The Importance of Employee Engagement

Article written by Incentive Services University

Much of the literature today on building a strong corporate culture is centered around the importance of keeping employees positively engaged at work, creating a culture in which each employee feels connected, empowered, and ultimately contributing to the forward momentum of the organization.

One important way that we can impact employee engagement is through recognition – whether it be through verbal praise, monetary rewards, social networks, or service award programs. The impact of recognition on employee engagement can be a significant factor in training – and retaining – quality employees who feel engaged and empowered to make a difference every day. In fact, research by the Aberdeen Group found that “60% of Best-in-Class organizations stated that employee recognition is extremely valuable in driving individual performance” (Driving a Culture of Employee Recognition, 2013). In addition, “ . . . in organizations where recognition occurs, employee engagement, productivity and customer service are about 14 percent better than in those where recognition does not occur” (Bersin & Associates, 2012). Recognized employees are more likely to be engaged employees – interested in and contributing to a positive organizational culture and its growth.

But what are the risks of NOT recognizing employees? Is there any negative impact to the health and well-being of a company and its culture? Research suggests that “[w]ithout a way to engage employees, organizations risk losing top talent and jeopardize organizational growth” (Aberdeen Group, 2013). Disengaged employees are decidedly less productive, contribute less and may, in fact, drive the corporate culture in an apathetic, if not negative direction. Unfortunately, “[o]nly 14% of organizations provide managers with the necessary tools for rewards and recognition” (Aberdeen Group, 2013). Recognition, even in small ways, helps employees to develop a strong sense that they can positively impact the forward-momentum of the organization.

Recognition can take many different forms, both formal and informal. Informal recognition might include anything from off-the-cuff remarks, praise or even monetary incentives based on random criteria left solely to manager discretion. While these are noble efforts, they often have no tracking or accountability either from a performance or financial perspective. In fact, research from the Human Capital Institute suggests that “ . . . sporadic recognition may in some cases be worse than no recognition” (Human Capital Institute, 2009). Left without a structured program, recognition can be inconsistent and results entirely unknown.

Formal recognition programs, however, might be the “best way to implement a recognition program . . . as a rational, carefully formulated program that is based on sound theory and is well integrated with an organization’s business strategy (Human Capital Institute, 2009). Within a formally designed program consistent with company culture and values, these programs can provide thoughtful and meaningful recognition to employees, contributing to an overall culture of both engagement and positive recognition. Furthermore, a properly-managed program with the right software can also provide significant data on use, feedback, results, accounting, and reporting. Tracking this data can pin-point effective recognition strategies, align program goals among managers and comply with financial and accounting regulations. In addition, the use of social technologies linked to a formal program “ . . . allows employees an established way to provide recognition and easily receive specific feedback” (Bersin & Associates, 2012).

Let’s look at two best practice case studies in which a formal, agency-managed program helped to build a culture of recognition and employee engagement.

A leading healthcare services company with over 80 hospitals and 80,000 employees developed a two-phased approach:

In Phase 1 – the company wanted to standardize the Service Award Program through the organization creating a consistent look and feel to build a culture of recognition. The program included the use of e-cards and technology alerts to engage both managers and peers.
In Phase 2 – the company wanted to better understand all of the recognition methods being used within the organization. To do this, they created a formalized process which included:
Budgeting, Tracking, Electronic Recognition Process, Social Technologies, Award Redemption, Tracking of Taxes and Accounting.

This phased approach allowed the company to start creating a consistent culture of recognition, allowing the program to gain a foothold while the second phase was being implemented. Phase 2 brought additional structure and opportunity to the program and allowed the company to see just where recognition was making an impact – and where it could be used to create more significant employee engagement.

A large food service distributor with over 30 distribution centers and 8,000 employees created an employee ‘Loyalty’ Program in which employees can earn points for Safety, Wellness, Above & Beyond Performance and Years of Service. In addition, the individual distribution centers can run ‘contests’ and ‘games’ specific to their location to help drive awareness in particular initiatives. Program technology alerts help to engage managers and peers in the recognition process while data functions track taxes and accounting for financial reporting.