SHRM Survey Findings: Employee Recognition Programs, Fall 2012 In collaboration with and commissioned by Globoforce November 15, 2012

Introduction Twice a year, Globoforce® conducts a survey with the Society for Human Resource Management (SHRM®), the world’s largest association devoted to human resource management. Our goal is to elicit trends among HR leaders and practitioners about what challenges they face and what strategies help them conquer those challenges. This August, we surveyed 6,000 HR professionals in organizations with 500 or more employees and asked them to share their experiences and practices. This fall 2012 survey uncovers new insights on emerging employee recognition trends and best practices. We looked in particular at these questions: What are the top issues facing HR management today? Is it important that core values be aligned with recognition? How are emerging practices like peer-to-peer recognition affecting engagement? What is the impact of recognition on “employee enablement”? What are the best practices for spending on a recognition program? 2

Key Findings How many organizations currently have an employee recognition program in place? A majority of organizations (77%) reported that they currently have an employee recognition program in place. One-half (50%) of the organizations that have a program in place also indicated that it is tied to the organization’s values. What are some of the reasons organizations implement an employee recognition program? Most organizations use employee recognition programs to improve employee morale and to increase employee engagement (79%). Other common reasons are to reinforce their organization’s values (59%) and to reduce employee turnover rates (34%). What changes have organizations experienced after they have implemented an employee recognition program? Over one-half (51%)of the organizations reported an increase in employee engagement after implementing an employee recognition program. Some organizations also reported an increase in customer satisfaction (35%) and employee productivity (30%). 3

Key Findings (continued) How often do organizations conduct employee performance reviews? Seventy-four percent of the organizations reported they conduct an annual performance review. Only 21% conduct reviews semiannually, and very few (3%) conduct quarterly reviews. How do organizations describe their performance review process? Most organizations that conduct employee performance reviews (72%) believe they provide constructive feedback to most of the employees in the organization, and nearly one-half (47%) feel their performance reviews offer an accurate reflection of the employees’ contributions. What are some HR challenges organizations are currently facing? Succession planning has become a common HR challenge (41%) as well as employee engagement (40%) and culture management (30%). Other HR challenges organizations indicate experiencing include recruitment (28%) and performance management challenges(28%). 4

Does your organization have an employee recognition program? Note: n = 763. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not equal 100% due to rounding.

What are the main objectives of your employee recognition program? Note: n = 555. Percentages do not equal 100% due to multiple responses.

Does your organization’s employee recognition program . . . Note: Respondents who answered “don’t know” were excluded from this analysis.

Employee Turnover Rates and Employee Recognition Programs Organizations with employee recognition programs reported an average employee turnover rate of 14% compared with organizations without an employee recognition program in place (17%). This translates to an average turnover rate that is 22% lower among organizations with employee recognition programs in place. Does your organization have an employee recognition program?  Mean employee turnover rate Yes (n = 339) 14% No (n = 66) 17%

Have the elements below increased, remained the same or decreased at your organization as a result of the implementation of an employee recognition program? Increased Remained the same Decreased Employee engagement (n = 481) 51% 47% 2% Customer satisfaction (n = 361) 35% 64% 1% Employee productivity (n = 455) 30% 70% <1% Profitability (n = 339) 29% 67% 3% Customer retention (n = 325) 25% 74% Employee retention (n = 449) 24% 72% 4% Employee absenteeism (n = 409) 6% 83% 11% Note: Respondents who answered “don’t know” or “not applicable” were excluded from this analysis. Percentages may not equal 100% due to rounding.

Based on engagement surveys conducted by your organization, what percentage of your employees feel highly engaged in the workplace? Note: n = 442. Respondents who answered “don’t know” or “not applicable” were excluded from this analysis.

How would you rate your employees’ current frustration level with getting things accomplished at your organization? n = 699

Do you believe employees at your organization . . . Note: Respondents who answered “don’t know” were excluded from this analysis.

On average do you think . . . Note: Respondents who answered “don’t know” or “not applicable” were excluded from this analysis.

How frequently does your organization conduct employee performance reviews? Note: n = 669. Respondents who answered “don’t know” or “not applicable” were excluded from this analysis. Percentages do not equal100% due to rounding.

Which best describes your organization’s performance review process? Note: n = 669. Percentages do not equal 100% due to multiple response options.

In your professional opinion, do you believe that the organizational culture is important to your organization’s leadership? Note: n = 658. Respondents who answered “don’t know” were excluded from this analysis.

What are the most important HR challenges to your organization? Note: n = 680. Participants were asked to choose their top three choices. Percentages do not equal 100% due to multiple response options.

Demographics

Which of the following best describes your primary role within your organization? Note: n = 678. Percentages do not equal 100% due to rounding.

Demographics: Organization Staff Size Note: n = 618

Demographics: Organization Sector

Demographics: Organization Industry Percentage Manufacturing 25% Health care and social assistance 14% Professional, scientific and technical services 12% Educational services 10% Government agencies Retail trade 9% Finance and insurance 8% Transportation and warehousing 7% Accommodation and food services 6% Administrative and support and waste management and remediation services 4% Utilities Note: n = 669. Percentages do not equal 100% due to multiple responses.

Demographics: Organization Industry (continued) Percentage Arts, entertainment and recreation 3% Information Repair and maintenance Wholesale trade Construction 2% Mining Real estate and rental and leasing Agriculture, forestry fishing and hunting 1% Personal and laundry services Religious, grantmaking, civic, professional and similar organizations Other 10% Note: n = 669. Percentages do not equal 100% due to multiple responses.

Demographics: Other Is your organization a single-unit organization or a multi-unit organization? Does your organization have U.S.-based operations (business units) only, or does it operate multinationally? Single-unit organization: An organization in which the location and the organization are one and the same. 13% Multi-unit organization: An organization that has more than one location. 87% U.S.-based operations only 56% Multinational operations 44% n = 672 n = 676 For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both? What is the HR department/function for which you responded throughout this survey? Multi-unit headquarters determines HR policies and practices 46% Each work location determines HR policies and practices 2% A combination of both the work location and the multi-unit headquarters determines HR policies and practices 52% Corporate (companywide) 55% Business unit/division 26% Facility/location 18% Note: n = 600. Percentages do not equal 100% due to rounding. n = 311

SHRM Survey Findings: Employee Recognition Programs, Fall 2012 In collaboration with and commissioned by Globoforce Survey Methodology Response rate = 14% 815 HR professional respondents from a randomly selected sample of SHRM’s membership with the title of manager or above and 500 or more employees. Margin of error +/-3% Survey fielded: August 31, 2012 - September 21, 2012

About Globoforce Globoforce is the world’s leading provider of social recognition solutions, redefining how companies understand, manage, and motivate their employees. Innovative companies around the world use Globoforce’s cloud-based social recognition software to reveal the true performance and influence of every employee and strengthen company culture.  With Globoforce, HR and business leaders can take a strategic approach to recognition programs that result in measurable benefits to the bottom line driven by increases in employee engagement, retention, and productivity. Globoforce is co-headquartered in Southborough, Massachusetts, and Dublin, Ireland.      To learn more: Visit: http://www.globoforce.com Read: http://globoforce.com/globoblog Twitter @Globoforce LinkedIn: http://www.linkedin.com/company/globoforce  26

About SHRM The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 260,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. 27