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Employee Recognition Programs:
The Secret to Increasing Employee Loyalty and Performance
An Article by Chuck Davis, President, The C.A. SHORT Company
Published online at www.hr.com
 

They've always been there. If they aren't giving you problems, you just don't think about them.
That's the way most of us feel about recognition and service award programs. Ninety-percent of major U.S. companies offer these awards to their employees, according to a World at Work report. Of that, I believe 85% have let their programs lumber along for years, with no creativity. The programs don't generate much excitement among management, let alone employees. Employees often see their awards as little more than entitlements.

If that sounds familiar, your company could be blowing a significant opportunity to improve the return on investment of your award programs. When used correctly, recognition and service award programs build loyalty, increase morale, improve performance, reduce turnover and its related costs, and boost excitement at work.
Don't believe it? I've seen it, as a consultant on such programs across the U.S.
Now is a good time to reassess and re-energize your company's award programs so they work for you in building employee loyalty and productivity. Here's why: More than thirty percent of your workforce is just waiting for the economy to improve so they can ditch you and find a better job.
A 2003 study from Walker Information, a research specialist on employee loyalty, found that in the typical workplace, 34% of employees can be considered "high risk," or actively looking for another opportunity.
Higher salaries and desirable benefits are important. But employees also stay with a company because they feel their hard work is recognized. That means more than handing employees a piece of jewelry with the company logo when they've stayed five years.
I've identified five essentials for a successful recognition program:
1. Human interaction is important. Recognize an employee's anniversary or other milestone in person, not over the phone or via email.
2. Peer recognition makes the difference. This comes in two forms -- presenting the award and giving the employee something to display later.In presenting, one-on-one recognition is fine, but recognition is more powerful in front of a group of the employee's peers. Hold an award ceremony, banquet, barbecue, or whatever is appropriate for your company.Give the associate something that clearly shows her name and years of service. Consider offering a plaque or certificate that can be visible at the employee's work space year-round.
3. Involve the family. Whenever possible, include family members in the recognition event. Design the program so the family participates in some way. Your event will have even more impact. Offer gift awards that can be used by the family if they choose. Encourage employees to review the gift catalog with their families, so family members can select and enjoy the gift together.
4. Give useful and functional gifts. If you're in banking or insurance, a pin might be a valuable symbol of achievement. But blue-collar workers would clearly prefer a more functional choice, like a tool kit. Offer a range of gifts your employees will care about. If you have a diverse group of employees, you need an extensive choice of gifts. The most successful recognition programs provide at least 50 choices for each year level.
5. Immediate gratification. Look for a vendor that provides gifts promptly and on-time. No one wants to receive a certificate of recognition or a gift a day after the awards ceremony.
The best way to find out if your awards programs are working is to ask employees. Hold focus groups - not with HR staff, but employees from every department. Send out a survey. Ask for suggestions.
Use your programs to lift employees' morale when they need it most. One company, for example, revamped its service awards program to coincide with the career points when employees had a tendency to leave. The service awards program became an element of a broader recognition effort that helped the company improve turnover.
For more fresh ideas, consider how two companies improved their recognition programs - and gained employee loyalty.
C.A. Short
When I became CEO of C.A. Short Co. in 1994, I realized a stunning truth. Even though we were in the recognition business, C.A. Short's prior management had done a lousy job of recognizing its own employees. We needed to change -- fast.
So we created a banquet in which employees heard how valuable they are. The banquet featured photos of employees from childhood to today, with comments from me about what these people had given to our company. Many people actually cried. That experience taught me anytime a person is recognized properly, they grow. They become more loyal to the company. Their attitude improves. They enjoy their job more, and the company makes more money.
To honor anniversaries and outstanding service, our employees create remarkable special events, from mock game shows with door prizes to a "manager car wash," where managers wash employees' cars for contributions to a good cause. Planning events has actually become something of a plum assignment at C.A. Short. "People want to be on the employee relations committee, and they want more meetings," says C.A. Short Human Resources Director Susan Campbell.
We also place a premium on peer-to-peer recognition. Any employee can nominate another for the U ROCK award for outstanding performance. Each month, our HR director sends a group email to the entire company, announcing that Joe has received a U ROCK award for catching an important error in payroll, or Jill has received one for locating two obsolete items for customers and going far beyond the call of duty. We even gave a U ROCK award to an employee who pulled off a stellar practical joke just when we needed one.
I send an email card of congratulations to each recipient. Along with all that, we have another means of group recognition. In our main facility, we built an interior sign that looks like a football field. As employees receive U ROCK awards, they move up the field towards the goal post. When they cross the goal, they receive special prizes of their choosing.
C.A. Short's recognition program is one reason why turnover at the company has dropped from a high of nearly 49% in 1999 to less than 20% today. Reducing turnover takes many steps - including hiring the right employees with the skills you need and appropriate training to ensure those skills stay sharp. But recognition is an essential component. "It's never too early to start recognizing," says Campbell. "It works. Everybody likes to be told, 'Good job on that project.'"
Baptist Health
Carol Walker has a lot to oversee. The benefits coordinator for Baptist Health in Little Rock, Arkansas runs award programs for 7,000 employees, including five main hospitals, numerous physician practices, and a retirement community. Until last year, she organized one big event in which employees from around the state would drive to Little Rock to receive their service pins. Employees value and wear the pins, which feature a different gemstone for every five years of service. But the company had grown so much in recent years that award recipients often didn't know each other, which led to an awkward, formal atmosphere. Some employees also had a long drive time to get to the event.
After surveying employees, Walker realized the recognition ceremonies would be more meaningful if they were smaller. "People like to have it at their own locations because it's more personal, like a family," she says. Each hospital hosts dinners or special events regularly to honor employees celebrating five or more years of service. Those with 15 or more years of service can choose a gift from a custom catalog with more than 70 choices, including jewelry, TVs, sporting equipment, CD players, camping equipment, cookware and cameras. The employees receive certificates of achievement at the special events; the gifts are delivered later to their homes or elsewhere that they designate.
Each hospital also honors employees during a festive National Hospital Week in May. Every employee receives a gift at these parties and luncheons. Popular items have included black director's chairs and backpacks on rollers.
Baptist's recognition program emphasizes human interaction, recognizes employees in front of their peers, and offers useful and pleasing gifts. That's why it succeeds. "I think these gestures are really important to employees," says Walker. "We do employee surveys about our recognition program, and the results are always positive. Along with strong benefits, recognition helps make a good package so that we're the employer of choice. It holds weight."
Recognition Leads to Better Performance
Several recent studies point to a significant impact by more effectively managing human capital. In What Really Works, a five-year study from the Harvard Business School, researchers identified four key management areas that separated better-performing companies from those that performed less well. One of those was maintaining a performance-oriented culture.
An effective recognition program will not make a company a top performer by itself. But it can be one of the tools you use to tangibly demonstrate to employees that their efforts do matter. Having a performance-oriented culture where employees are recognized for their contributions is an important way to improve a company's long-term financial performance.
Chuck Davis is CEO of C.A. SHORT Company, which provides service, performance, and recognition award programs to U.S. and international companies.