by Lisa Grimaldi | August 01, 2005
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 percent.
    " 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.