Companies spend significant amounts on recognition programs for their employees, but are these recognition programs still relevant and should they be a source for cost savings in economically hard times?

True or False? Recognition programs motivate employees
Recognition programs differ from one company to another. Salary increases, short term and long term incentive programs, bonuses and non-financial benefits give companies ample freedom to decide on their program of choice to motivate their employees. The main driver of all recognition programs is increased motivation to achieve great performance in whichever goals and targets a company is setting itself and recognition programs have often become an organisation's key differentiator in the hunt for talent.

However, research on Recognition programs by Globoforce reveals that most recognition programs do not contribute to corporate strategy.
In this study, 45% of respondents believe that their recognition programs do not drive bottom-line results and even worse, 38% of those surveyed say that their organisations don’t measure the results of their recognition programs.

Especially under scrutiny are currently Executive recognition programs, where executives are receiving bonuses whilst their companies go ‘downhill’. Whilst there are many voices calling to close the gap between top performing executives and ordinary workers, Richard Beatty, who teaches at Rutgers University says that this approach is ‘strategic suicide’. Stating that ”Once the good times reappear, disenchanted top players will bolt for better treatment and more pay. Getting rid of rewards and bonuses is managerial insanity.“

Beatty is not alone. Jon Williams, partner at PricewaterhouseCoopers, stresses that ”voluntary turnover will drop during any period of economic slowing or uncertainty – but not for the top 10 per cent of talent, who will continue to be just as mobile as ever.“

The trick in this economic climate is for HR management to be smart about achieving motivation with a reduced recognition budget. Ken Gilbert from Mercer agrees that "HR can add value by making sure that budgets available for bonuses and pay increases are spent where they will have the most impact".

Thinking about your top performers
In order to spend recognition money wisely, it would come in handy to know where the “talent“ is. There are many ways of measuring and categorising your talent, but few use hard facts that go beyond training rosters and skills surveys.

Justyn Sturrock from IBM points to analytics as a key tool in differentiating where talent is. “Workforce analytics data is key here. This is not basic HR data. HR must understand the peaks and troughs of workfoce demand, ...what skills are available in the business, where talent is located and how it can be rapidly deployed.“

Master Burnett from the HR Consultancy Dr John SullivanAssociates, estimates that only 1-2% of large corporations use analytics to evaluate their workforces.

The message here is to sit down and think about your top performers. Who they are, where they should be and most importantly, how not to lose them. One good indicator for the quality of your recognition programs would be if you kept your regrettable losses at a low level.