Gratitude: The Ultimate Change Agent

October 9, 2019 Eileen Nolan

6-minute read

tree at sunset

“Change is the only constant in life.” Heraclitus was way ahead of his time. Change is our new normal. In my career and in my role working with some of the world’s biggest and best companies, the common denominators are transformation and change. Products change. Industries change. The market changes. Employees’ needs change. In my experience, the most successful companies are the ones that find ways to inspire through – not just weather – these times of uncertainty.

Current state of change

A recent Workhuman® Analytics & Research Institute (WARI) international survey report of more than 3,500 full-time workers shows 1 in 5 workers are at companies that have been through a divesture or workforce reduction in the last 12 months. And the pace of change will only continue to increase.

In a recent Deloitte survey, 79% of executives at corporations and private equity firms said they expect the number of deals they close in the next year to increase. Whether a M&A deal, a business restructure, or an industry downturn, change is highly disruptive to people. And it is how you take care of people in uncertain times that determines how your business actually weathers these storms.

Weathering the storm

Let’s face it: During an industry downturn or business hiccup, budgets are getting cut and uncertainty is afoot. You don’t just want to keep the lights on. You want to fight forward with the chosen team. That team will need to feel lifted and recognized for the work they are doing – sometimes a lot more of it, with fewer resources. For those that remain, how do you help them thrive?

Some companies lean on retention bonuses – to their detriment.

Dr. John Sullivan, talent management thought leader, calls retention bonuses “a form of ‘paid servitude,’ where you buy rather than earn employee loyalty.”

There is no proof retention bonuses actually work, so they deliver no actual ROI. Plus, a one-time, future payment to part of the staff may not get the majority of people through the daily storm. And if it does, their loyalty to the organization has an expiration date.

What companies need are always-on strategies with demonstrable ROI that support the culture, the business, and the employees who continue to outperform in their roles, despite the uncertainty. Gratitude is that strategy.

Gratitude as a business strategy

For a penny of every payroll dollar, you can create a healthy gratitude culture. A social recognition program invested at 1% of payroll creates moments of gratitude between colleagues, aligned to company values, and broadcasts them across your culture.

Every day there are opportunities to shine a light on good work and amplify it for everyone to celebrate. Name another compensation program that can do that for a penny on the dollar.

More than that, social recognition has demonstrable ROI. Social recognition moves the needle on turnover, productivity, performance, and engagement:

  • An annual rate of 7-10 recognition moments is correlated with 2x lower chances of voluntary turnover.
  • Employees who receive 5+ gratitude moments per year are significantly more likely to also increase their year-over-year performance rating.
  • Employees recognized with 1-2 gratitude moments each quarter feel significantly more appreciated for their performance and as a result are significantly more engaged.

At Cisco, a customer with an award-winning culture, an independent analysis of their social recognition program proved their investment was not only supporting the kind of culture they aim for, but also highly correlated to an increase in engagement scores. Think about how much Cisco likely spends on total rewards or even just payroll. Now imagine for every dollar, they pull a penny into a recognition budget. That investment has led to a direct correlation in engagement. That is the kind of ROI HR practitioners dream of.

If that doesn’t move you, I have more data: Our latest international employee survey report shows workers recognized in the last month at companies that have been through a merger or acquisition are nearly 2x as likely to trust in their company’s leadership team, compared to those who have never been recognized for their work (82% vs. 46%).

Real-world examples

I’ve seen firsthand how our customers have thrived as a result of doubling down on gratitude. I witnessed the downturn in the oil and gas industry a few years ago and the devastation that it caused. Tough decisions were made, including one company that severely cut not only headcount, but also major employee benefits, including 401(k) matching, vacation time, salaries, and more.

Even as the workforce was nearly cut in half, the one employee benefit that company continued to invest in – at 1% of payroll – was social recognition.

The SVP of total rewards was adamant that the ability for employees and leaders to recognize the daily work of the employees that remained was critical to their success. She also noted that it was one of only two truly global programs that could be delivered to every employee. It was a lever that flexed with population size. This was essential to keeping high performers motivated and building connections between employees as they weathered the downturn and as they came barreling back as a business.

Another great example was when a leading biopharmaceutical company went through a tough patch after a major drug came off patent. The company went through layoffs for the first time in its history. It was a culture shock. But they never cut recognition investment. They increased their monthly investment per employee (MIPE) and monthly award per employee (MAPE) to keep gratitude flowing and encourage those who remained to focus on the positive contributions being made daily. It kept them competitive and kept their talent working toward pipeline goals.

In both these situations, the leaders protected the power of the people on the ground closest to the work. They protected the ability to recognize great performance in the moment – the kind of crowdsourcing that empowers all employees to own the culture and drive the business. And, with 1% of payroll, it was an incredibly efficient investment.

Invest well.

Level of investment matters. One percent of payroll is a good starting place. You have to create enough of these positive moments to create a wave – gratitude momentum. The frequency of recognition matters. These moments are proven to lift an employee equally as long as a major spot bonus.

If you’d like to lift culture and create that momentum, think about how frequently good work should be recognized and fund accordingly. A budget built to acknowledge an employee once a year, or every five years, won’t work if you are trying to unleash gratitude to the masses. Invest in putting gratitude in the capable hands of your employees. They will carry it forward.

I encourage you to invest in programs that deliver ROI to the business and that will protect your culture and keep employees engaged through the journey. Beyond the traditional HR metrics, social recognition is proven to improve strategic business metrics such as safety, billable hours, plant performance, and return on capital. Think about your investment in those metrics and consider what 1% of payroll could do for your culture in good times and in dodgy weather.


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About the Author

Eileen Nolan

Eileen is vice president of strategic accounts at Workhuman where she leads a talented senior team of strategic client directors who partner with some of the highest performing companies around the globe. She has more than 25 years of experience leading and managing change in sales, operations, and human resource management roles. She is a graduate of the United States Military Academy at West Point.

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