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Determining the ROI of Employee Recognition

Jan 15, 2015

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

One question 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?”

Determine ROI on Employee Recognition 

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 that 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. 

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BI WORLDWIDE

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 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.