The Awards Pro: Selling Corporate Awards Part 2: Why Companies Need Recognition

Copyright © 2012 by Davis Multimedia, Int'l. All Rights Reserved.
As Printed in April 2012, Volume 37, No. 10 of The Engravers Journal
The black crystal Phantom awards from Crystal D, St. Paul, MN, feature different accents for different award occasions.

   Most of us in the recognition & identification industry have known for some time that recognition is important as a tool for motivating people to do their best and that awards are the cornerstone to reinforce that message. Most managers and executives in the corporate world are aware of this as well, but that doesn’t mean they’re doing a good job of using this information to their best advantage.
   This article is a continuation of EJ’s “The Awards Pro” series on selling corporate recognition programs and the products used as their foundation. As you may recall, we kicked off the series with part one (March 2012) by discussing the power of recognition. We talked about how successful recognition programs lead to better financial performance and more engaged and motivated employees. We presented various recently compiled studies and statistics that not only support this claim but prove beyond a doubt that there is a definite link between the effective use of recognition and business success.
   Why does EJ feel this information is so important to our recognition dealer readers that we’ve decided to do a multi-part series on the topic? Quite simply, if you sell awards, you can use this information as a powerful sales tool to help you grow your business! How? When you realize that by becoming a “recognition consultant” to your corporate customers, you elevate your business above the crowd of companies whose sole focus is the sale of award products in a crowded marketplace. You see, once corporations are convinced of the need for recognition then it is only a matter of time before more opportunities become available to you to sell them the awards they need to attain their goals!
   In this article, part 2 of the series, we will discuss why companies need good recognition programs. We’ll also talk about some of the consequences that occur when businesses and organizations are not doing a good job of recognizing their employees.
   If you were to poll American workers, about 80 percent would say that it’s extremely or very important to be recognized for doing a good job in the workplace. Recognition is a very basic need. It answers a universal need to matter, and everyone wants to matter to the people they live and work with.

This American eagle sculpture from Marco Awards Group, South Windsor, CT, is designed to recognize outstanding achievement in the corporate awards market.

   If you’ve ever taken a psychology class in high school or college then you’ve probably heard of Maslow’s hierarchy of needs, which is a theory of motivation proposed by Abraham Maslow in 1943. It’s a very interesting concept that is usually depicted by a diagram or pyramid that shows five different levels of human needs, with the most basic needs represented at the bottom of the pyramid. This helps us to understand what drives human behavior (Fig. 1).
   Basically, this theory states that there are some very basic needs that all humans require for subsistence such as food, water, air, sleep, etc. These basic needs are essential to life and therefore are considered the base of the pyramid. According to Maslow’s theory, people tend to take care of the needs at the lower level before focusing their attention on the higher levels shown in the pyramid.
   Other needs we require which go beyond subsistence include things like security, love, esteem and finally, at the highest level of the hierarchy, self-actualization. This is a fancy way of saying that people taking the step from the fourth to the fifth level have reached their potential and they are where they want to be in life.
   I believe there’s a corporate motivation analogy to Maslow’s hierarchy and we can argue that many of these same needs exist in the workplace for employees. For example, for our most basic needs of paying the bills, we all need a paycheck. After that, we need benefits to cover health issues. Next, we need a positive work experience which is going to give us some level of satisfaction. However, recognition is at the top of the hierarchy because this is what creates true engagements with employees.
   Recognition is what will help companies achieve their corporate identity, or self-actualization, which really means being able to achieve their full potential as an organization. And if you think about it, the only way an organization can reach its full potential is if its employees are going the extra mile for the company and reaching their own individual potential.

Figure 1: Maslow’s Hierarchy of needs (original five-stage model).

   The fact of the matter is that very few companies are realizing their full potential because their employees are not going the extra mile for the companies they work for. Why aren’t employees motivated to do their best work? If you look at some of the studies we’re about to present, you’ll see that a big reason is because a large majority of American workers do not feel truly appreciated.
   Despite the proven results that recognition drives strong performance and despite the fact that most managers claim they’re doing a good job in this area, American workers say otherwise (Fig. 2). In fact, only 52 percent of employees say they feel valued on the job (Stress in the Workplace survey 2011, APA/Harrris Interactive). Other studies have found similar results: that lack of appreciation is the number one reason why employees leave an organization (Gostick and Elton, The Carrot Principle) and three out of four employees say they are not loyal to their current employer (Society for Human Resources).
   Somewhere along the line there is a great disconnect between what managers believe will motivate employees and what employees say is important to them. For example, managers always seem to think that what works best to motivate people are good wages and salaries. However, we’re not talking about meeting the most basic needs of being able to pay the bills here. We’re talking about motivation, that characteristic that really makes us want to come to work and go the extra mile to do a good job. Again, if you ask employees they will tell you that a paycheck is nice, and even essential for their survival, but what motivates them is feeling appreciated and informed.

Classic Medallics, Inc., Mount Vernon, NY, offers awards such as this loving cup that can be used for perpetual award programs.

   So, to sum things up, people want recognition that a lot of managers aren’t giving them and, as a result, we have an American workforce that does not feel recognized and appreciated. All workers (not just Americans) want and need recognition (Fig. 3). In fact, 80 percent of employees in one poll feel it is extremely, or very, important to be recognized when you do good work (Nelson, 1001 Ways to Reward Employees, 2006).
   I can still vividly recall the day years ago when I received a phone call from my boss. Instantly I thought, “Oh no, what did I do now?” He went on to say that he was just calling to tell me that I had done a great job on a project I had just completed. Although this happened years ago, I have never forgotten it. It was something as little as a phone call, but it made a huge impression on me and is something I will always remember.
   Back to our studies, even top corporate executives are aware that there’s a disconnect between their managers and employees when it comes to recognition. For example, when asked how many of their managers actively praise employees, those polled guessed that only 10-20 percent do so. In the meantime, the majority of CEOs and senior managers site that retention of key employees is the most important factor for their success. Again, this information shows a clear disconnect between what should be happening in the workplace and what really is happening in terms of employee recognition.
Figure 2

Figure 3

Figure 4


   What we’re trying to do here is piece together a story, through data and statistics, which shows that the corporate world needs recognition programs. It’s proven that these programs can build businesses. It’s also proven that there can be severe consequences to businesses and organizations and to the economy as a whole, if employees are not feeling recognized and appreciated.
   One of the biggest burdens on businesses is employee turnover (Fig. 4). It is an enormous hidden expense that negatively effects the global economy. Replacing an employee who has left his or her job can cost a company anywhere from 100-250 percent of the employee’s annual salary and, in fact, costs the U.S. economy an estimated $5 trillion each year.
   In today’s workplace, two out of three employees feel no loyalty towards their current employer. They feel no obligation to remain at their current jobs, and this is a real problem that is costing businesses billions of dollars. To hear it from the lips of an executive: “For every percentage point we can reduce turnover, that’s about $5 million added to our bottom line. We spend about a half million dollars on employee recognition, and we are confident that we’re getting at least 10 times return on that (David Siegel, Avis CEO).”
   I would like to introduce a brief case study that further shows a link between recognition and retention. The Heritage Medical Association had an abyssmal turnover rate of 50 percent, if you can believe that. Company management realized it was a major problem and they implemented a strategic plan to reduce its turnover rate. The organization put a recognition program in place that began recognizing employees for their tenure. Now, this didn’t happen over night, but after three years the association saw its turnover rate reduced from 50 percent to 20 percent (The Carrot Principle). It’s clear that recognition made a remarkable change for this organization in the area of employee retention.

Johnson Plastics, Minneapolis, MN, offers a variety of materials and supplies for creating high-quality corporate award plaques.



   So, workers want and need recognition, yet they’re not feeling recognized or appreciated by their employers. This is what we would call a traditional need gap. There’s a need for recognition and there’s a gap because people aren’t feeling as though they’re getting it, which is creating a major expense both to businesses and to the economy in general.
   As mentioned earlier, recognition can be a huge motivator and can lead to many positive things. I’d like to move beyond recognition for a moment and talk about the term “engaged employees.” We briefly touched on this term earlier, which has become sort of a corporate buzzword over the last couple years. If you’ve ever called a customer service department where the person on the other end of the phone is very enthusiastic and helpful that person likely would be considered an engaged employee. These people make you want to talk to them and, sometimes, even though you may be calling with a problem, their positive attitude can immediately put you into a good mood. There’s just something very real and positive about an engaged employee.


Figure 5

Figure 6

Figure 7

   Recognition is great because it can motivate, reward and praise, but something else that is very important and tied to successful business results is that recognition can create “engaged” employees (Fig. 5). First of all, I’d like to make a distinction between satisfied employees and engaged employees. Satisfied employees are those who are happy with both their pay and their work. They’re happy with the status quo, but they’re not necessarily going to offer new ideas or implement change. Engaged employees, on the other hand, are those who are really into their jobs, and they’re willing to do whatever it takes to help the company succeed on a variety of fronts.
   Coming back to some statistics from The Carrot Principle, we know that companies with “high employee satisfaction” levels experience a 20 percent higher customer service rating. But more important, those with “engaged employees” see a 22 percent higher customer service rating than those organizations without satisfied or engaged employees (Fig. 6). Obviously, the goal of any organization should be to find a balance between satisfied and engaged employees because these are the people who are really going to make a difference in the company.
   The employees with low levels of engagement and low levels of satisfaction are typically the complainers. They are, in some ways, a threat to the company because they tend to be vocal in their criticisms and that takes up a lot of management time and brings everybody down. Next, you have people who are satisfied with their jobs but don’t really support or care about the company’s goals. They’re satisfied with the status quo and just happy to get their paycheck, but they’re not willing to go out of their way to make sure that the company succeeds.


 


   Another group of employees are the people with low levels of satisfaction but who really want the company to succeed. These people are engaged, but they’re just not satisfied with the way things are and they’re pessimistic. Many of these employees are, perhaps, the ones suffering from lack of recognition. They are giving their all but they have low morale and are just not happy, which means they present a high risk of turnover.
   Finally, as mentioned earlier, you have the group of employees that I call your ambassadors. These people have a lot of passion for the company. They’re satisfied with what they do, they’re engaged and they love talking to customers, adding value to the organization and trying new things. These are the people who really make a difference because they’re committed to success. Hopefully, these are the employees who are going to stay. These are your “A” players; the ones that you want to keep in play and that the company does not want to lose.
   The idea occurred to me that this might be something that recognition professionals could take to their corporate clients and use during their sales pitch. You could use the chart like the one in Figure 7 and have your clients rank their employees, putting their names into these boxes which represent categories of workers. Have them determine which employees are their star players and which ones could leave tomorrow with little or no impact on the company. Then ask the prospective customers how they would feel if they were to lose their star players.


Crystal plaques make useful and attractive corporate awards. Photo courtesy of Pella Engraving Co., Pella, IA.


   As everyone knows, we’re not in the world’s best economy right now. Employers might appear to have the upper hand since staffers may not have the same kind of job flexibility that they once had, but that’s not going to last forever. You can have a lot of dissatisfaction build up over time so I think this is a great time to present this concept to your clients. They won’t want to see Susan or Craig or Joe (their star players) leave the organization because they know what kind of impact that would have on the business.
   So, to review where we’re at so far, we know from part 1 of this article series that recognition offers businesses and organizations proven positive results. They experience better operating margins, better return on assets, better return on equity, etc. Not only that but as we’ve just discussed here, employee turnover is a major concern for corporations, costing companies and the overall economy huge amounts of money.
   As we’ve seen, the biggest reason employees leave their jobs is because they don’t feel recognized or appreciated, which serves as a great recognition selling tool for anyone dealing with corporate clients who are concerned about retention, and who isn’t? Recognition is proven to increase employee satisfaction and engagement which, in turn, leads to higher customer service ratings for businesses. I can’t imagine that there’s any executive or manager in the corporate sector who wouldn’t want to hear this story.
   Stay tuned for part 3 of this article series where we will discuss the key components of a successful recognition program and how companies can build a culture of recognition.


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