1% of Payroll: The Magic Number For Social Recognition Investment

Why do some recognition programs take off with widespread adoption, while others struggle to gain traction or make an impact? The problem is not that some work cultures don’t need recognition – appreciation is a basic human need.

One challenge many companies face is that executives, and sometimes even HR leaders, perceive recognition as a cost as opposed to an investment. When a recognition program is perceived as a cost or a “nice to have,” companies look for ways to bring that cost down as low as possible. Underinvesting in your recognition program, however, can weaken the recognition experience for your employees.

For example, imagine a global recognition program that allows the average employee to be recognized only once per year. What about the high-performers who consistently do great work throughout the year? An annual, “thanks for all you do,” is an underwhelming recognition experience, and can actually do more harm than good. It’s certainly not a perk you would feature on your careers page to job candidates.

Finding 3 in the 2016 SHRM/Globoforce Employee Recognition Survey shows that the sweet spot for values-based rewards and recognition investment is 1% or more of payroll. Companies that make this level of investment are nearly three times as likely to rate their program as excellent, compared to companies that invest less than 1% of payroll.

What about “free recognition” or “e-thanks”? The data doesn’t look good. Companies that invest nothing in their recognition program are five times more likely to rate their program as poor, compared to companies that invest 1% or more of payroll.

What’s more, the survey found that as investment increases, HR professionals perceived greater positive impacts on nearly every metric evaluated. Check out the graph to the left. A healthy recognition investment can help move the needle on retention, learning and development, and even attracting new job candidates.

To learn more about investing in recognition, we sat down with Chris French, Globoforce’s VP of customer success, for a Facebook Live chat. He shared exciting new data across many of our customers that shows as individuals receive more recognition, their probability of leaving the organization decreases. He also shared some tips for organizations that are looking to find budget for recognition. Check out that interview below.

(If you don’t see the video, click here to visit our Facebook page.)

You’d be surprised to know how much you’re already spending on programs that 1) are difficult to track and 2) are not delivering results. This post gives an overview of how to invest in recognition without adding budget, and suggests recognition spend could be hiding in one-off programs like employee gifts, safety awards, and incentive plans.

It’s not about cutting programs that work for your company, but figuring out which ones do work and which ones can be consolidated into one social recognition program. The annual pay raise or bonus for example, only gives a lift in employee engagement for about one month. Many smaller recognition moments throughout the year can be more effective at motivating employees and sustaining engagement. What if you took a small percentage of the annual bonus and used it for social recognition? Check out the e-books Annual Bonus, Annual Waste? and Why It’s Time to Re-Evaluate the Annual Bonus to learn more.

Don’t miss the next post in our series on findings from the 2016 SHRM/Globoforce Employee Recognition Survey, where we look at award-winning workplaces and their human workplace program offerings.

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