Reward & Recognition Schemes - Providing Return on Investment

More companies are turning to employee reward and recognition schemes as a way of boosting the performance of their workforces.

Earlier this year, the Chartered Institute of Personnel and Development's Annual Reward Management Survey found that 41 percent of businesses are running some kind of staff recognition scheme, while 30 per cent offer non-cash rewards. The report suggested that these initiatives have become popular because companies are facing tighter human resources budgets as a result of the ongoing economic uncertainty.

However, just because some companies are looking for non-monetary ways of rewarding and recognising their employees' performance does not mean they have lost all interest in the financial side of things. As with any business strategy, employee reward and recognition programmes need to have a demonstrable return on investment (ROI).

Placing an exact figure on the return that is generated by staff recognition can be a difficult prospect. In 2005, a whitepaper by Marketing Innovators pointed out that many companies typically look for ROI in terms of new business generation and cost reductions. The research, which reviewed a number of studies and articles on employee management, argued that there is"an indirect yet undeniable correlation between employee satisfaction and financial performance".

The white paper suggested companies that invest in strong reward and recognition systems tend to have higher levels of employee motivation and job satisfaction, which in turn improves their performance and attentiveness to customer service.

This belief is backed up by research into the effects of employee recognition from Canada's Universite Laval Chair in Occupationa lHealth and Safety Management. The institution claimed that staff recognition can create noticeable results in three main areas - positive effects on the staff, on the firm's customers and on the organisation itself.

According to the university, knowing their hard workis appreciated allows workers to see their job as more significant, rather than just as a source of financial compensation.Employee recognition helps make work meaningful, giving it a renewed sense of dignity and the ability to be a source of pleasure and satisfaction," the organisation claimed.

In addition, it stated that staff motivation can be boosted by the use of employee reward and recognition schemes, a point which Cary Cooper, distinguished professor of organisational psychology and health at Lancaster University, agrees with.

Highlighting the concrete advantages this can have, professor Cooper explained that high levels of motivation lead to"better team building, better shared knowledge and movement towards objectives, higher levels of job satisfaction ? and ultimately better performance and productivity".

The Universite Laval also noted that customers can be affected by high levels of staff recognition. It suggested that they have better relationships with organisations that care for their workers, as they tend to receive higher levels of service. As the Marketing Innovators review summed up:"Satisfied employees generate satisfied customers, who in turn build long-term relationships - and spend more money."

Furthermore, the university claimed a company that rewards the efforts of its staff benefits from a better public image, which can make it more likely that customers will trust it. Employee recognition can also encourage staff to more closely abide by their organisation's values and philosophy - and this could be reflected in the level of service they offer to customers.

Finally, the group suggested that a business which hasa strong employee reward and recognition culture will experience a number of direct effects. It claimed that firms will notice higher rates of productivity and performance, explaining:"Employees feel they have a place within the organisation and perceive their contribution as unique and valuable."

The university also reiterated the point that employee recognition can create greater levels of staff motivation and retention - which have long been established as being beneficial to the overall performance of an enterprise.

As more companies move towards adopting employee recognition and non-cash reward packages, it seems as though they will start to notice the ROI which is created by having a well-motivated and engaged workforce - long held as a key driver of business success.

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