational arrangement can blur conventional reporting hierarchies. Managers are repeatedly called upon to assemble, engage and motivate work teams over whom they have zero or limited control.

Managers must motivate diverse groups of specialists from different departmental areas in terms of subject matter as well as geographic location. They must get them to work jointly toward a unified goal. Again, these groups are often virtual. They operate from different locations and come to the table with different backgrounds, skill sets and cultural values.?

A manager’s ability to engage and inspire people from assorted work teams and disciplines is a big factor in getting employees to collaborate freely. Leaders who acknowledge members of their teams — even for the smallest contributions — get better results than those who do not. Further, leaders who consistently recognize their project teams, including direct reports and borrowed or contingent workers, provide a psychological safety net for new ideas no matter how contrarian they may be. That feeling of trust, cultivated through the manager’s encouragement, promotes deeper and more enthusiastic levels of participation with knowledge workers.

Recognition systems allow managers to select and establish work teams and reward them for their contributions, and they can make this aspect of promoting collaboration easier and affordable.

Motivate Workers to Share New Ideas

In today’s economy, talent leaders would be shortsighted not to look at the employee adjustments, alterations and adaptations that occur every day as a potential source of competitive advantage. Higher levels of engagement are strongly correlated with higher levels of innovation. According to a 2010 study by Hay Group, “The Changing Face of Reward,” the most innovative companies create room for new ideas and look for them everywhere in their organizations. Knowledge workers apply their best thinking to complex challenges every day, and their individual attitudes toward problem solving and tapping into their ideas can be the difference between corporate growth and stagnation.

Valuable ideas come from all levels of the company, but due to the virtual nature of many of today’s knowledge workers, most are hidden from senior management. Innovations occur when individuals who are intellectually committed to finding the most effective outcomes pursue them. Engaged knowledge workers often develop solutions and new methods on their own. These “personal patents” define the finest, newest, often unshared best practices emerging within every knowledge-based firm. Some of the more powerful enterprise-wide enhancements come from incremental improvements to products, processes or services advanced by the most attentive and engaged employees.

Recognition plays a role in capturing and commercializing new ideas from knowledge workers. A 2010 Harvard Business Review article cited a Babson Executive Education study indicating that employees working at “rewarder companies” — organizations whose leadership overtly rewards new ideas — are 250 percent more likely to propose and develop business improvements on a regular basis than those working for “non-rewarders.”

Rewards also can play a role in mitigating the fear of failure, something employees continue to be concerned about within the current work environment. Only 18 percent of employees in the study at rewarder companies felt that avoiding a negative outcome while pursuing a new idea was a serious concern. In fact, showering positive attention on new ideas is considered a best practice at innovative, knowledge-based companies.

Recognizing a good idea also helps other employees benefit from it. Acknowledging a new idea can fast track it into a firm’s formal work processes. Managers start the process by recognizing both the individual and his or her idea and demonstrating the impact it is having locally and within the context of broader business goals, from impacts on customer satisfaction and project efficiency to revenues.

Sharing those outcomes through a recognition system not only acknowledges an individual’s idea, it enables others to look more closely at how they might adopt the new methods, and it motivates more employees to pursue and share new ideas of their own. This helps organizations to commercialize the value of a new idea faster and with more efficiency. The cycle not only promotes best practices, it reinforces the cooperative, information-sharing work environments that knowledge workers crave.

Align Recognition and Growth

Businesses are more dependent on their employees than ever before, yet the funding for non-cash compensation is attracting higher levels of scrutiny. Senior management will demand that recognition programs be closely aligned with the way talent operates and positioned to contribute to the organization’s broader growth mission.

Employee recognition programs have always promised increased productivity, incremental revenue, reduced workforce attrition and higher customer satisfaction. But recognition can help companies cultivate employees’ contributions in more innovative ways.

Knowledge workers address a wide range of job-related issues every day. They often work virtually, close to customers and on the front lines of the business value chain. With that in mind, culture, collaboration and innovation are essential to ensuring recognition is still relevant and impactful.

A properly designed and implemented employee recognition system will drive critical financial measures for businesses. But as executives look beyond those benchmarks and aim to influence the efficiency and effectiveness of their talent, talent leaders armed with advanced recognition tools and techniques can add greater value. Strong alignment with an organization’s larger growth goals should be at the heart of any recognition strategy.

Mike Ryan is senior vice president of marketing and strategy at workforce recognition and employee incentives services provider Madison Performance Group. He can be reached at editor@talentmgt.com.