Across the last 18 months or so, we have received an increasing number of questions about the role of employee recognition in today’s organizations. To answer those questions better, we embarked on a new research initiative focused on understanding the world of recognition and its role within talent management. We are now beginning to publish the outcomes of that research. We just launched the new Bersin & Associates Employee Recognition Framework (register for the free webcast on June 12), which is designed to help organizations understand how the different elements of employee recognition fit together as well as all of the critical decision points for developing a strategic recognition program. In June, we will publish our first-ever benchmarking report on employee recognition. We will follow that up by publishing a best practices report on employee recognition at the end of the summer, which will explain the top practices that correlate to better employee and business outcomes.
Before delving into all of this new research, an important question we should all be asking ourselves is, why is employee recognition such a hot topic now? In short, the answer is that the business world – and, consequentially, the workplace — changed substantially over the last five years. Some of the most significant of these changes include (1) a volatile economy, (2) the need for workforce greater agility, (3) the flattening of organizational structures, (4) the leveraging of technology in novel ways and (5) the rise of the Millennial generation in the workforce. Employee recognition has offered organizations new ways to adapt to these changes, as explained below:
(1) Volatile Economy —As many Western organizations responded to the economic recession, they found themselves unable to increase compensation and had to decrease or eliminate bonuses. Further, many of those same organizations reduced portions of their workforce. The upshot was increased pressure on the workers that remained, but with fewer rewards for their harder work – resulting in lower employee engagement1. Coaching and development became a popular (and relatively cheap) alternative to show that the organization still valued the employees remaining on the job. Organizations have similarly turned to recognition, particularly the types requiring low cost per employee (e.g., gift cards, thank you notes).
(2) The Need for Greater Agility—As we all know, business is moving faster than ever. Organizations need to be able to reconfigure their workforce to respond to their new business demands. Some of this reconfiguration will come from new hires and some of it will come from the current workforce. The workforce continues to become more globalized, with increasing competition for top talent stretching across multiple regions. One study found that to sustain economic growth, by 2030 the United States will need to add more than 25 million workers and Western Europe will need to add more than 45 million employees2. The result is a dramatic need for practices that attract new employees and keep existing employees highly motivated and engaged. To do this, progressive organizations are creating recognition programs that align with business demands and the needs of the broader workforce.
(3) The Flattening of Organizational Hierarchies—The old days of a top-down hierarchy, in which the manager is the “king,” exist in fewer and fewer companies. Every day, more organizations are adopting collaborative work environments and reducing the levels of management within their ranks. The result is a decline in the number of promotion opportunities available to employees. To continue to show employees that they are valued, organizations are turning to a myriad of recognition approaches that do not include promotions.
(4) Novel Uses of Technology — As we all know, social technology has grabbed hold of the public’s attention and time in a big way across the last 5 years. At the same time, transparency, collaboration and knowledge sharing have become more the norm within organizations. Many organizations are attempting to leverage both trends by using social technology to increase the transparency, collaboration and knowledge sharing within the organization. A key element of many social platforms (i.e., LinkedIn and Facebook) is the ability for individuals to give positive feedback directly to others within the network. It is, therefore, a natural extension that employee recognition has become more common in organizations following this approach. In fact, a whole host of technology providers are now offering services that enable this type of online social recognition.
(5) The Rise of the Millennial Generation in the Workforce—Younger employees typically require more feedback (both positive and constructive) and development than older generations. Given that many organizations are in a situation where baby boomers will soon start to retire in droves, employers are searching for a way to keep these younger workers engaged, productive and retained. Employee recognition can be a critical tool in doing all of these things.
Most of these changes are here to stay. Employee recognition can help organizations to adapt to the new reality. Our initial research findings show that an effective employee recognition program can make a big difference to engagement and turnover levels. However, not all recognition programs are created equally – and those programs that are most effective go way beyond the traditional tenure or service recognition awards.
We hope you’ll stay tuned for our new research, as we begin to share the insights from our new data and interviews. We believe that after this summer you will likely never think about a “thank you” in quite the same way again!
1 Gallup Management Journal’s Employee Engagement Index, 2010 and http://trustmattersgroup.com/spiritoftrust/?p=441.
2 “Global Talent Risk – Seven Responses,” World Economic Forum, 2011.