. Top 10 Insights on Budget Spend for Recognition Programs | Northstar Meetings Group

Top 10 Insights on Budget Spend for Recognition Programs

Ideas for spending smarter on incentives, from the Conference Board of Canada and WorldatWork.

Roy Saunderson pic

Looking at research from the Conference Board of Canada and WorldatWork's Trends in Employee Recognition Survey, one gains an interesting overview of budget spending on recognition programs. Consider these top 10 insights as you prepare your budget planning for the coming year.
1. Long service or career-milestone awards rule. These are the most tried-and-true of all the budgeted programs, with at least 50 percent or more of overall recognition program spend. With shifting demographics, this percentage will adjust itself as managers of recognition and rewards steer their budgets where they are most needed.
2. Formal recognition programs take a big budget chunk. Pinnacle programs like an excellence awards program can consume at least 20 percent of overall budget spend. These best-of-the-best, nominated or earned award programs are the Academy Award equivalent in both public- and private-sector organizations.
3. Retirement recognition has double spend in the public sector. Public-sector organizations spend twice as much on retirement gifts than their private-sector counterparts. They probably have less scrutiny over retirement awards than they would for performance- and incentive-based recognition and reward programs.
4. Manager to employee recognition programs score low. These show budget ranges from 7 to 12 percent of total spend, with private sector taking the higher amount over public sector. Not all recognition needs to be program-based, but these low percentages show that you must strategize recognition to make a bigger difference.
5. Peer-to-peer recognition is requested more often.
 More organizations have peer-to-peer recognition programs, but spend is only a maximum of 4 percent across organizations. Consider budgets strategically across everyday, informal and formal programs for the desired business impact each program can make.
6. Program budget spend declined over a 6-year period. From 2010 to 2016, the overall budget spend across all recognition programs for all sectors took a 30 percent nosedive. To increase the recognition spending, your program owners must show greater ROI using analytic reports that recognition programs now provide. 
7. Validate what the budget spend really is. Industry vendors have used 1 percent to 3 percent of base salary as the typical guide to budget amounts for employee recognition. WorldatWork shows only 11 percent of companies spend between 1 percent and 2 percent on recognition budgets, while 51 percent spend between 0.1 percent to 0.3 percent.
8. Separate out all of your program costs. Vendors generated most budget-spend percentages for costs of tangible and nonmonetary rewards. However, there are other costs like salaries, administration, analytics, continuous improvement, communications, events, printed materials and training.
9. Get a greater share of the budget for recognition. Connect employee recognition to business and people strategies. Identify how recognition will move the scales and increase performance metrics like productivity and engagement. Show how you plan to generate a positive ROI from recognition.
10. Show how recognition is an investment from the budget allocated. Give your leaders a picture of why recognition is needed now. Tell them what you've been doing with recognition so far. Demonstrate how recognition fits into the big picture, and lay out the impact recognition can have on people and performance.

Incentive columnist Roy Saunderson is the author of Giving the Real Recognition Way and chief learning officer of Rideau's Recognition Management Institute, a consulting and training company that helps leaders and managers get recognition right. He can be reached at [email protected] Also, check out the library of Real Recognition Radio shows.