Budgeting for Recognition Toolkit, Section 3: Budget, Measure, Analyze

The IRF’s Recognition Program Budget Calculator

This tool offers general budgeting guidelines for broad-based employee recognition programs apart from your budget for incentive & reward programs. While it does not provide precise estimates, it offers budget guidelines based on industry averages and best practices.

Click on the calculator link below, then enter your number of employees and target annual award. The calculator will then provide recommended estimates for such key areas as professional design, award budget, technology, communications, administration events, and training. It will also calculate the suggested total spend per employee and average award per employee.

Tracking and Measuring the Success of Your Employee Recognition Program

The overarching reason for measuring the success of your employee recognition program is to inform your continuous efforts at improving it. Without measures and data, you can only act on hunches.

Recognition programs that are assessed based on tangible, financial objectives as well as intangible, non-financial objectives result in improvements at both levels (Banker, Potter, & Srinivasan, 2000). Nonetheless, researchers find that one of the great weaknesses of most of these programs resides exactly at this level – the lack of success indicators, measurable objectives and measured outcomes. They advise that measurement is “a key area of development of employee motivation, recognition, and award programs if they are to generate the senior management support they deserve” (Peltier, Schultz, & Block, 2005, p.68).

First, look at your program objectives – the goals you articulated when you documented the reasons for your employee recognition program (see Design Factors, Item 1). For example, you might have targeted higher employee engagement, lower attrition, broader/greater/more frequent use of recognition, or improvement to the employee experience itself, as your key goal(s). Increasingly, firms track ratings on Indeed or GlassDoor to measure “employee experience.”

Your first objective in measurement should be to assess progress against your key goal(s) so that you know where to focus when working to improve the program.

Of course, you can’t simply look at employee engagement scores or attrition rates before and after the implementation of your recognition program and then attribute any and all gains to the program. Other factors might be at play, especially since months, or even a year or more may have passed between engagement surveys.

Some important measures of the financial returns and impact of your recognition program can be estimated using credible techniques such as the ROI Methodology™ and/or change point analysis (see Appendix A). Insights into the effectiveness of your program can be gained through gauging the results of engagement and satisfaction surveys over time. You can also use exit interviews to gather feedback on your recognition program. Other measures, such as percentage of employees registered in the recognition program (your Activation Rate) give you a means to track program uptake, and prove simple to track.

Depending on your program goals, consider the following measures and metrics to gauge your success and progress:

•  Activation Rate: Number of employees who have registered for the program
• Active Users (Monthly)
• Recognition per month (number of instances of recognition)
  • Leaders, managers, and supervisors
  • Peers
• Team vs Individual Recognition
• Top Recognizers
• Most Recognized (Teams/Individuals)
• Points awarded
• Points Redeemed (and, at the aggregate, what points are redeemed for)
• Reasons for recognition
• Recognition type (purely intangible vs. token tangible reward)
• Budget drawdown
• Changes in employee engagement: Consider tracking this by employee type
• Changes in employee retention: Consider tracking this by employee type/demographic
• Changes in employee absenteeism
• Performance improvements: Revenues, customer growth, etc.
• Customer satisfaction
• Net Promoter Score
• Improvements in safety, health, and wellness
• GlassDoor/Indeed ratings and comments

Consider using surveys, exit interviews, and focus groups to track:

• The perceived fairness of the program
• The perceived impact/meaningfulness of the program
• Communications adequacy (frequency, clarity)
• Orientation/Training impact and need
• Ideas for improvement