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Why Recognition Still Matters

Even in a Soft Economy, Employee Retention and Productivity Programs Remain Important

New York, NY. August 18, 2011 — In the midst of an economy with very little growth, and with U.S. unemployment levels hovering around nine percent, all business expenses continue to attract scrutiny from the cost-cutting hawks. And that leaves business leaders questioning if employee retention still matters.

According to a new white paper released by New York–based Madison Performance Group, the worldwide leader in developing employee engagement and incentive marketing programs for Fortune 1000 corporations that include CA, Citigroup, Kawasaki and Siemens—the answer is a resounding YES!

The pressure to do more with less continues to guide corporate thinking, and executives are wondering if programs designed to strengthen an employee’s commitment and loyalty still make sense in an economy that has an abundance of idle labor.

Engaged employees—those who are emotionally and intellectually committed to what they do, and who they do it for—are proven to be more productive than those who are not. But employee productivity has not wavered in years. In fact, the average output per employee has increased. This has occurred while the aggregate national income level for workers has been in steady decline for quite some time. Essentially, employees are doing more with less and for less.

“Most employees feel overworked and underappreciated,” says Mike Ryan, Senior Vice President of Marketing & Client Strategy for Madison Performance Group. “They are productive now because they have to be, not because they want to be, and they are planning to leave their present employers when the opportunity presents itself. The surge of productivity companies have enjoyed will not go on forever. Businesses that ignore this reality, and that do not take proactive steps to reconnect with their workforce, run the risk of being the big losers when hiring heats up again.”

Business leaders who continue to think employees have no options are playing with fire. While the labor market to date has been inconsistent—some might say soft—many experts say a new phase of robust hiring is coming. At the beginning of the year, multiple economists surveyed by CNNMoney forecasted that an average of 2.5 million jobs would be added to the U.S. economy this year, which would be the best one-year gain in hiring since 1999. Even the most pessimistic of those surveyed, David Wyss of Standard & Poor's, expected 1.8 million jobs to be added this year, roughly double the pace of hiring in 2010.

Businesses have digested a lot of bad news recently, but uncertainty will more likely delay than derail the recovery. Ryan adds, “Keep in mind that businesses have enjoyed seven consecutive quarters of rising profits. Third-quarter profits in 2010 rose at an annual rate of $1.659 trillion, the steepest annual surge since officials began tracking such matters 60 years ago. At some point, progressive companies will realize that the path to sustained growth is a combination of increased employee commitment and additional headcount.”

Here are five steps businesses should undertake immediately to reconnect with their employees in order to retain their best and brightest and create a work environment that’s more attractive to potential new hires:

1. Repair your culture Two-thirds of employees believe that company culture has a significant impact on their morale and productivity. A positive culture aligns corporate strategy with behavioral expectations, gives employees clarity and purpose, and provides a framework for worker contributions.

In a positive environment, workers are more likely to trust their managers and coworkers, share information and ideas without hesitation, and contribute discretionary effort freely. Businesses signal what’s important through their recognition plans, and companies would be smart to take proactive steps to repair whatever cultural damage may have been done over the last few years. They can start by reinforcing the attitudes and actions that characterize their internal brand— their cultural framework.

2. Set the stage for continuous innovation As companies fight for incremental growth, the ability to identify and leverage new value-creating ideas is a valuable differentiator. Smart companies know innovations occur when complex thinking is applied to new problems or opportunities by those individuals who are intellectually committed to finding more effective outcomes. These “personal patents” define the best and newest, but often unshared, best practices emerging within every business.

In innovative environments, employees believe that management is open to new ideas, not averse to experimentation and generally supportive of prudent risk taking. It is your recognition philosophy that mitigates the fear of failure that often stifles an innovative instinct, and it is your recognition platform that can serve as the place to solicit, acknowledge and socialize those new ideas, maximizing employee collaboration and operational impact.

3. Involve frontline managers Employees are much more likely to be engaged when they feel their manager understands what they do well, encourages them to use their skills as much as possible, and recognizes and rewards their achievements when they do. But in the face of competing priorities, most frontline managers in today’s talent economy are not sufficiently committed to the development of their employees’ capabilities or careers. And in that regard, they may be taking their cues from the top. McKinsey says that CEOs and senior leaders are not sufficiently involved in either shaping talent management strategies or in outcomes.

4. Don’t neglect virtual workers The rapid rise of technology has accelerated the growth of the virtual workforce. This group of employees tends to toil alone, far from physical interactions with others (and the reassurance they bring). Distance exacerbates their need to bond and feel connected. This is one reason why reinforcement activities need to be more specific and frequent with virtual employees than perhaps with any other group.

While the digital technologies virtual workers use to communicate and collaborate are sleek, they can lead to misunderstandings that strain relationships, trust and a sense of belonging. In other words, technologies are the variable in the virtual employee/employer dynamic. An overwhelming concentration of instant messages, emails and text messages dominate virtual workers’ communication patterns and increase the potential that things will be taken out of context.

Ironically, web technologies can also provide a solution for companies looking to create a more closely connected employee society. When integrated with forethought, social-networking techniques can help companies expand the impact of recognition across worker communities of common interest. Employees, once isolated, can build/maintain relationships, share successes and learn from one another. Companies that have incorporated social-media-type tools report increased employee engagement, expanded opportunities for knowledge sharing, higher levels of innovation, superior customer focus and lower communication costs.

5. Think like marketers No discipline within an organization is more committed to the development and optimization of its workforce than Human Resources. But to be better at generating the type of emotional connections that drive long-term value and loyalty, HR teams will need to start thinking and executing like their Marketing colleagues. Marketing teams have evolved particularly quickly in using digital media to deliver messages that are more efficient and impactful. Precision marketing practices that build personalized relationships with the brand have helped Marketing teams gain new respect and status within organizations. HR teams would be wise to adopt some of their methods as they look to create, deliver and sustain a more meaningful employee/employer relationship.

Companies continue to rebound, yet the unemployment rate has remained stubbornly stuck around the 9 percent mark for almost two years. How unprecedented is that? During the 1982 recession, the unemployment rate peaked at 10.8 percent, but that elevated level didn’t last quite as long—only 19 months.

Workers are now doing more for companies. While the labor inequities have helped organizations experience a windfall of productivity and profits, they have also placed a strain on employee morale and engagement. Survey after survey suggests that a wide-scale worker defection is forthcoming.

“To sustain high levels of productivity, organizations will need to rely less on employee fear and more on recognition techniques that are proven to spark and prolong an employee’s desire to contribute,” concludes Ryan. “Without taking action now, employers will be left with a recession-damaged workplace culture populated by disenfranchised employees who will leave for new pastures at the first opportunity.”

Media Contact: Ericho Communications Carolyn Fraser, Account Executive 220 East 23rd Street New York, NY 10010 Phone: 646.507.5897 Email:

About Madison

As a global leader in Social Recognition, Madison delivers intuitive and multi-faceted Recognition, Incentive and Service Anniversaryprograms powered by Maestro, their uniquely configurable cloud-based SaaS technology. Recognition Group Travel, Concierge Travel Arrangements and Corporate Meetings are an integral part of these capabilities. Designed to solve an organization’s unique business issues, Madison’s approach encompasses the totality of a company’s performance drivers and focuses on the individuals responsible for ultimate success–employees, sales and channel partners.

Madison’s performance and sales boosting methods coupled with powerful analytics and innovative solutions give management the power to purposefully engage an audience; measurably identify leadership traits; effectively motivate tangible potential; and sharply incent individuals. Leveraging scientific principles to guide desirable change of human behavior and elevate performance, Madison has been helping clients do more by encouraging their audiences to achieve more for 40 years.

For more information: Madison Email: Phone: 866.535.2543 Fax: 212.308.0646


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