Incentive Newsline: Study Proves Recognition Pays Off
It’s no surprise that recognition is good for
employees’ morale. But a study by the O.C. Tanner Co., a Salt Lake
City-based employee recognition firm, and Columbia, Md.-based
research firm the Jackson Organization, demonstrates that patting
employees on the back is good for the firm’s bottom line, too.
Participants 26,000 employees of 31 U.S.-based firms were
surveyed in 2002 and 2003 about their levels of engagement with
their jobs and how they rated their organizations’ recognition of
excellence. The responses were averaged and arranged into four
groups, ranging from the lowest to the highest scorers. Next,
participating firms’ financial information for 2002/2003 provided
by the firms was factored in, revealing the
" The 25 percent of companies that scored highest in employee
recognition had an 8.7 percent return on equity (fiscal year
earnings divided by the average shareholder’s investment for that
year), while the group with the lowest score returned 2.4
" The top group had a 6.1 percent return on assets (a fiscal
year’s earnings divided by total assets); the lowest-scoring group
had a 1.7 percent return.
" The top-scoring quartile had a 6.6 percent operating margin
(how much companies make from each dollar spent on sales); the
lowest-scoring group had a 1 percent operating margin.