Recognition Leads to Greater Profits

Conventional wisdom would hold that in this time of slow economic recovery and limited job creation, the prudent approach when it comes to employee recognition would be to limit it as well. You’ve seen the numbers – the percentage of American adults with jobs has barely budged in the last few years. Ask a recent college graduate about their job search…the outlook is grave. Being such, why would a company need to recognize employee excellence in this environment?

It would be a big financial mistake not to.

Let me share an “Above and beyond” story. McDonald’s wanted to recognize franchisees who had the greatest drive-thru guest count over a two month period. The profitability goal was met as competition was high. The recognition—several franchisees and their significant others enjoying Super Bowl weekend watching the game from a private suite.

Every great workplace has one thing in common, a manager’s ability to recognize employees’ talents and contributions in a purposeful manner.

In their book, “The Carrot Principle” by Adrian Gostick and Chester Elton, the authors present powerful data on the correlation between recognition and return on equity. In a major study of 26,000 employees in 31 organizations, Gostick and Elton asked the ultimate question, “Does my organization recognize me?” What they found was that recognizing excellence was strongly associated with the best financial performance.  In fact, recognition had the most significant impact on operating margin; with companies in the highest quartile of recognition at 6.6% while those in the lowest quartile reporting 1 %.

Purposeful recognition leads to greater profits.

Attracting top performers is becoming more and more difficult; employers should focus on the retention of their current workforce to remain competitive.

“Engaged employees demonstrate: innovation and creativity, take personal responsibility to make things happen, desire to contribute to the success of the company and team, have an emotional bond to the organization and its mission and vision. U.S. Department of Labor statistics show the number one reason people leave an organization is that they “don’t feel appreciated” – The Carrot Principle.

Effective managers create a culture one person at a time by using a variety of inclusive and meaningful recognition experiences:

  • Day to Day recognition – pats on the back, on the spot awards, hand written notes
  • Above and Beyond recognition – structured awards for significant achievement
  • Career Recognition – formal programs  that  recognize key dates like anniversaries
  • Celebration events – celebrations to reinforce team or company  success and achievement

Constructive praise and meaningful rewards will always lead to greater financial performance. Great recognition can be done in a matter of moments and it needn’t break the bank.

Debra Koenig, President, B2A

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