TheWhitePaper*

Recognition: The ‘Tipping Point’ in Building Employee EngagementA vital step to unlocking the engagement dividend in your organization

ISSUE 3 JUNE 2008

TheWhitePaper*

Every day, Globoforce helps Global 2000 companies

improve employee engagement levels through our

awardwinning, strategic, employee recognition solu-

tions. We don’t just talk about the merits of building

an engagement culture in which each and every em-

ployee is driven to succeed, we make it happen.

We share with you our insights into creating a positive,

engaged environment where your people see best

practices, strong ethics and exceptional performance

being recognized and rewarded consistently, openly

and fairly; an environment that encourages loyalty,

commitment and honesty of effort, resulting in signifi-

cant Return on Investment (ROI).

Are Your Employees Engaged?

Studies show engaged employees stay longer, are more productive, more consci-

entious, and make fewer errors. They are simply prepared to go the extra mile,

daily delivering their extra discretionary effort to your organization. That translates

into improved customer satisfaction, higher sales and a healthy bottom line. En-

gaged employees are also strong word of mouth ambassadors reporting on what

a great place to work your company is (to future employees and customers alike),

but currently, only one in seven employees is fully engaged in the workplace. One

in four is actively disengaged! What about everyone else in the organization? Well,

they fall somewhere in between.

Here is the bad news for organizations that don’t

take engagement seriously:

“Organizations with large numbers of dissatisfied

employees have more absenteeism and lower pro-

ductivity – as well as 51% higher turnover rates than

those with engaged employees.”

- James Harter Chief Scientist, Gallup’s International Management.

Only one in seven employees is fully engaged at his or her workplace.

One in four employees is actively disengaged.

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Employee Engagement Matters

Employee engagement is the latest buzz within organizations today, but what does

it mean for your company?

Well, for starters, “Engagement” is not just another buzz word. It’s a real business

Return on Investment opportunity. Studies show that improved employee engage-

ment leads to demonstrable increases in profits, sales, customer loyalty and above

average productivity.

Employee Engagement = Big ROI Dividend!Companies that utilized an effective employee rec-

ognition program enjoyed a 109% three year me-

dian return to shareholders vs. a 52% return for

the same period for those companies that did not.

Watson Wyatt Study of three million employees, as

quoted in Forbes magazine (2004).

Gallup studies based on surveys of millions of em-

ployees globally, have proven positive engagement

results in:

27% higher profits *

50% higher sales *

50% higher customer loyalty *

38% above average productivity *

In today’s competitive global econ-

omy, getting more discretionary ef-

fort from employees is the key to

business success.

So, what’s the secret to achieving this engagement dividend payout?

In our view, recognition is the “Tipping Point” that

makes the vital difference between employees being

“willing” ones, or truly “engaged” ones.

Recognition is no longer a “nice to have”. It can be the

“glue” within your Engagement Strategy if you aim to:

Be competitive *

Communicate to employees they add value and *

you acknowledge them

Create an engagement culture *

Get the engagement dividend payout *

How Engagement Affects Financial Performance—One-Year Study

12-month change in operating income

Companies with high employee engagement Companies with low employee engagement

12-month net income growth rate

12-month earnings per share growth rate

- Towers Perrin Global Workforce Study 2007-2008

40% 30% 20% 10% 0 -10% -20% -30% -40%

-32.719.2

-3.813.7

-11.227.8

TheWhitePaper*

Building a recognition program within your organi-

zation helps establish this culture of engagement

across your global organization.

Recognition programs help employees see the bigger

picture (a key characteristic of all engaged employees).

They build the trust critical to full engagement and fos-

ter a “thank-you” culture throughout an organization,

motivating employees to take pride in their work.

Effective recognition programs are those that ensure

consistency by assessing behaviors and results deserv-

ing of recognition, and then recommend the appropriate

award level. Organizations should, therefore, implement

a program that provides positive reinforcement for con-

tributions that align with the company’s overall goals.

The “Tipping Point” is RecognitionIn our opinion, recognition is the “tipping point” in

capturing the engagement dividend.

A 15% improvement in levels of engagement corre-

lates with a 2% improvement in operating margin.

In January 2005, a Globoforce client with over 40,000

global employees launched a new, global employee

recognition program. In the space of just 24 months,

this new program has helped increase employee en-

gagement/satisfaction survey scores from the 60%s

to the high 80%s.

“If you take all the evidence, there’s a compelling case

that an organization with engaged people [will] do fina

ncially better than one with disengaged people.”

- Towers Perrin, 2004.

So How Do You Implement Employee Engagement?

What does the research tell us?

Companies with recognition cultures are proven to

succeed at approximately twice the rate of those that

do not. The evidence is built on various studies over

recent years from well respected sources.

What type of results should I expect?

At Globoforce, we firmly believe that the results

you will achieve depend on your organization’s

level of ambition.

When it comes to your program’s success, the phrase

“the tempo starts at the top” really does hold true.

Senior level validation of the program and ambition for

the program’s success is essential. In order to effec-

tively build a culture of engagement within your orga-

nization, your employee recognition program should

be driven by a core, in-house program management

team with senior executive “program champions” that

encourage employees to make recognition a part of

their daily work life and drive program objectives.

Add to this how your recognition program will not

only become a conduit to communicate and explain

company values, but more importantly help put

these values into day to day action, and you will be

well on the road to success.

TheWhitePaper*

Based on the growing mountain of research on the

engagement topic, most observers recommend five

essential ingredients, as “must haves” in an effective

engagement strategy; these are in addition to the ba-

sic foundations of good HR practice.

What Is Your Ambition?

If your ambition is to get that engagement dividend, we recommend that you make Recognition the GLUE in your Engagement Strategy.

These are the ingredients that will differentiate the

mediocre engagement programs from the most ex-

tremely effective programs. What is really remark-

able is how pivotal an effective recognition program

can be in helping you to achieve your goals in each

and every one of these five essential ingredients.

1. Know Your Workforce

Who are they, demographically, culturally—but most

important of all—psychologically. What’s their level of

satisfaction—or engagement? You’ll need a bench-

mark before you get started to know how extensive

your “psychological contract” with your employees

is today. What satisfies and what dissatisfies your

employees? You will likely find non-cash rewards will

be an ideal basis for, both recognition and improving

performance by satisfying the human ego. They ap-

peal to the recipient’s need for Psychic Income™ by

providing your employees with a tangible symbol of

achievement that fulfils their needs.

2. Build Confidence in Your Leadership and Your Corporate Strategy

This one is a must have—there is no substitute for good

leadership and having the right strategy. But where

companies so often let themselves down is by not mak-

ing these real, every day living entities for all employees

to emulate. Publishing documents about your mission

statement or posting it on a wall is not enough. Effective

recognition programs have senior level support and will

be purposely built around the company strategy and

Let’s look at these five essential ingredients of the engagement puzzle:

goals. Now, you’ll have ALL your employees interested!

Building these into a recognition program makes them

tangible and real for everyone, everyday.

The Successful, Innovation-Driven Culture

Support for Risk Taking Can try new things in order to be innovative

% of respondents agreeing with statement

Credible Leadership Senior management has sincere interest in employee well-being

Supervisory Relations Immediate manager encourages new ideas and ways of doing things

Rewarding Innovation Immediate manager recognizes and appreciates good work

Employees perceive company as successful

Employees do not perceive company as successful

- Towers Perrin Global Workforce Study 2007-2008

6946

4726

6444

6849

0 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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3. Inspire

Feeling inspired in your workplace naturally increas-

es your desire to do more, and do better. Recognition

programs offer executives the platform for commu-

nicating their vision. They are also an opportunity to

brand that vision. One of our clients communicates

everyday to employees through their recognition

program about “The Power of YOU”. Successful

programs are those with CEO-level support. Having

a CEO act as a program “champion” validates the

program goals and supports program implementa-

tion, helping your organization to inspire and meet

its engagement goals.

4. Communicate Often

When it comes to engagement, you can never com-

municate too often! We encourage you to think

about your employees as you would your customers.

Launching an engagement and recognition program

is like launching a new product – it requires continu-

ous communications through all stages of its lifecycle

to keep it active and effective. Frequent program com-

munication raises program awareness, increases par-

ticipation, boosts performance, and, most importantly,

helps develop that culture of engagement.

5. Build an Appreciation Culture

Employees will be quick to ask what’s in this for me? For

the company the answer is simple—remember to say

“Thank You” often! Aside from offering fair and merit

based total rewards programs, make sure to mark the

difference between compensation and recognition. If

you only have compensation programs, you simply

will not be saying “Thank You” often enough. Build-

ing a recognition program will ensure everyone must

say “Thanks,” in both formal and informal ways, but

most importantly in a way that boosts your employees

Psychic Income™, not just their monetary income!

Successful programs are those that award frequently,

at all levels and across all geographic regions, for their

genuine contributions to the organization. With more

people receiving awards, the greater the awareness

will be that the company is committed to building a

culture of appreciation.

TheWhitePaper*

Today, Globoforce is working with the biggest and the

best—great companies including P&G, Discovery

Channel, Avnet, Intuit, Dow Chemical and Amgen.

We are helping to foster a culture of engagement

through fast and timely recognition that’s rooted in

their corporate vision and values.

Today’s “Most Admired” Companies Have the Recognition Factor!

An engaged workforce captures the discretionary ef-

fort of every employee, resulting in increased pro-

ductivity and success.

Central to an engagement culture is a global recogni-

tion strategy that rewards teamwork and reinforces

company values and mission.

Do You Have the Recognition Factor?

Is your employee recognition program delivering the

results your company wants?

If your ambition is to capture the engagement divi-

dend, you need to match your recognition strategy

to that ambition. Evidence has shown a profound

impact on people who receive recognition and, like-

wise, a profound impact on the bottom line for the

organization that fosters an engagement culture.

It’s time for you to take control of your recognition

program. With a set of specific program objectives

in mind, you can design a program that recognizes

people in your organization who exhibit high perfor-

mance that positively reinforces personal, business

and functional goals and helps achieve company

success.

Globoforce (North America)Reservoir Corporate Center

144 Turnpike Road, Suite 310, Southborough, MA 01772 USA

Phone: +1 (888) 7-GFORCE (436723) Fax: +1 (508) 357 8964 Email: corporate@globoforce.com

Globoforce (Europe)6 Beckett Way, Park West Business Park, Dublin 12, Ireland.

Phone: +353 1 625 8800 Fax: +353 1 625 8880 Email: corporate@globoforce.com

© 2008, Globoforce Limited. All rights reserved.

About Globoforce

Globoforce is the leading worldwide provider of on-demand strategic reward and recognition solutions for Global 2000 companies. Globo-

force’s flexible and efficient recognition tool can scale from one user to millions of users with ease, offering global companies a powerful and

secure solution to implement and manage their companywide or divisional employee recognition programs. Through a dynamic, easy-to-use,

on-demand technology platform, Globoforce transforms the way companies engage, motivate and empower their workforces across the world.

Co-headquartered in Southborough, Mass., and Dublin, Ireland, Globoforce was recently selected by the Great Place to Work® Institute as one

of the “50 Best Companies to Work For.” Globoforce won a 2007 Process Innovation Award for the creative deployment of Dow Chemical’s

global, on-demand employee recognition program. Globoforce also won Human Resource Executive magazine’s coveted “Top HR Product of

the Year” award in 2004 for its revolutionary on-demand software solution. Some of Globoforce’s world-class customers utilizing this enterprise-

class solution include Amgen, Avnet, Dow Chemical, Intuit, Procter & Gamble and Reuters. www.globoforce.com.