Employee Recognition

Calculating Your Recognition ROI [Webinar Recap]

In today's HR world, it's all about the numbers - proving how your initiatives are making an impact, and ultimately delivering a measurable business ROI. If like many this time of year you're buried in annual planning exercises, you've come to the right place for actionable insights to calculate engagement and employee recognition ROI.

This morning we hosted an interactive webinar with our friends at 15Five to help guide your annual planning efforts. We discussed the value of an engaged workplace and the metrics you should prioritize, and workshopped through two awesome tools for calculating the return on investment you can expect when investing time and resources into employee engagement, and more specifically into meaningful employee recognition.

In the webinar we'll reference two employee engagement and employee recognition ROI calculators: for a full overview of how to use the calculators with mock company examples, download our companion eBook, "Know Your Recognition ROI."

Check out the webinar recap and uncover the true value of your employee recognition and engagement efforts with numbers you can bring straight to the boardroom. Any questions on the methodology or how to apply the learnings to your own plans? Reach out to along the way.

4 insights we discovered about engagement and employee recognition ROI.

1. Engaged employees drive your business.

Looking at data across a variety of sources, we see a strong correlation between companies with highly-engaged workforces and their stellar business results. Engaged employees not only bring a more positive attitude to work helping to build a more warm and welcoming company culture, but also show improvement across productivity, absenteeism, employee turnover rates, and shareholder value key business drivers.

top employee engagement metrics
Engaged employees are more productive, and more likely to stay

  • Companies with high engagement scores have employees who are on average 20 percent more productive.
  • Engaged employees are less likely to overextend vacation and sick days, reducing absenteeism (unearned PTO) by 41 percent.
  • On average, highly engaged companies will experience a 40 percent improvement in annual voluntary turnover.
  • Engaged companies outperform disengaged companies by 5X, measured through shareholder return over a 5-year period

2) How an engaged workforce yields $21.8M for Brand-A.

Taking a look at our first calculator, powered by 15Five, we see how an engaged workforce can positively impact metrics like productivity rates, can reduce absenteeism or unearned PTO, and help to reduce annual voluntary employee turnover rates by plugging in unique workforce data. Download the Engagement ROI Calculator online here to run your own numbers.

calculate employee engagement roi
Our mock company Brand-A has the potential to yield $21.8M annually through improved employee engagement

Brand-A is a growing company with 500 full-time employees, generating on average $100M in annual revenue. Their average employee salary is $65,000. Plugging in these numbers, we see how engaged employees can help increase production and reduce the costs to replace employees who might otherwise leave Brand-A throughout the year. In total, a more engaged workforce has the potential to yield Brand-A a $21.8M economic impact annually, through a mix of increased revenue and reduced operational expenses.

How'd we do the math?

The estimated value comes from the amount of revenue added due to the effects of a more engaged workforce: experts assume a 20 percent increase in employee productivity, plus the money saved from a 41 percent reduction in absenteeism and 40 percent decrease in employee turnover rates.

Employee engagement is driven by a variety of factors, and there is no one-size-fits-all approach. When evaluating tools for improving employee engagement, check out our eBook,"The HR Tech Engagement Stack," a comprehensive review of disruptive startup technologies that help boost employee engagement across the employee lifecycle.

3) How meaningful employee recognition programs deliver a 3X ROI for Brand-A.

In our first example, we saw that Brand-A could expect a $21.8M yield through increased employee engagement efforts, derived from increased productivity, reduced absenteeism and employee turnover rates.

Deloitte shares that when employee recognition is done well, it’s also a benefit to the company. Recognition efforts alone reducing annual voluntary turnover rates by 31%. For this exercise, we’ll specifically look at the savings that meaningful recognition efforts bring as a result of more employees staying on at your company (vs. having to replace them). For Brand-A, this came out to a 3X return on investment:

calculate employee recognition ROI
Brand-A can achieve a ~3X business ROI through meaningful employee rewards and recognition programs

How'd we do the math?

Walking through the employee Recognition ROI Calculator, we see a few new variables in play. The first is Brand-A's estimated employee Recognition Investment, which when planning for success is recommended to be 1-2% of your annual payroll.

Second, we see Deloitte's metric for estimated reduced employee turnover through meaningful employee recognition efforts. When taking into account the estimated costs to replace employees (now averaging 9-months salary, or for Brand-A $48,750 per head), we divide these anticipated replacement fees by the recommended employee recognition investment to uncover a very sizable business ROI. For every one dollar invested into meaningful employee recognition and employee rewards, Brand-A saves 3.

4) Meaningful employee recognition efforts positively impact qualitative engagement metrics.

We learned a lot through the calculator tools, connecting the impact of engaged employees with key quantitative metrics like employee turnover, performance rates and absenteeism.

But what about the more qualitative, or opinion-based findings? At Blueboard, we deliver Post-experience Engagement Surveys to every rewarded employee, aiming to understand how they enjoyed their Blueboard employee reward experience, and how their employee reward specifically shifted engagement sentiment. Through hundreds of survey responses, we've found that Blueboard experiential employee rewards, in particular, have positively changed sentiment around the employee's feeling of value, their motivation rates, and their plans to stay. Employees also agree that Blueboard is a pretty excellent tool for building company culture.

employee recognition program benefits
Blueboard rewards are proven to drive a positive engagement impact

  • Feeling of Appreciation: 97 percent of Blueboard employee reward recipients felt genuinely appreciated for a job well done.
  • Motivation to Perform: 96 percent of Blueboard employee reward recipients felt motivated to perform at the same reward-worthy level or higher after completing their experience.
  • Plans to Stay: 97 percent of Blueboard employee reward recipients believe that Blueboard is a great tool for retaining top talent.
  • Building a More Positive Company Culture: 97 percent of Blueboard employee reward recipients believe Blueboard positively impacts their company culture.

Blueboard: Effective employee recognition programs.

Feeling more able and ready to tackle annual planning? We hope these tools add value, and we're always looking to develop more exciting content to guide your path. Please let us know in the comments below if you found the calculators helpful, and how you leveraged the insights for your own planning meetings. Request a demo today to explore the world of employee recognition.

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