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Executive Summary
Nowadays, virtually all organizations want to improve employee retention, experience, and morale while enhancing their corporate cultures. But what kinds of initiatives can push all those buttons?
Our latest research shows that rewards and recognition, or R&R, are certainly one viable choice. When we asked HR professionals about the top five advantages of R&R programs, the most cited responses were, in order:
- Helps employees feel valued
- Increases satisfaction/morale
- Improves company culture
- Enhances employee experience
- Increases employee retention
But just because R&R can have a range of positive impacts doesn’t mean it always does, according to ourresearch. Indeed, one of the primary goals of our research is to discern which practices are most closelyassociated with R&R success.With this in mind, consider some of the major findings from the report.
Our Major Findings
Major Finding #1
There are various important and related challenges to R&R success in organizations aside from the potential issue of cost, many related to the skilled management of these programs. They are:
- Inconsistent applications of rewards and recognition
- Loss of engagement among those not receiving R&R
- Lack of leadership involvement
- Lack of managerial training on best practices
Major Finding #2
Another key concern is a lack of metrics to discern the effectiveness of these programs.
- A mere 43% of organizations review the effectiveness of their reward and recognition programs at least annually.
- 22% do not ever evaluate effectiveness.
- There is only a single measurement method used by a majority (58%) of organizations: that is, conducting an annual engagement survey.
Major Finding #3
Good R&R practices make a difference; compared to the organizations that have less effective rewards and recognition (R&R) programs, those that have more effective programs are:
- About 13X more likely to recognize employees daily
- Almost 7X more likely to include self-nominations
- 6X more likely to take employee opinions into account for new rewards/initiatives
- Over 4X more likely to determine R&R’s impact on performance
- 3.5X more likely to tie R&R to company values
- Over 3X more likely to include customer nominations
- Over 2.5X more likely to think artificial intelligence (AI) will help leadership to better understand the experiences of employees in the future
- 2X more likely to gather employee feedback during team meetings
What’s Driving R&R in Organizations?
Finding: Organizations most commonly incorporate R&R to help employees feel valued.
What are the top five advantages of R&R programs? First and foremost, such programs help employees feel valued (65%), of course. This, in turn, results in other key advantages. When employees feel valued, it increases their morale and satisfaction, cited by 49%. This, in turn, can positively impact the entire company’s culture, chosen by 45%. Rounding out the top five are enhancing employee experiences (38%) and increasing their retention (37%), which are among the most important goals of talent management these days, our research shows.
What do you believe are the top 5 advantages of the R&R program(s)and/or capabilities in your organization? (Select up to 5)
Employee-favored R&R Initiatives
Finding: Employees most commonly prefer monetary incentives and gift cards as rewards
We asked participants to identify the five most popular types of rewards programs that their employees prefer most.
Over four-fifths (83%) indicated that monetary incentives are the most popular with employees, followed by employee gift cards (71%). Nothing else is mentioned by more than half of the respondents, but rounding out the top five are:
- Company-branded swag (44%)
- Vacation benefits (40%)
- Sending employees for seminars, conferences, leadership programs, etc. (34%)
It is often important to consider a variety of individual employee interests when preparing incentives. This may be one of the reasons why many organizations use point-based systems.
With such systems, employees can accrue rewards over time to save up and earn larger rewards. In addition, point systems offer a variety of options that employees can choose from based on their interests and time.
Of the following types of rewards, which five are most popular withemployees in your organization? (Select up to five)
Finding: When it comes to recognition, employees most often value manager and peer-to-peer appreciation
We also asked respondents about which five types of employee recognition are most popular among workers. More than three-fifths cite manager’s expressions of gratitude (62%). Given that managers often set goals and/or direct employees, it makes sense that employees appreciate it when managers personally express their gratitude.
Likewise, since many employees work together in teams to accomplish key goals, they often appreciate recognition from their peers (49%), which may give a more personalized feeling.
About half of respondents also indicate employees enjoy larger celebrations such as parties/social gatherings (48%) and over two-fifths (42%) cite award nominations. Rounding out the top five is public communication such as social media/newsletters, cited by 37%.
Of the following types of recognition, which five are most popular with employees in your organization? (Select up to five)
Measuring R&R Effectiveness
Finding: Organizations most commonly rely on engagement surveys to measure R&R effectiveness
About three-fifths of organizations (58%) use annual engagement surveys to measure the effectiveness of their R&R programs. While such surveys help in gathering a lot of insightful data, they often fail to capture the most current R&R information.
To get more targeted and current R&R program data, 45% observe trends in R&R employee participation rates, and 28% administer regular pulse surveys.
We find it concerning that 22% do not measure effectiveness at all and that only about a quarter (26%) monitor manager engagement levels in the program. After all, if managers are not engaged in the program, it can be nearly impossible to get employees engaged.
What methods does your organization use to measure the effectiveness of its rewards and recognition (R&R) programs and/or capabilities?(Select all that apply)
Finding: Just 43% regularly review the effectiveness of their R&R programs
We also asked respondents about how often they review their programs for effectiveness. Only a little over two fifths (43%) regularly review the effectiveness of R&R programs.
When organizations do evaluate, most do so on an annual basis (28%), but others do so on a more regular basis. We believe that the widespread lack of regular program measurement is one of the primary reasons so many organizations report lackluster R&R program effectiveness results.
Challenges Preventing R&R Success
Finding: Many organizations cite cost and implementation challenges in their R&R programs
We also asked about the five biggest challenges associated with offering rewards and recognition programs. It turns out that cost and inconsistent application of R&R are tied for the top challenge, both cited by 48%.
These two challenges are somewhat interrelated in that when organizations follow consistent processes there is a greater potential to optimize spending. Rounding out the top five challenges are the loss of engagement of those not receiving R&R (42%), a lack of leadership involvement (38%), and a lack of managerial training on best practices (36%).
We believe that it makes sense for organizations to better involve and train leaders in the areas of reward and recognition. By doing so, organizations can help ensure a more consistent application of R&R.
What do you believe are the top five biggest challenges associated with offering R&R programs in your organization? (Select up to five)
Practices for Successful and Effective R&R
To better understand what may be driving effective rewards and recognition practices today, we took a closer look at what separates organizations with highly effective R&R practices from those with less effective practices.
To do this, we divided respondents into two cohorts:
- R&R leaders: these organizations represent respondents who answered “high” or “very high” to the survey question, “How would you rate the effectiveness of your organization’s R&R programs and/or capabilities?”
- R&R laggards: these organizations represent respondents who answered “very low,” “low,” “moderate,” or “we do not have programs or goals” to that same question.
Of course, correlation is not the same as causation. While we cannot state that any specific practice will lead to success in employee financial wellness, we do see intriguing relationships that might result in greater success.
Finding: Organizations should link R&R to corporate values as well as take employee feedback into consideration
The following chart represents data from a variety of survey questions, highlighting how some organizations that are more successful in the R&R space are doing things differently compared to those that are struggling to achieve success in this area.
We found that R&R leaders are over six times more likely than R&R laggards to take employee feedback into account when introducing R&R initiatives to a high or very extent. They are also over four times more likely to determine R&R’s impact on performance. Similarly, leaders are 3.5 times more likely to tie values to R&R provided to a high extent.
If your organization hasn’t done so already, consider making rewards and recognition an integral part of the corporate culture. Organizations may be able to achieve this by tying R&R to performance, values, behavioral traits, project or career milestones, and tenure/service. Keep attributes such as fostering teamwork and increasing transparency front and center.
What differentiates R&R leaders from the laggards?
The Future of R&R
Finding: Almost half of organizations say they will nurture a culture that encourages rewards and recognition in the next two years
We asked respondents to consider a list of changes on the horizon and then identify which ones would apply to their organization. About half plan to nurture a culture that encourages rewards and recognition (46%).
This is understandable considering many organizations are not finding their programs effective enough, and our research shows many employers have experienced inconsistent R&R implementations. This may be one of the reasons why about a third (32%) plan to involve better training for managers on R&R and 29% plan to empower front-line managers to issue rewards.
Further, a quarter intend to make improvements to increase fairness (25%), and more than a fifth (22%) plan to become more inclusive. About two-fifths (38%) will provide greater visibility into company wins and individual accomplishments, while nearly as many plan to focus on making R&R more personalized (34%). Over a quarter (28%) will make rewards more just-in-time or on-the-spot. We should note, however, that about a fifth of organizations (21%) do not plan to make any changes.
In which of the following ways will rewards and recognition in your organization change over the next two years? (Select all that apply)
Finding: About half say R&R technology will improve tracking and reporting during the next two years
We asked respondents to indicate the top five ways that technology will aid R&R programs over the next two years. The top five are cited by over one-third of the respondents. Technology can greatly aid in creating and maintaining a database. This can help track R&R data and create accessible reports (49%).
A similar proportion (48%) cite technology helping derive insights through analytics. But technologies can do more than just help with tracking and analysis. About two-fifths (39%) say technology can improve communication with employees and help in real-time recognition.
A similar proportion think technology will help reduce the administrative burden through automation (38%). Only 12% indicate technology will not help R&R in any way.
Choosing from the list below, what are the top five ways that technology will aid your organization’s rewards and recognition program over the next two years? (Select up to five)
Key Takeaways
Key Takeaway #1
Get support from top leadership buy-in. Delineate how R&R will influence performance, retention, and engagement. Share this information with C-level leaders and use it to garner support from their teams.
Key Takeaway #2
Measure the effectiveness of R&R programs regularly. Consider leveraging engagement surveys or pulse surveys to track R&R programs, review program participation, and understand how employees perceive these programs. Delve into metrics that provide insights into R&R program costs as well as employee performance, employee engagement, retention, and well-being.
Key Takeaway #3
Communicate clearly about rewards and recognitions to employees. Tailor rewards to suit individual preferences by offering a variety of reward options that are within the budget. Remember that there is value in non-monetary rewards such as team-building events, rewards/ certificates/plaques, nature-oriented experiences, and time spent on continuing education. Consider broad communication about this in email, newsletters, and in regular one-on-one meetings with managers.
Key Takeaway #4
Train managers. Encourage line managers to execute on-the-spot rewards and recognition instead of relying mostly on infrequent performance reviews to make employees feel more valued and engaged. Discuss the advantages of a manager helping an employee identify, build, and appreciate their strengths. Teach managers how to convey R&R messages to award winners and losers. Also, educate managers about the tools and technologies available to them.
Key Takeaway #5
Leverage technology to your advantage. For recognition to be successful, an R&R system needs to track and document the types of wins and accomplishments of employees over time. Technology is an important component of making that happen. Further, much of that R&R information is performance-related and somehow needs to make its way to an employee’s pay-for-performance review. Consider incentivizing managers to regularly include data from R&R technology and ensure that information gets integrated and tracked in the performance system.
