Guest Column - November/December 2015

Planning Ahead

Why Your 2016 Budget Must Include Implementation of Employee Recognition

By Paul Gordon

As 2016 is rapidly approaching, budget proposals will soon be taken into consideration. Company decision-makers should contemplate including an employee recognition program, or upgrading their existing program, to kick off the New Year with a fully engaged staff.

The Benefits of Recognition

A recognition program motivates employees to reach goals throughout the year, and assists managers with the task of executing six-month and annual reviews. Internal loyalty programs encourage peer-to-peer recognition, allowing encouragement to be passed from bottom to top. It also opens lines of communication across the company and fosters the collaboration between multiple departments.

Motivating employees with an advanced recognition program that features high-end merchandise and top-tier brands that are unique, engaging and trending allows staff to turn hard-earned recognition into a valuable reward that continually reinforces the company's core values and desired behaviors.

Additionally, offering the most coveted products from luxury and high-end brand names proves the company's commitment to its employees and appeals to a multigenerational office. Providing employees with the power of choice and the exclusive opportunity to obtain merchandise they might not otherwise purchase evokes excitement and anticipation, and encourages goal completion.

Cash incentives don't work and don't provide employees with an emotional connection to a company, unlike brand name rewards. Recognition is the initial driver, and the reward is the valued trophy that sustains the good will and the accomplishment.

Cash Isn't King: Case in Point

This year, Gravity Payments, a Seattle-based credit card processing company, created a stir when it altered its pay scale format for the entire company, providing a one-size-fits-all monetary reward.

According to CNBC, the company experienced considerable backlash from national media when it lost clients and employees, and was involved in a lawsuit filed by CEO Dan Price's brother and former business partner after the implementation of the $70,000 minimum annual salary. As a result, some of Price's most valued employees quit.

Since a well-executed recognition program has direct ties to employee retention, managers need to focus more on spot recognition, service awards and sales incentives in order to retain their top employees.

Price assumed the monetary reward for everyone would create happiness and encourage employees to work harder. However, not long after the program was put in motion, employees expressed to the media that it was unfair to double the pay of some new hires while senior staff members received little to no raise at all.

According to CNBC, the new pay scale pushed Gravity's web developer, Grant Moran, to voluntarily leave the company.

"I had a lot of mixed emotions," he said in the article. His salary was bumped up to $50,000 from $41,000 (the first stage of the raise), but Moran remained worrisome about what the raise would do to the company's retention rate. "Now the people who were just clocking in and out were making the same as me," he said. "It shackles high performers to less motivated team members."

Price could have redirected those finances in a more responsible and effective manner, saving the company money all while encouraging company-wide inspiration.


By implementing an employee recognition program built through a third party that specializes in motivational incentives, Price could have motivated top performers and average employees alike, boosting engagement in a more balanced, fair way. While Price's intentions were in good will, company leaders failed to consider the financial consequences of losing employees.

Recognition & Retention

Employee turnover comes with a heavy cost. The average cost to replace an employee making an average of $30,000 a year is $4,800, replacing an employee who earns $50,000 a year is $9,850, and the average cost to replace an employee who earns a $75,000 a year salary is $15,300.

Since a well-executed recognition program has direct ties to employee retention, managers need to focus more on spot recognition, service awards and sales incentives in order to retain their top employees.

To be effective, the program should be designed to be fully scalable to grow with outlined needs and adhere to the company's budget. Decision-makers must identify the most engaged managers and employees, as well as those who need improvement.

When tangible, brand-name items are awarded to successful employees of any level for their hard work, the employees are more motivated to work toward achieving company and personal goals. It also supports a healthier company culture and inspires company loyalty.

The one-size-fits-all mentality doesn't work with motivating an entire company, and recognition is not an equal playing field. Employees should be rewarded based on individual success and merit, making recognition programs a highly valuable tool for companies to thrive in 2016.

Paul Gordon is Senior Vice President of Sales at Rymax Marketing Services, a full-service loyalty marketing provider in the incentive industry solely focused on creating programs and events to drive ROI through brand name rewards. For 20 years organizations partnered with Rymax have seen an increase in employee performance and retention, customer loyalty and overall revenue. For more information, visit