REASONS YOU NEED STRATEGIC RECOGNITION 12345 Recognition Instinctively Seems Smart

REASONS YOU NEED STRATEGIC RECOGNITION 12345 Recognition instinctively seems smart. But how does it impact your business’s bottom line? Here are five factors that make a compelling business case for strategic recognition. 3.44% 3.44% 5.75% 5.75% 78% 50% 50% 63% 63% 38% 38% engagement workplaces have: workplaces engagement high- Towers that Watson shows and like Gallup, Hewitt, groups from research recent at A glance appreciated? and recognized better were efforts if your harder Would work you 27% 27% 56% 56%

profit margins profit net in Difference margins operating in Difference profits Higher productivity average Above sales Higher loyalty customer Higher return shareholder in Difference Source: Globoforce MoodTracker Spring ’12 Spring MoodTracker Globoforce Source: Ye 22% NO 9 11

s 10 1 13 8 12 7 increase shareholder returns. shareholder increase workforces Highly engaged Recommendations Culture. of author Sheridan, Kevin says of engagement,” driver impactful most one number is the “Recognition it? get you is do key. how But engagement So success. company driving in factors important two engagement: customer and employee between connection astrong shown consistently has 17 than more percent. by margin acompany’s operating boost can engagement in employee change a 15 percent that indicated has study A Towers Perrin income. operating in increase a$100,000 saw stores engagement, in employee boost ofapoint 10th every for that found Buy, which Best an example for profits. and Take sales, loyalty, customer productivity, have increased workforces engaged highly with companies that prove studies again, and Time lines. bottom and top to the to improvements leads Engagement engagement. drives recognition Strategic line. bottom the benefits it business: is in there argument compelling most It’s the To increase your levels of engagement, ramp up your employee recognition. employee up your ramp To ofengagement, levels your increase survey. an employee consider To ofengagement, levels assess own your 4 “When employees feel recognized 1

Building a Magnetic Building a Magnetic 3

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in compelling way. compelling and in adirect business outcomes drives recognition strategic on engagement, impact organizational with strong its values. With to behaviors align ability the and results your business strategies, with measurable into it integrates and tactical the beyond recognition takes recognition Strategic pins. or watches employees tenured give that programs Years or drawer ofService a from cards gift out handing of managers in nature—consisting quite tactical been have programs recognition Historically, percent higher engagement levels. 60 and percent 20 between saw performance employee recognizing in effective were managers where companies that reported Engagement.” through to revenue tied issince it indirectly Recognition meaningful and regular providing in value the to see able be should supervisors hard-nosed most Even the result… quality a higher produce and harder work will they meaning employees, Engaged be to likely the workplace, they are statistically more more statistically are they workplace, the 5 In fact, Towers Watson has In fact,

5 Reasons You Need Strategic Recognition // 2 3

Recognized employees are 2 less likely to jump ship.

Unwanted turnover is a pervasive and costly JOB DESCRIPTION/ TURNOVER CALCULATING liability for any organization. A while back, CATEGORY COST as % of 5 Reasons Need You Strategic Recognition TURNOVER COSTS Coca-Cola estimated that it costs $3,637.00 Annual Salary to replace one minimum wage employee.14 In We profiled a sample company of Entry Level, Non Skilled 30 - 50% 10,000 employees with a very fact, out of 17 organizations who calculated conservative 11% annual turnover rate and an average cost to replace of 75%. that cost, SHRM had the lowest estimate, still Service/Production Workers 40 - 70% up at $3,500 per employee.15 The University Skilled Hourly 75 - 100% Company with 10,000 Employees of Arizona Medical Center conducted an eye- opening study in 2009 setting the cost of Clerical/Administrative 50 - 80% replacing a generalist at $115,554; replacing Professional 75 - 125% 70% a subspecialist at $286,503; and a surgical 10% subspecialist at $587,125.16 Technical 100 - 150% 20% Engineers 200 - 300% When we factor in time and productivity lost to vacancies and onboarding, we begin to Specialists 200 - 400% see just how significant these “hidden costs” Supervisors/Team Leaders 100 - 150% Entry Mid- Senior really are. In fact, the costs of turnover are Level mgmt mgmt usually estimated at 30-50 percent of the Middle Managers 125 - 200% annual salary of entry-level employees, 150 Average Annual Salaries percent of middle level employees, and up Source: Jack Phillips Center for Research to 400 percent for specialized, high-level employees.17 With U.S. national average begin to account for the brain drain and turnover at 38 percent, according to the U.S. risks associated with losing valuable tribal $30K $70K $150K Dept. of Labor, (and even award-winning knowledge and talent. employers at turnover rates of 11 percent, according to the APA) that’s a significant bite Research overwhelmingly shows that Cost to Replace (@75% of salary) out of the corporate apple.18 recognized employees are more likely to stick with you. As the Wall Street Journal Need an example? Check out the sidebar. recently observed: “Awards, recognition $22.5K $52.5K $112.5K You read right. An 11 percent turnover would and praise might just be the single cost that company $41.3 million a year. Even most cost-effective way to maintain if all of your employees are the entry-level a happy, productive work force.”19 $8/hr version, you still are incurring losses of Recognized and appreciated employees stay Annual Loss of Talent (@11% turnover) $3+ million annually. And this doesn’t even the course.

770 220 110 people people people Recommendations Determine your own turnover rates and annual turnover costs. Compare that against the investment in a strategic recognition program. $17.3 $11.6 $12.4 MM MM MM WHO’S LOOKING FOR A NEW JOB?

of those who feel appreciated 20%

of those who do not feel appreciated $41.3MM 60% in bottom line turnover costs

28,875 19,250,000 40% 770 @ 220 @ 110 @ $37,500 per $87,500 per $187,500 per Within Six Months head = head = head = $28,875,000 $19,250,000 $208,625,000

22%

Within a Month 4

// Not all engagement 3 is good engagement.

Engagement is good. Lack of engagement is • Be potentially damaging for both bad. Simple, right? Wrong. individuals and their organizations

There are two types of engagement. One • Reflect higher levels of stress is transactional (or situational), when and difficulties in achieving 5 Reasons Need You Strategic Recognition employees are happily focused on a job a work-life balance or task they like. The other is emotional, Emotional engagement has the opposite where employees have made strong ties effect. “It’s driven by a desire on the part of to their bosses, coworkers and company employees to do more for the organization values. Like cholesterol, you have to make than is normally expected,” the study said, sure you have less of the first type of “bad” “and in return they receive more in terms of engagement and more of the second type of a greater and more fulfilling psychological “good” engagement. Strategic recognition contract.”21 That means emotionally engaged drives that. employees are bringing employee energy to the table in a sustainable, positive way. John Fleming of Gallup, author of Human Sigma, has linked emotional engagement to How does this relate to recognition? Most satisfaction and to desirable financial and traditional reward programs are unemotional operational outcomes.20 According and transactional—with incentive bonuses or to a recent study published by the cash rewards, isolated top-down award-giving, Chartered Institute of Personnel or simple milestone catalog gifts. Strategic and Development (CIPD) and recognition, on the other hand, is social and Kingston University Business emotional—with public appreciation and School’s Centre for Research awards that are tied to corporate values, in Employment, Skills and witnessed and congratulated by peers and Society (CRESS), high levels that involve personal choice in reward type. of the transactional form of Good recognition drives good engagement. engagement were found to:

Recommendations

Examine your culture to determine the type of engagement you’re inspiring. Consider strategic recognition that encourages emotional, rather than transactional engagement.

TRANSACTIONALLY ENGAGED EMPLOYEES EMOTIONALLY ENGAGED EMPLOYEES

More likely to display More likely to react negatively Attached to their work. More likely to have undesirable behavior. to the line manager relationship high levels of well-being

Score lower on all Not committed to the job Less likely to experience More likely to have high task performance dimensions or the organization burnout or work–family conﬂict. performance & levels of citizenship

Less likely to respond to a Willing to jump ship if a Desire to do more for & get more Willing to stay the course. supportive environment better offer appears. in return from their company.

Do only what is required or expected, Less likely to indulge in undesirable behavior as long as promised rewards are forthcoming which might damage the organization. TRADITIONAL, TACTICAL RECOGNITION TACTICAL TRADITIONAL, STRATEGIC, SOCIAL RECOGNITION SOCIAL STRATEGIC, complete trackingandre Unilateral, top-downre Myriad, decentralizedpr Driven bycultur with nocentralizedre Peer “T Global pr HCI/Taleo rash &T -to-peer re +4.6% LAST 12MONTHS ograms with rinket” awar Data Deficient Deficient Data Data Proficient Data Organizations -3.0% Organizations STOCK VALUE VALUE STOCK % CHANGE % CHANGE e andvalues cognition cognition porting porting ograms ds

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reputation and human talent. It is critical It is critical human talent. and reputation knowledge, assets: intangible such just on calculated is now value company’s market ofa 85 percent that notes Institution roles. future for them to develop looking are or employees top-performing all of their know even oforganizations 17only percent undervalued. and inconsistent appreciation and subjective, and is haphazard planning succession flawed, fatally are reviews Performance measure. to difficult and are so intangible human assets because skill, a “soft” considered been long has management talent sadly,But good your talent. talent. your andmeasuring appreciating engaging, cultivating, for tool an effective with you provide also They retention. and planning succession management, performance of purposes the for influencers and performers key identify and workgroups, and employees among visualizing ties the works, organization your into how deep dive you let They ofvariables. set soft very Talentand apreviously Maps™ quantify Insight Tools them. manage like Executive but results measure only not and culture, into your insights to deep gain required data the provides recognition Strategic analysis.” data workforce at as‘deficient’ themselves rated who those outperform […] financially to likely more far were analysis data workforce in ‘proficient’ “Organizations that rated themselves HCI/Taleo: by survey to arecent According performance. financial and intelligence, talent use our and gather we well how link is between also areal There them. cultivate and outliers positive your to identify able to be 25 Yet for all that, the Brookings Brookings the Yet that, all for 24 According to WorldatWork,

5 Reasons You Need Strategic Recognition // 5 12 1925. since - of market by afactor stock general the have values core outperformed and core vision positive strong with Companies Jim Collins 5 , Built to, Built Last Recommendations directly impacts the bottom line of your business. recognition. Together, they offer exponentialan return on investment that Any of these fivefactors makes a compelling businesscase forstrategic The theybut something practice. employees recite,something not are values Company resonates with employees. Make those company values directly actionable. directly values company Make those employees. with resonates in that way culture corporate with values company have if aligned you Determine clear values known and understood by “having that found Survey Modern firm research the study, in arecent Likewise, 1925.” since of12 afactor by market stock general the have outperformed values core vision and core positive strong with “Companies that B time.” over book, In their them preserve you that and organization, into the explicitly them build you that are, they what know you that all, at have values you core that have,” you “but values core wrote, he what is not point “The business greatness: to enduring is essential values core having that Jim Collins found has writer profitability ofhigher managers that shown objectives. and long-term strategy business culture, corporate to practices management companies align people High-performing uilt to Last to uilt

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values should be lived, not just displayed. just not lived, be should values Company concept. asan abstract than rather asapractice, minds in employees’ culture alive brings recognition strategic In this way, actions. and thoughts integrates them into employees’ everyday wall and the off down ideals guiding those brings it value, each to specifically back map that models recognition and awards with values, to company directly is recognition aligned strategic Because organizational success. and ofengagement pillar anare intrinsic values clear, practicable Good, executives. for an exercise just not are values company words, In other employees.” to engage Without clear values, it is nearly impossible possible. engagement is to making key employees throughout [an] organization more likely to be be to likely more

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5 Reasons You Need Strategic Recognition // 6 135 ABOUT GLOBOFORCE COUNTRIES 135 COUNTRIEGloboforceS has been helping companies drive business results through 25M+ strategic recognition programs since 1999. Our clients get results—dramatic REWARD OPTIONS improvements in employee engagement, increased employee retention and measurable adoption of corporate values. 25M+ 15+% REWARD INCREASES IN OPTIONS EMPLOYEE ENGAGEMENT SOURCES 1CFO Magazine, 2007 & departments in one academic medical center” 2009 Harvard Business Review, 2010 http://www.ncbi.nlm.nih.gov/pubmed/19116474 1-3 2http://www.ketchumperspectives.com/ar- 17Source: Jack Phillips Center for Research. See: MONTHS 15+% chives/2004_i2/internal/culture.php http://humancapitalstrategy.blogspot.com/2009/04/ TO FULL INCREASES IN 3 ADOPTION EMPLOYEEGallup, “Engaged Employees Inspire Company calculating-employee-turnover-cost.html ENGAGEMENTInnovation”, Gallup Business Journal, http://busi- 18http://www.apa.org/news/press/releases/2011/03/ nessjournal.gallup.com/content/24880/gallup-study- workers-stressed.aspx 100% engaged-employees-inspire-company.aspx 19http://guides.wsj.com/management/recruiting- PURE SAAS 4Interview, Kevin Sheridan, May 23, 2011 hiring-and-firing/how-to-reduce-employee-turnover/ 5Kevin Sheridan, Building a Magnetic Culture, 2012 20http://businessjournal.gallup.com/content/102496/ 6Towers Perrin, “Turbocharging Employee where-employee-engagement-happens.aspx 1-3 Engagement”, 2009 http://www.towerswatson.com/ 21CIPD, ”Emotional or transactional engagement – MONTHS TO FULL assets/pdf/629/Manager-Recognition_Part1_WP_12- does it matter?,” 2012 ADOPTION24-09.pdf 22http://www.shrm.org/Research/Articles/Articles/ 7Hewitt Associates, “Hewitt analysis shows steady Documents/0606RQuartpdf.pdf decline in global employee engagement levels”, 23https://www.deloitte.com/view/en_US/us/Insights/ press release, July 29, 2010 Browse-by-Content-Type/deloitte-review/2472dacb2 8Gallup, “Q12 Meta Analysis”, 2006 http://strengths. bea9210VgnVCM100000ba42f00aRCRD.htm 100%gallup.com/private/Resources/Q12Meta-Analysis_ 24Recognition Council 2009, “The Time for Employee PURE SAASFlyer_GEN_08%2008_BP.pdf Recognition and Rewards Programs Is Now” 9Gallup, “Q12 Meta Analysis” 25World at Work, “Global Survey Reveals Companies 10Towers Perrin, “Turbocharging Employee Still Fail to Communicate Strategy, Nurture Top Engagement” Performers, or Accurately Align Pay for Perfor- 11Towers Perrin, “Turbocharging Employee mance,” 2011 25M+ 26 REWARD Engagement” http://www.taleo.com/researchpaper/business- OPTIONS 12Gallup, “Q12 Meta Analysis” impact-talent-intelligence 13Gallup, “Q12 Meta Analysis” 27“Global Talent Management: How Leading 14“New Ideas for Retaining Store-Level Employees,” Multinationals Build and Sustain their Talent Coca-Cola Retailing Research Council, January 2000 Pipeline,” INSEAD Working Paper, 2007. 15Source: SHRM. See: Marlene Chism, Stop 28https://www.deloitte.com/view/en_US/us/Insights/ Workplace Drama: Train Your Team to Have No Browse-by-Content-Type/deloitte-review/2472dacb2 Complaints, No Excuses, and No Regrets bea9210VgnVCM100000ba42f00aRCRD.htm 16Schloss EP, Flanagan DM, Culler CL, Wright AL, 29Collins, Jim, Built to Last: Successful Habits of “Some hidden costs of faculty turnover in clinical Visionary Companies, 2004

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Globoforce (Europe) Globoforce (North America) Founded in 1999, Globoforce is the world’s leading provider of employee recognition solutions. 21 Beckett Way 144 Turnpike Road Through its social, mobile, and global technology, Globoforce helps HR and business leaders Park West Business Park Suite 310 elevate employee engagement, increase employee retention, manage company culture, and discover Dublin 12, Ireland Southborough, MA 01772 USA actionable insight about their talent. Today, employees across the world are living their company values t // +353 1 625 8800 t // +1 888 743 6723 f // +353 1 625 8880 f // +1 508 357 8964 and achieving peak performance through the SaaS-based Globoforce platform. A private corporation, e // [email protected] e // [email protected] Globoforce is co-headquartered in Southborough, Massachusetts, and Dublin, Ireland.