Recognition a Cost-Effective—Yet Often Misunderstood—Employee Motivational Tool, Comprehensive New Study Finds

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Research Review, Case Studies Highlight Recognition's Key Role in Organizational Success

CHICAGO, September 30, 2009 –Employee recognition programs, when used as part of a "Total Rewards" package, can dramatically improve employee engagement and job performance, as well as positively impact business results, according to research announced today at the Motivation Show by theHuman Capital Institute, theForum for People Performance Management and Measurement, and theIncentive Research Foundation.

"This comprehensive report synthesizes recent research by analyzing case studies of successful recognition programs and recommending further investigation into workplace recognition," said Forum Vice President Beth Schelske of the ITAGroup, Inc.

The report, "The Value and ROI in Employee Recognition: Linking Recognition to Improved Job Performance and Increased Business Value—The Current State and Future Needs," uncovers significant information about workplace recognition.

'Total Rewards' Package Includes More than Pay, Benefits

Although compensation and benefits are traditional ways employers retain and motivate workers, a "Total Rewards" package may include other incentives such as work-life improvements and recognition, which meet an individual's psychological need for appreciation. Recognition, ranging from simple praise to awards, cash or extra time off, is awarded to the employee immediately after the action and without achievement expectations.

Recognition's value is demonstrated by:

• Recent studies that show a high correlation between recognition and improved employee engagement, which in turn improves job performance and captures business value.
• Organizations that actively improve employee engagement through recognition financially outperform their competitors.

Lessons Learned from Real-World Recognition Programs

The report's highlighted case studies—of restructured recognition programs at Scotiabank, Delta Airlines and MGM Grand—demonstrate that recognition programs:

• Must include multiple award forms to satisfy different worker needs.
• Need not be costly and, in fact, may have no real monetary value.
• Are effective when the recognition is of value to the individual worker, and is awarded for behaviors linked to specific job performance goals.

"Companies often focus on compensation and bonuses as the means to motivate employees," said Schelske. "But, especially in our recessionary economy, recognition programs are a proven, low-cost method for creating improved productivity in organizations."

Researchers Recommend 'Best Principles,' Additional Exploration

The researchers recommend "best principles" for developing and implementing recognition programs to heighten employee engagement, improve job performance and increase business value.

• Use both formal and informal recognition to build a "culture of recognition."
• Provide a wide variety of recognition rewards—to appeal to individual preferences.
• Emphasize recognition of increased quality in performance, instead of simply quantity of effort.
• Recognize workers regularly—sporadic recognition may be worse than no recognition.
• Link reward activities to specific business objectives and/or cultural values.
• Measure the cost of the recognition reward system and the benefits gained.

The report also discusses the need for continued research, especially for empirical studies and investigation to better measure long-term business value gains resulting from successful recognition programs.

"Without question, this new research points to the critical importance and measurable impact of employee recognition, especially when it comes to improving the bottom line," said Rodger D. Stotz, Chief Research Officer of the Incentive Research Foundation. "Yet there is still continued work to be done to fully explore and understand these links, and to be able to quantify recognition programs' business value to organizational leadership."

A full copy of "The Value and ROI in Employee Recognition: Linking Recognition to Improve Job Performance and Increased Business Value—The Current State and Future Needs," is available to the media. The researchers also will discuss study findings during a free Masters-level HCI Webcast, to be broadcast live Thurs., Oct. 22 at 3 p.m. ET from www.hci.org. For more information or to register for the free webcast, visitwww.hci.orgor call 1.866.538.1909.

ABOUT THE FORUM

The Forum for People Performance Management and Measurement (www.performanceforum.org) is a research center within the Medill Integrated Marketing Communications graduate program at Northwestern University. A central objective of the Forum is to develop and disseminate knowledge about communications, motivation and management so that businesses can better design, implement and manage people-based initiatives inside and outside the organization.

ABOUT THE INCENTIVE RESEARCH FOUNDATION

The Incentive Research Foundation (www.TheIRF.org) funds and promotes research to advance the science, and enhance the awareness and appropriate application of motivation and incentives in business and industry globally. The goal is to increase the understanding, effective use and resultant benefits of incentives to businesses that currently use incentives and others interested in improved performance.

ABOUT THE HUMAN CAPITAL INSTITUTE

The Human Capital Institute (www.hci.org) is a catalyst for innovative new thinking in talent acquisition, development, deployment and new economy leadership. Through research and collaboration, our global network of more than 160,000 members develops and promotes creativity, best and next practices, and actionable solutions in strategic talent management. Executives, practitioners, and thought leaders representing organizations of all sizes, across public, charitable and government sectors, utilize HCI communities, education, events and research to foster talent advantages to ensure organizational change for competitive results. In tandem with these initiatives, HCI's Human Capital Strategist professional certifications and designations set the bar for expertise in talent strategy, acquisition, development and measurement.

PRESS CONTACTS

Forum for People Performance Management and Measurement
Sue Voyles or Annalisa Jacobs
734.667.2005 or 630.369.7780
sue@logos-communications.com or annalisa@performanceforum.org

Incentive Research Foundation
Jon Lieb or Frank Katusak
212-563-8025 or 212.590.2518
jlieb@sellingcommunications.com or f.katusak@TheIRF.org

Human Capital Institute
Aimee Diehl
866.538.1909
press@hci.org

PRESS CONTACT
Aimee Diehl
Human Capital Institute
866.538.1909
press@hci.org

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