Growing impact of recognition programmes on performance management

More than half of US companies with recognition programmes also observe higher levels of employee engagement, retention, and productivity

64 percent of companies that have an employee recognition programme say their employees are rewarded according to job performance versus just 36 percent of organisations who do not have a recognition programme in place. These are just two of the noteworthy statistics from the SHRM/Globoforce Employee Recognition Survey*, announced today by Globoforce, the world’s leading provider of employee recognition solutions, and Society for Human Resource Management (SHRM), the world’s largest association devoted to human resource management.

The SHRM/Globoforce semi-annual survey examines the current state of HR leaders’ employee engagement and recognition practices and their impact on performance management. Today’s leaders face increasing competition to hire skilled workers and retain top talent – a business’s number one asset. The survey reveals that employee engagement is still the number one priority among HR professionals. The recent survey also uncovers a connection between recognition programmes and engagement and retention levels, all crucial elements amidst an awakening job market.

“We’re witnessing intense competition for talent that requires new approaches for energising, engaging, and evaluating a global workforce,” said Eric Mosley, CEO of Globoforce.  “Performance management has long been viewed as the underlying way this is done. Yet, as this latest survey shows, the lack of ongoing feedback continues to be its missing ingredient. By using a social performance management strategy powered by employee recognition, HR leaders can fill that critical gap of feedback. The result is higher levels of employee engagement, satisfaction, and productivity.”

“The latest SHRM/Globoforce survey shows a growing introspection among HR leaders. They know how critical HR strategies will be in 2012 and well into the future,” said Mark Schmit, SHRM’s vice president of research. “By taking the next step beyond simply talking about employee engagement and proactively addressing it with tools like employee recognition, HR leaders will have greater success in elevating all key HR metrics.”

Among the 770 HR leaders who responded to the survey, key insights include:

Employee engagement is the top HR challenge but underutilised. According to the survey, 94 percent of HR leaders say employee engagement is an important or very important workforce challenge they currently face. However, only 42 percent of respondents currently track employee engagement levels, missing an opportunity to address low engagement levels within the organisation with targeted, proactive strategies. In fact, among companies that measure engagement (versus those that do not), HR leaders say:

* More employees feel rewarded according to job performance (69 percent vs. 49 percent)
* More managers acknowledge and appreciate employees (56 percent vs. 46 percent)
* More employees are satisfied with their levels of recognition (37 percent vs. 23 percent)

Employee recognition fills the feedback gap for effective employee performance management. The survey finds that 45 percent of HR leaders do not think annual performance reviews are an accurate appraisal for employee’s work while 42 percent do not think employees are rewarded according to their job performance. Examining this by companies with recognition programmes versus those without:
* 55 percent of companies with recognition programmes say their managers effectively acknowledge employees.
* Conversely, only 36 percent of companies without recognition programmes feel employees are effectively acknowledged and appreciated by managers.

Employee recognition delivers ROI against key HR metrics. Among organisations that measure the ROI of their employee recognition programmes, HR leaders observed increases in key metrics. More than half of survey respondents saw increases in productivity, customer/employee retention, employee engagement, return on profit margin, and return on equity as a result of their employee recognition programme.

Percent of HR leaders who say they observed an increase in these metrics as a result of their recognition programme:
* Employee productivity – 63 percent
* Employee engagement – 61 percent
* Return on profit margin – 58 percent
* Customer retention – 52 percent
* Employee retention – 51 percent
* Return on equity – 50 percent

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