Before dedicating budget, business leaders always ask themselves, “Will it produce a satisfactory return on investment (ROI)?” When it comes to employee recognition, the ROI quickly becomes clear. Whether from directly related metrics like improved retention rates or indirectly related benefits such as being named a best place to work, well designed employee recognition programmes consistently pay off.

For HR, staff turnover is a budget-killer, particularly when considering that the cost of replacing an employee ranges from 50 percent to 150 percent of a year’s salary. If a company has 10,000 employees with annual salaries ranging between £30,000 and £150,000, and an 11 percent turnover rate, it could spend more than £41 million in turnover costs. Even if a recognition programme reduced turnover by just 20 percent, it would more than pay for itself.

Building an employer brand

Fifteen years ago only a few visionaries in human resources used the term ‘employer brand’. Now, it’s commonly understood as a critical part of recruiting. In a world where candidates can receive multiple job opportunities, employers rely more and more on a carefully crafted brand message to distinguish them from their competitors. A good example of the power of a well-known employer brand is hearing that “everybody in tech wants to work at Google.”

Brand is not just about salary, company size, success, or culture—it’s about the combination of all four. Branding pays off in recruiting because it means the right people are likely to be attracted to the company, which allows recruiters to hire the best employees. This drives success, boosts reputation, and attracts even more qualified candidates.

Employer brands are built on three promises: tangible attributes (pay and location), intangible attributes (prestige and company culture), and reasons to believe (such as being named a ‘best company to work for’). Social recognition, which relies on recognition coming from all employees, rather than just from line managers, contributes all of these promises.

A reward that arises as a result of a social recognition programme – whether it’s a voucher or a carefully chosen item – provides employees with a physical gift that holds far greater meaning than a traditional cash bonus.  A social recognition programme reinforces workplace culture by demonstrating and celebrating those who reflect the company’s values, creating a more united organisation. People often leave jobs because of a lack of recognition, so there’s a significant intangible benefit to a company brand if a potential employee knows that they will be appreciated for a job well done.

By making sure people feel valued, social recognition cultivates a feeling of goodwill and camaraderie among employees, feelings that are then often made public in how they talk about the company through social media, word of mouth or company awards. Indeed, one employee’s enthusiastic thumbs-up or a third-party award for being a superior place to work is worth thousands of words of marketing copy.

You can quantify the benefit of becoming a coveted employer brand over time through improvements in standard recruiting data, such as time to hire, the number of qualified applicants, and quality of hire. Combined with the savings of improved turnover rate, these data points clearly demonstrate the business case for social recognition. The best candidates don’t just take a job for money; they want to do great work in a place that appreciates them.

Data analytics and ROI

The information revealed by a social recognition programme can also be of great value to a company, and can have a significant impact on improving business processes that maximise productivity in the workplace.

Today, sophisticated data analytics are bringing employee management into a new age. The data supplied by social recognition creates a rich, real-time narrative of company life. By capturing and analysing individual acts of recognition, a social recognition practice can determine who the hidden influencers are, who has strong potential and who isn’t pulling their weight. Because social recognition uncovers which values-based behaviours are lacking and which are abundant, you might think of it as a ‘brain scan’ of company culture.

In a strategically driven social recognition programme, a strong correlation between recognition and company values is crucial. Executives who discover hidden strengths from their dashboard data can then capitalise on those strengths. As the name implies, dashboards indicate performance across many systems and dimensions, just like the dashboard of a car. The most interesting thing happens when you go beyond the metaphor and examine performance over time, as social recognition enables leaders — and employees — to direct and influence company culture.

Ultimately, the ROI case for implementing social recognition in a strategic framework includes both returns you can quantify immediately as well as those realized over the long-term. Immediately quantifiable savings include lowered staff turnover, while over a longer period, businesses will begin to notice the benefits of an increasingly loyal workforce. By implementing social recognition, businesses can create a more unified, engaged workforce—­ and one that is more motivated, productive, and in line with the company’s corporate values.





Derek is the Vice President of Client Strategy and Consulting at Globoforce, where he leads the company’s Insight consulting division. As a renowned speaker, author of an acclaimed blog, Recognize This!, and the co-author of Winning with a Culture of Recognition , he teaches HR leaders how to use recognition to proactively manage company culture.