Naomi Simson: Recognition motivates more than pay

The recent American Express Global Customer Service Barometer found that Australians will pay more – in fact up to 12 per cent more – if they received better service. Apparently we are among the unhappiest customers in the world.

I find this interesting given that Gallup has been telling us for years that we have the second most disengaged workforce in the world – after the French.

This is not rocket science. It is so simple to improve. If people are happy at work they will deliver happy service. And a big step towards happy employees is simply to recognise their contribution.

The 2012 RedBalloon Reward and Recognition Survey, which studied more than 4000 businesses across Australia and New Zealand to gauge the current trends, attitudes and behaviours around employee reward and recognition programs, discovered that more than three-quarters (77 per cent) of employees would consider leaving their organisation if they weren’t recognised for their contribution and one in four are seeking a new job or intend to in the next three months.

Managers receive most of the criticism, with 44 per cent rated “very poor”, “poor” or just “satisfactory” at delivering praise; three-quarters of employees are starved of recognition, receiving it only monthly, quarterly or once a year; and 11 per cent receiving no praise at all.

These are worrying findings given a 25-year-long Gallup study – based on interviews with 12 million workers at 7000 large companies – also found that the relationship with a manager largely determines the length of an employee’s stay.

Retention is one of the biggest issues facing businesses right now and with the cost to replace someone estimated at 150 per cent of their salary, simple maths demonstrates the return on investment of a successful reward and recognition program.

In tough economic times, it’s your people that will get you through, and if businesses invest in and show their employees appreciation now, they’ll stay for the long term.

Similarly, it’s unrealistic for employees to expect significant pay raises in the current economic climate – but a well thought-out and effective reward and recognition program can help keep your employees feeling valued and motivated for a fraction of the cost of increased pay packets.

Businesses need to encourage and empower managers to unleash the power of praise and managers must invest the time to get to know their people and what inspires and drives them – how else can they expect to build trust and retain employees over the long term? The report also shows that rewards alone will not give you happier employees.

Almost half (46 per cent) of respondents would opt for recognition over a reward when being thanked; 50 per cent want recognition and something physical, such as an experience, a gift voucher or time off from the office; and only 4 per cent of employees would be happy with a reward alone.

The role of managers in this process is key, with 51 per cent of respondents seeking acknowledgment from their direct manager, 35 per cent from peers and colleagues, and only 14 per cent from the chief executive.

Recognition is most important to Generation Y, with 86 per cent prepared to leave an organisation due to lack of recognition, compared with 77 per cent of Generation X and 63 per cent of baby boomers.

Organisations cannot afford to pay just lip service either – any acknowledgement needs to be authentic, personal and relevant to a specific activity. People need to know what they did specifically that contributed to a business result.

The RedBalloon study highlighted that 42 per cent of businesses do not have a reward and recognition program in place, which does not bode well for those who are considering leaving for lack of thanks.

Just as worrying are the 57 per cent of companies providing a substandard reward and recognition experience, as employees are five times more likely to leave their organisation if their business provides a poor program.

I call this the “recognition retention multiplier”, and it represents a big opportunity for businesses to pull up their socks.

Next week: Virgin Group founder Richard Branson

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