When you introduce an employee rewards and recognition programme, you'll see a broad range of ROI, from increased engagement to higher revenue.
An employee reward and recognition programme shouldn't just be something that's 'nice to have'. As with any business decision, you need to be able to measure the return on investment (ROI) you're garnering from any recognition programme you have in place.
But what sort of ROI can you expect to see from an employee rewards and recognition programme, and how can you measure it?
1) Increased engagement and productivity
Implementing a rewards and recognition programme should lead to a clear increase in employee engagement. In fact, Deloitte research shows that employee engagement, productivity and performance are 14 per cent higher than in organisations without recognition.
The most common way to measure engagement is through an employee engagement survey. This will tell you exactly how happy your team are at work, and you can include specific questions in it about your incentive strategy and whether it's having an impact.
You can also measure productivity and performance through linking your rewards to KPIs. You can easily see if your recognition programme is working by analysing whether employees are hitting the incentivised KPIs more frequently since putting the programme in place.
2) Better margins
A 15 per cent improvement in engagement can result in a 2 per cent increase in margins.
If employee engagement, productivity and performance is higher, this will normally lead to increased revenue. For example, the same Deloitte study found that a 15 per cent improvement in engagement can result in a 2 per cent increase in margins.
Have a look at your sales figures and see which ones are directly linked to the KPIs you're incentivising to find out how much your rewards programme is making your company in increased sales.
3) Improved retention
Another type of ROI you'll get from a rewards and recognition programme is improved retention. Organisations with employee recognition programmes have 23.4 per cent lower turnover than those without, according to the Society of Human Resource Management.
Having a high turnover can have a huge impact on your company's bottom line - the same source shows that every time a business replaces a salaried employee, it costs the company between six and nine months' salary on average. This is because of the amount of time it takes to train the new employee.
4) Better brand perception
When you have a successful employee rewards and recognition programme in place, this will help to improve employees' perceptions of your business. They will then go out into their communities and talk about your workplace in a positive light, meaning potential customers will have a better perception of your brand. This could easily translate into higher sales as more consumers buy from you.
What's important is that you choose a rewards provider that makes analytics and reports easy.
How to measure ROI
There are several ways you can measure these elements, from creating employee engagement to looking at sales and revenue figures. What's important is that you choose a rewards provider that makes analytics and reports easy.
At Power2Motivate UK, we have in-built reporting functions that mean you can measure a huge range of things - not just ROI - with a few clicks of the mouse. Our three-click reporting system will provide reports on how many people are logging into the programme, and how many awards are being issued per department, as well as detailed engagement data.
For more information on creating a rewards and recognition programme with Power2Motivate, contact the team today or request a demo.