June 23, 2011 SHRM Survey Findings: Employee Recognition Programs In collaboration with and commissioned by Globoforce

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Key findings 2  What are the most important workforce management challenges organizations are currently facing? For more than three-quarters of organizations, different generations of employees (85%) and multiple cultures in the workplace (84%) are important (“important” and “very important”) workforce challenges.  What are the key HR challenges organizations expect to face in the next three to five years? Nearly all organizations indicated that employee engagement, employee retention and employee recruitment are the challenges their organizations will be facing in the future.  How many organizations currently have an employee recognition program? Eight out of 10 organizations currently have an employee recognition program.  What are the most common reasons that organizations recognize employees? The most frequently reported reason was recognizing employees for their years of service (58% of responding organizations reported having this practice). Nearly one-half (48%) indicated that “going above and beyond with an unexpected (not regular) work project” was also commonly recognized, and 43% reported recognizing employees for a “successful performance result related to the organizational financial bottom line.”  Are employee recognition programs challenging to measure? Few organizations (13%) measure the ROI of these programs. Of those that do measure the ROI, the majority of respondents (68%) agree that measuring the effectiveness of their employee recognition programs is challenging and another 9% strongly agree. Less than one-quarter (23%) of respondents disagree that measuring an employee recognition program is challenging.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Talent Management 3

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM Do you think that at your organization: Note: Analysis excludes “not sure” response. Percentages above reflect respondents who answered “yes” to the question. Percentage organizational charts are an accurate indicator of your organization’s leaders and influencers? 71% (n = 491) annual performance reviews are an accurate appraisal for employees’ work? 61% (n = 435) employees are rewarded according to their job performance? 56% (n = 406) managers or supervisors effectively acknowledge and appreciate employees? 46% (n = 331) employees are satisfied with the level of recognition they receive for doing a good job at work? 31% (n = 223)

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Of the following options, which do you think is the most accurate appraisal of employee performance? 5 n = 726

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 The importance of workforce management challenges that organizations are currently facing: Very Important ImportantUnimportant Very Unimportant Multiple cultures in the workforce 35%49%15%1% Different generations among employees 34%51%13%1% Global diversity of today’s companies 24%38%29%9% Harnessing the power of social networking technologies 21%51%24%4% 6 n = 742

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 The importance of workforce management challenges that organizations are currently facing: 1-99 employees = 21% employees = 25% 500-2,499 employees = 15% 2,500-24,999 employees = 27% 25,000 and above = 41%Larger organizations > smaller organizations 7 Comparisons by organization staff size: Compared with smaller organizations (2,499 employees or fewer), larger organizations (2,500 or more employees) view global diversity of today’s companies as more a important workforce management challenge. Government = 49% Publicly owned for-profit = 35% Privately owned for-profit = 30% Nonprofit = 38% Government > publicly and privately owned for-profit organizations and nonprofit organizations Comparisons by organization sector: Government agencies are more likely to view multiple cultures in the workplace as an important workforce management challenge compared with how publicly and privately owned for-profit organizations and nonprofit organizations view this challenge. Publicly owned for-profit = 30% Privately owned for-profit = 21% Government = 20% Nonprofit = 10% Publicly owned for-profit organizations, privately owned for-profit organizations, and government agencies > nonprofit organizations Publicly owned for-profit organizations, privately owned for-profit organizations, and government agencies are more likely to view global diversity of today’s companies as an important workforce management challenge compared with nonprofit organizations.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 HR challenges organizations anticipate facing in the next three to five years: 8 Note: n = 742. Total may not equal 100% due to rounding

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Methods organizations use to track employee engagement levels: 9 Note: n = 637. Includes only organizations that indicated they track employee engagement levels. Total does not equal 100% due to multiple response options.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Employee Recognition Programs 10

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Does your organization have an employee recognition program? 11 n = 698

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 The Most Common Reasons Organizations Recognize Employees 12 Note: n = 549. Includes only organizations that have an employee recognition program in place. Total does not equal 100% due to multiple response options.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 How do organizations track employee recognition programs? 13 Note: n = 423. Analysis excludes “not applicable” responses. Total does not equal 100% due to multiple response options.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Is your CEO/president involved in your employee recognition program? 14 Note: n = 552. Total does not equal 100% due to rounding.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Does the budget for employee recognition programs come out of the HR budget, the individual department/business unit budget or from both budgets? 15 Note: n = 547. Total does not equal 100% due to rounding.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Which area in HR is responsible for employee recognition at your organization? HR Functional AreaPercentage General HR function59% Rewards and recognition14% Compensation and benefits13% Performance management4% Learning and development3% Other8% 16 Note: n = 552. Total does not equal 100% due to rounding.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Does your organization track the ROI of your employee recognition program? 17 Note: n = 419. Analysis excludes “not sure” responses.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Percentage of organizations that track the ROI of their employee recognition program 1-99 employees = 10% employees = 6% 500-2,499 employees = 7% 2,500-24,999 employees = 19% 25,000 and above = 21% Larger organizations > smaller organizations 18 Comparisons by organization staff size: Larger organizations (2,500 employees and more) are more likely to track the ROI of their employee recognition programs compared with smaller organizations (2,499 employees and fewer). Publicly owned for-profit = 22% Privately owned for-profit = 10% Nonprofit = 7% Publicly owned for-profit organization > privately owned for-profit organization, nonprofit organization Comparisons by organization sector: Publicly owned for-profit organizations are more likely to track the ROI of their employee recognition programs compared with privately owned for-profit and nonprofit organizations.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 The effectiveness of employee recognition programs is challenging to measure 19 Note: n = 53. Includes only the respondents who indicated they track the ROI of their employee recognition programs. Survey included a “strongly disagree” response option, but this option was not selected by any respondents.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Common challenges organizations experience in tracking the ROI of employee recognition programs Percentage Metrics of success keep changing, making it impossible to consistently report on ROI 32% The recognition program cannot be linked with our talent management or performance management systems, giving us no insight into how recognition affects key metrics such as performance improvement or retention 32% The recognition program is not designed to deliver improvement in metrics that our executive leadership (CEO/CFO/COO/CHRO, etc.) finds valuable 22% The recognition program only rewards the ultimate results, but does not take into consideration how those results are achieved (e.g., in line with company values) 20% Only segments of employees are eligible to participate in employee recognition programs (e.g., top performers, select job levels) 20% Don’t know what metrics we should be measuring to prove ROI15% 20 Note: n = 41. Includes only the respondents who indicated they track the ROI of their employee recognition programs. Total does not equal 100% due to multiple response options.

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Demographics 21

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Demographics: Organization industry Manufacturing 20% Health care and social assistance 16% Other services except public 9% Educational services 8% Professional, scientific and technical services 8% Retail trade 7% Finance and insurance 6% Public administration 4% Accommodation and food services (accommodation; food services and drinking places) 4% Arts, entertainment and recreation 3% Information 2% Transportation and warehousing 2% Construction 2% Utilities 2% Wholesale trade 1% Administrative and support and waste management and remediation services 1% Management of companies and enterprises 1% Mining 1% Real estate and rental and leasing 1% Religious, grantmaking, civic, professional and similar organizations 1% Repair and maintenance 1% Agriculture, forestry, fishing and hunting 0% Personal and laundry services 0% Private households 0% 22 n = 710

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Demographics: Organization sector 23 n = 730

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Demographics: Organization staff size 24 n = 730

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011 Demographics: Other 25 Does your organization have U.S.-based operations (business units) only or does it operate multinationally? U.S.-based operations only57% Multinational operations43% Is your organization a single-unit company or a multi-unit company? Single-unit company: A company in which the location and the company are one and the same 16% Multi-unit company: A company that has more than one location 84% Are HR policies and practices determined by the multi-unit corporate headquarters, by each work location or both? Multi-unit headquarters determines HR policies and practices 44% Each work location determines HR policies and practices 2% A combination of both the work location and the multi-unit headquarters determine HR policies and practices 54% HR department/function for which you responded throughout this survey Corporate (companywide)59% Business unit/division20% Facility/location21% n = 721 n = 623 n = 729 n = 623

SHRM/Globoforce Employee Recognition Tracker Survey: Employee Recognition Programs ©SHRM 2011  Response rate = 13%  Sample composed of 745 randomly selected HR professionals from SHRM’s membership who are employed at organizations with a staff size of 500 or more employees.  Margin of error is +/- 3%  Survey fielded May 17-27, Methodology For more poll findings, visit Follow us on Twitter: SHRM Survey Findings: Employee recognition programs In collaboration with and commissioned by Globoforce