Boston Consulting Group
Name: Atharul Khan Section: 011 Turnitin: 367848933
Boston Consulting Group __________________________________________________________________ To: Rich Lesser, Chief Executive Officer From: Atharul Khan, Human Resource Manager Date: October 29, 2013 Subject: Increasing Company Return on Investment Statistics have proven that companies who value their employees less have a higher voluntary turnover rate and lower employee productivity than companies who reward and value their employees. In a recent study by Forbes, companies that scored in the top 20% for building a “recognition-rich culture” enjoyed a 31% lower voluntary turnover rate1. Turnover rates costs companies thousands of dollars in recruiting, hiring and training employees for work effectiveness. It is estimated that it costs 30-50% of a company’s annual salary to replace an entry-level employee. A decrease in a turnover rate of 31% could save your company thousands of dollars2. With many companies offering annual monetary awards to employees, it is becoming a major trend in the business to business marketplace. Companies are introducing this fad as a competitive advantage contributing to their success. Recent studies indicate when employees are recognized for their contribution, they began to work harder and more effectively. By introducing an innovation award program that will reward an employee with the best overall creative idea, employees will be motivated to work harder and drive company success even further. These monetary awards have several distinctive advantages over conventional methods to increasing employee motivation: 1. Recognition programs improve employee engagement and productivity. In a recent study by Gallup, Companies with higher levels of employee engagement enjoyed 50% higher levels of productivity and 44% higher profits3. 2. Recognition programs are an effective recruiting tool. When companies reward employee effort, skill and success, they are more likely to experience a spike in recruitment by as much as 25%4 with top level talent at the top of the list. 3. Recognition programs provide a higher Return on Investment (ROI). Delta launched a massive recognition program in 2007 and had measured 547% increase in Return on Investment. While Employee Recognition Programs is an option, many HR managers often complain that these programs cost companies’ valuable time and money without substantial improvement. Monetary Award Programs can be expensive; however need be implemented the correct way in order for companies to see full benefits. According to Forbes, 87% of Recognition Programs focus on tenure5. It was concluded that tenure based Recognition Programs have virtually no impact on organizational performance. Recognition Programs work most effectively when employees are awarded based on skill, effort and results. Please allow me to arrange for a demonstration from Delta so that we can learn more about how an innovation reward program can help us improve employee productivity and increase a company’s Return on Investment. _________________________________________________________________________________________ 1- Bersin, J. (2012, 6 13). New research unlocks the secret of employee recognition. Retrieved from http://www.forbes.com/sites/joshbersin/2012/06/13/new-research-unlocks-the-secret-of-employee-recognition/2/ 2, 3, 4- Darrow, L. (2013, 02 23). 4 statistics that prove employee recognition programs work. Retrieved from http://www.awardco.com/4statistics-that-prove-employee-recognition-programs-work 5- Tenure – To give someone a permanent post, especially as a teacher or lecturer (Oxford Dictionary)
Boston Consulting Group __________________________________________________________________ To: Rich Lesser, Chief Executive Officer From: Atharul Khan, Human Resource Manager Date: October 29, 2013 Subject: Increasing Company Return on Investment Statistics have proven that companies who value their employees less have a higher voluntary turnover rate and lower employee productivity than companies who reward and value their employees. In a recent study by Forbes, companies that scored in the top 20% for building a “recognition-rich culture” enjoyed a 31% lower voluntary turnover rate1. Turnover rates costs companies thousands of dollars in recruiting, hiring and training employees for work effectiveness. It is estimated that it costs 30-50% of a company’s annual salary to replace an entry-level employee. A decrease in a turnover rate of 31% could save your company thousands of dollars2. With many companies offering annual monetary awards to employees, it is becoming a major trend in the business to business marketplace. Companies are introducing this fad as a competitive advantage contributing to their success. Recent studies indicate when employees are recognized for their contribution, they began to work harder and more effectively. By introducing an innovation award program that will reward an employee with the best overall creative idea, employees will be motivated to work harder and drive company success even further. These monetary awards have several distinctive advantages over conventional methods to increasing employee motivation: 1. Recognition programs improve employee engagement and productivity. In a recent study by Gallup, Companies with higher levels of employee engagement enjoyed 50% higher levels of productivity and 44% higher profits3. 2. Recognition programs are an effective recruiting tool. When companies reward employee effort, skill and success, they are more likely to experience a spike in recruitment by as much as 25%4 with top level talent at the top of the list. 3. Recognition programs provide a higher Return on Investment (ROI). Delta launched a massive recognition program in 2007 and had measured 547% increase in Return on Investment. While Employee Recognition Programs is an option, many HR managers often complain that these programs cost companies’ valuable time and money without substantial improvement. Monetary Award Programs can be expensive; however need be implemented the correct way in order for companies to see full benefits. According to Forbes, 87% of Recognition Programs focus on tenure5. It was concluded that tenure based Recognition Programs have virtually no impact on organizational performance. Recognition Programs work most effectively when employees are awarded based on skill, effort and results. Please allow me to arrange for a demonstration from Delta so that we can learn more about how an innovation reward program can help us improve employee productivity and increase a company’s Return on Investment. _________________________________________________________________________________________ 1- Bersin, J. (2012, 6 13). New research unlocks the secret of employee recognition. Retrieved from http://www.forbes.com/sites/joshbersin/2012/06/13/new-research-unlocks-the-secret-of-employee-recognition/2/ 2, 3, 4- Darrow, L. (2013, 02 23). 4 statistics that prove employee recognition programs work. Retrieved from http://www.awardco.com/4statistics-that-prove-employee-recognition-programs-work 5- Tenure – To give someone a permanent post, especially as a teacher or lecturer (Oxford Dictionary)
