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6 steps for determining the ROI of an employee recognition program

Jul 07, 2015

Written by: John O’Brien
(View Author Bio)

Can you measure ROI on employee recognition Initiatives? YES you can, but you
have to define what is important to measure.

Recognition ROI BI WORLDWIDE Latin America.

Overview

At BI WORLDWIDE, we use the principles of behavioral economics to create the best engagement strategies on the planet. We work with expert academics who advise us on the latest research on human behavior, engagement and decision-making. We use non-cash rewards and recognition to engage and motivate employees and sales teams. Check out our case study library to see how our customized and results-driven solutions have helped clients all over the world.

Follow this six-step process to determine the ROI of an employee recognition program

It’s a question that always comes up when companies are considering starting an employee recognition program or questioning if they should continue implementing a program:

“What’s our return on investment?”

It’s a valid and important question. Depending on the size of your organization, you can be spending an average of $125 to $175 per employee per year on award costs and another $50 to $75 per employee per year on administrative costs. For an organization with 10,000 employees, that’s an investment of up to $2,500,000. Of course, your CEO and CFO will want to know what they are getting for that kind of money.

If you can’t answer the question, your employee recognition budget could be the first thing on the chopping block when budgeting time comes around.

So how do you measure return-on-investment for a rather subjective initiative focused on recognition?

Here’s the six-step process to follow:

  1. Start with defining your recognition objectives.

Recognition can be viewed simply as a “warm fuzzy” that is impossible to measure if you don’t first assign specific objectives for the program. In order to create a meaningful ROI, first determine what the real business need is for instituting a program. Common needs include:

• Improving morale
• Increasing productivity
• Improving absenteeism
• Reducing turn-over
• Reducing rework
• Reducing costs
• Reducing customer service complaints

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John O’Brien

Vice President
Employee Performance Group

As Vice President of BI WORLDWIDE’s Employee Performance Group, John O’Brien’s primary focus is to develop employee engagement strategies and solutions that change the behaviors of employees to align with our customers’ business objectives. An expert in Employee Recognition Strategy, he educates HR professionals around the world on how to best engage their employees through employee engagement strategies, solutions and best practices.