Can you measure ROI on employee recognition Initiatives? It’s a question that always comes up when companies are considering starting an employee recognition program or questioning if they should continue implementing a program.
It’s a valid and important question. Depending on the size of your organization, you can be spending an average of $125 to $175 per employee per year on award costs and another $50 to $75 per employee per year on administrative costs. For an organization with 10,000 employees, that’s an investment of up to $2,500,000. Of course, your CEO and CFO will want to know what they are getting for that kind of money.
If you can’t answer that question, your employee recognition budget could be the first thing on the chopping block when budgeting time comes around.
So how do you measure return-on-investment for a rather subjective initiative focused on recognition?
Follow this six-step process to determine the ROI of an employee recognition program.
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Six Steps to Employee Recognition ROI
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6
Steps for determining
theroianemployee
recognition Program
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Can you measure the
ROI on employee
recognition initiatives?
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YESyou can,
but first you have to define
what’s important to measure.
Can you measure the
ROI on employee
recognition initiatives?
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Here’s the
six step process to follow:
5. Start with defining
your recognition objectives.
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7. Common objectives include:
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Increasing productivity
Reducing
customer service complaints
8. Common objectives include:
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Increasing productivity
Reducing
customer service complaints
Improving morale
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Your program may also
positively impact
other objectives,
but if you
focus on one or two,
you’ll find it easier to
create a
defensible ROI.
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Identify the key metrics
that align to your objectives.
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Identify the key metrics
that align to your objectives.
2
Use measurements
you already have
in place.
12. Establish a control group.
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The control group can be
a baseline period to
use for comparison.
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The control group can be
a baseline period to
use for comparison.
This adds credibility to your
final ROI calculations
and results.
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Define and
communicate behaviors.
4
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5
Set realistic expectations.
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You should reasonably
expect not to see
any significant change
for at least six months
against your key metrics
and it could be as much
as 36 months.
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Focus your measurement
on tactical results such as:
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Percentage of managers
who have participated in
program training.
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Percentage of managers
who have participated in
program training.
The number of recognitions
employees have sent
their co-workers.
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Percentage of managers
who have participated in
program training.
The number of recognitions
employees have sent
their co-workers.
The percentage of
employees who have
recognized a co-worker.
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The number of recognitions,
per manager, that have
been given.
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The number of recognitions,
per manager, that have
been given.
Percentage of managers
using thier discretionary
awards budget.
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Calculate all of your
program costs.
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Including these costs
will lower your ROI –
and increases your
credibility when
management
understands that
you are being
completely transparent.
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Including these costs
will lower your ROI...
Labor
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Including these costs
will lower your ROI...
Labor
Materials
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Including these costs
will lower your ROI...
Labor
Materials
Training
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Including these costs
will lower your ROI...
Labor
Materials
Training
Presentations
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