Can you prove the ROI of a peer to peer recognition program?
Employee recognition is a crucial element of any great organizational culture, and the peer to peer model is an incredibly efficient and effective way to implement it. But implementing and maintaining a quality program does require an investment of time and resources.
Luckily, it's easy to see the massive returns an investment in peer recognition provides if you know where to look. Let's take a quick dive into three of the most important ways peer to peer recognition can positively impact an organization's bottom line.
1. Improved employee engagement
Employee engagement is one of the greatest challenges — and greatest opportunities — in modern business today. Employees are generally funneled into three categories in terms of their engagement:
Engaged employees have a positive emotional investment in the work they do, and the organization they work for. They're working with a strong purpose, and are focused on moving their team, and the organization as a whole forward. Highly engaged employees nearly always excel, and perform far beyond industry benchmarks. With a solid foundation and a team of engaged employees, there's nothing you can't accomplish.
Employees who are not engaged are essentially 'checked-out,' and simply 'going through the motions.' Although they're not actively working against the organization, they're not pulling for it either.
Actively disengaged employees are not just checked out, they're acting out and expressing their disappointment, or even their contempt for your organization. Actively disengaged employees aren't just pulling against the momentum of your organization, they're often turning others around them and damaging company culture.
Perhaps one of the most surprising statistics about engagement is the proportion of 'not engaged' and 'actively disengaged' employees that exist in the average organization. According to research published by Gallup, 70 percent of employees in the U.S. and 87 percent of workers worldwide fit into either the 'not engaged' or 'actively disengaged' employee categories.
Why is that such a problem?
There's a massive cost associated with disengaged employees. In the United States alone, the cost of poor engagement is estimated to be as much as $550 billion in lost productivity.
In a great article she wrote for Glassdoor, Alyssa Retallick explores these costs, plus the additional cost to a company's culture and its brand.
Peer to peer recognition helps improve engagement by providing employees with the ability to celebrate, recognize, and often reward the contributions their colleagues make.
While facilitating this volume of recognition across your entire organization would be a monumental challenge, if not impossible, with a simple top-down approach peer recognition makes it easy.
2. Improved employee retention
Employee retention is right up there with engagement in terms of how much it impacts your organization's bottom line. If you're curious to see (or share) the cost in numerical terms, check out our cost of employee turnover calculator.
Losing a good employee is unfortunate and expensive, but it's often preventable.
The cost of losing a good employee isn't usually considered in its entirety. There are the obvious costs of lost productivity during that employee's absence, and the costs of recruitment, but those costs are really just the tip of the iceberg.
A large number of less visible, but equally dramatic costs are associated with losing a top-performing employee:
When a good employee leaves, the rest of their team is often faced with an increased workload. Even if that increase is temporary, it's going to impact their output, their stress levels, and their bandwidth for taking on new tasks.
Paperwork, equipment, and administrative overhead are only a small part of what it costs to train a new employee. Mentoring a new colleague through their first few weeks (or months) is a valuable work for a member of your organization to do, but it comes at a cost of even further-reduced bandwith and output.
Most employees don't 'ramp,' or jump right into their job and start producing at the level of their predecessor, especially if their predecessor was a top performer. It can take months, or even years for a new employee to reach the output level of a previous top performer.
So how do you improve retention?
In many cases, leaders look to salary; however, salary is fungible. In other words, your salary dollars are worth exactly the same amount as your competitors' salary dollars. If you're competing for talent retention on salary alone, companies with more money to throw around will beat you every time. When that happens, you'll need to be ready to pay both the visible and hidden costs of attrition.
Culture, on the other hand, is the opposite of fungible. If your organization's culture is unique and positive, you have something that no other company can offer. According to research conducted by Monster, 86 percent of employees ranked culture, and a company that truly values the well-being of its employees as one of their chief factors in determining an ideal employment situation.
Recognition is the foundation of an extraordinary organizational culture.
Employees need to know the work they do is important, meaningful, and moving their team forward. Peer recognition provides an opportunity to see that — both at a granular, personal level, and at an organizational level.
Visible peer recognition also provides prime examples of exceptional performance for new employees to emulate.
3. Improved recruitment
Culture isn't just a tool for retaining good employees — it's equally important as a recruiting tool. In her article for Undercover Recruiter, OnDeck's SVP of People Operations Lorna Hagen writes:
"A company’s culture is always in the background, either motivating or frustrating employees. Saying you have a great culture and having one might be two different things. And, in the context of recruiting, you can’t hide a bad culture for long. Eventually, people find out."
Having the ability to both attract and retainin the industry's best performers and brightest new stars is a crucial element of improving your company's bottom line.
So is your company culture an asset or a liability?
If your culture is an asset, the best parts of it can be strengthened by peer recognition. It's a natural way to improve cultural alignment, with each contribution, and corresponding piece of recognition exemplifying your organizational values.
If your culture is actively losing candidates and long-standing employees, facilitating a recognition-rich environment is a great way to help turn that trend around.
Bringing it all together
These are just a few ways that peer recogntion can make a positive impact on your company's bottom line. You can increase that impact further with some of the tips we shared in our most recent eBook, Getting the Most from Peer Recognition. Feel free to grab a free copy below!