Editor note: This article series was created from “The Rewards of Selling Corporate Recognition Awards,” a presentation developed by Larry Maloney, VP of Sales and Marketing for R.S. Owens, Chicago IL. All Photos and illustrations courtesy of R.S. Owens, except where noted otherwise.
There’s no getting around it and certainly no sense in ignoring the fact that the country is in a recession. Most of the news reports you hear or read about are bleak, especially when it comes to how the current economic condition is affecting or will affect businesses both large and small. That has the potential to be a double-edged sword for some award dealers (small businesses) who count on corporate clients (typically large businesses) for a large part of their revenues. However, as you will soon see from this new article series, the future doesn’t have to look so bleak.
Needless to say, I went running down the street to the nearest trophy shop. I went inside and found a bronze hand with a dart in it. I thought it was the coolest looking trophy I’d ever seen, not to mention I thought it was quite appropriate for a forecasting award since we all know that forecasting the economy or sales is a lot like throwing a dart at a dart board—you do the best job you can but it typically involves a combination of luck and skill. Anyway, the award was a big hit and I’ve never forgotten that experience.
Now that I’ve been in the industry for a while and as I’ve researched the topic of recognition, I have come across a lot of ideas and concepts which I believe can help retailers find different ways to sell recognition awards and recognition award programs. The key to making these ideas and concepts work, however, is for retailers to understand the value of recognition in such a way that they can communicate these ideas to their clients. If they can use this information effectively then it could serve as a powerful sales tool when it comes to selling corporate recognition awards.
The Power of Recognition
I did an interview recently with a reporter from the Wall Street Journal who was inquiring about the presentation I was about to give on this topic of selling corporate awards. Basically the reporter’s view was: “Aren’t you just preaching to the choir since everyone you will be talking to already knows about the importance of awards?”
While it may be true that everyone who attended that presentation and everyone who is reading this article may already believe awards and recognition are important, the information here is different. It’s different because we now have a collection of studies and facts that support that belief. We now have facts and information that retailers can take to their corporate clients that actually proves successful recognition programs lead to improved corporate performance.
Before we get into some of the studies that provide us with the factual data we can use to our benefit, I would like to discuss some key conclusions about corporate recognition. We all know that awards are a critical component of any corporate recognition program, and obviously they are the part most award dealers focus on. However, it’s also important to recognize that from a business perspective, they are not the only part. It takes a culture of recognition within an organization to improve business performance. We will discuss this concept in more detail later.
Another conclusion I’ve found is that there tends to be a large disconnect in the way recognition programs are viewed. Based on much of the research I’ve done, I’ve found that there are many people within an organization who view these programs differently. For example, there is a very big disconnect between how managers view the recognition programs they put in place and how employees see those programs. We will address how to resolve this issue later in this series.
A third conclusion I’d like to bring to your attention is that corporate recognition has three main components. The first is day-to-day recognition and the second is informal recognition. The third component is formal recognition, which is what most of us in the award industry is most familiar with in regard to the award presentations. We will examine each of these components more closely in the next article of this series. The main thing I would like to stress here is that recognition is not just about giving an award. Corporate recognition is a multitiered, very complex structure.
If there is one thing that I would like everyone to take away from this article series it is this: recognition improves corporate performance. It is proven—it’s not speculation, it’s not guesswork, it’s not conjecture, it’s not anecdotal—that it has a bottom-line impact!
There are a few studies I would like to bring to your attention which help prove this statement, all of which can be seen in more detail in two great books that I highly recommend. The first is The Carrot Principle, 2007, Gostick and Elton, which shows beyond a doubt that corporate recognition produces increases in operating results regardless of what measure you are looking at. The second book is The WOW! Workplace which, among other things, shows how to put together a powerhouse recognition culture.
Based on the studies we will look at here, it’s true that most companies do have corporate recognition programs. Most of us already knew this to be true. It’s also true that about 75 percent say they have a formal recognition program in place (Fig. 1), and that the top five reasons for implementing such programs are as follows (Fig. 2):
1. To increase employee morale
2. To create a positive work environment
3. To create a feeling of belonging
4. To retain people/top performers
5. To encourage loyalty
When companies were asked what types of performance they recognize within their programs, I expected sales to be at the top of the list, but as you will see from Figure 3, that’s definitely not the case. One of the studies that I think offers retailers the best ammunition when it comes to sales, however, is that which was conducted by the Jackson Organization. This was a large-scale study which asked employees from all different types and sizes of organizations how well their employers recognized excellence. The responses were divided evenly into four separate groups, from those that did a great job motivating and recognizing employees to those that did the worst.
This study compared the success of a company’s recognition program (based on their employees’ perceptions) to their financial performance. First, it looked at a company’s return on equity, which is the fiscal year earnings divided by the average shareholder equity, and it correlated this information to the company’s recognition program.
Very interestingly, the study found that the companies in the bottom group—those who had the worst recognition programs or no programs at all—saw a 2.4 percent return on equity. The companies in the top group —those with the most successful recognition programs in place—averaged 8.7 percent return on equity or about three times higher than the bottom group (Fig. 4).
A second metric used in the study was to look at a company’s return on assets, which is the fiscal year earnings divided by total assets. It’s not surprising to learn that they found very similar trends. Organizations with the worst or no recognition programs averaged 1.7 percent return on assets while those with the best programs saw an average of 6.1 percent, or almost five times greater than the bottom group (Fig. 5).
A third measure used in this study looked at a company’s operating margin, which is simply income compared to sales. Once again, the trend continues as those companies with the most successful recognition programs had operating margins that were almost six times higher than companies with the worst or with no recognition programs (Fig. 6).
As you can see from the information presented here, this study supports what most award dealers and suppliers already believed. To quote the person who conducted the study, Karen Enderson, PhD, The Jackson Organization:
“Up to this study, the link between recognition and financial performance was largely anecdotal. Recognition was considered to be some emotional afterthought, while those who believed that effective recognition would drive results had no hard data to prove it. This study took recognition from myth to reality…to a business essential.”
Another important study I would like to bring to your attention is one conducted by the Gallup Organization (Gallup Great Workplace Award) which surveyed five million employees and found that an increase in recognition leads to lower turnover rates, higher customer loyalty and satisfaction and higher overall productivity.
One more study I want to cite is the Watson Wyatt Rewards Survey. Once again, this study uses a very large sample size of over 600 employers with 3.5 million employees, and shows that the employee turnover rate for companies with a clear recognition strategy in place was 13 percent lower compared to those organizations without such strategies or programs.
So why do I think these studies are so important? Because we now know that the power of awards and recognition is no longer just anecdotal. We now have a lot of hard facts and data that show that recognition can help drive solid business results, and this is really the first time this type of information has ever existed. Now if that isn’t a powerful selling tool for corporate recognition awards and programs then I don’t know what is.
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