Impact Measurement: The Missing Link in Incentives, Rewards and Recognition

The growing RRN Impact Metrics Library provides practical resources for connecting incentives, recognition and engagement investments with measurable business outcomes.

Activity Is Not Impact
Start With the Business Objective
Recognition and the Financial Conversation
From Proving Value to Improving Results
Other RRN Impact Measurement Resources

Click here to subscribe to the ESM weekly e-newsletter.

The incentives, rewards and recognition field produces abundant data on participation, redemptions, recognition activity, attendance and satisfaction. The bigger opportunity is determining whether these investments actually affect retention, productivity, sales, customer satisfaction, profitability or other organizational priorities. The RRN Impact Metrics Librarybrings together research, measurement frameworks and practical approaches aimed at helping organizations move from activity metrics to meaningful impact measurement and continuous improvement.

Activity Is Not Impact

A recognition program can generate high participation. An incentive program can produce strong engagement. An incentive trip can earn exceptional satisfaction ratings. None of these measures alone demonstrates that the investment produced a meaningful business result. That distinction is becoming more important as senior management increasingly expects investments in people to receive the same level of accountability applied to technology, equipment, facilities, marketing and other business processes.

The Impact Council Recommended Metrics for Enterprise Engagement Efforts provides a broad framework organizations can adapt based on their own purpose, goals and objectives.
Rather than prescribing one universal ROI measure, it suggests metrics related to customers, employees, salespeople, channel partners, suppliers and communities. These can include retention, productivity, customer satisfaction, incremental revenue, quality, referrals, innovation, profitability and other measures directly related to organizational performance.

The objective is not to measure everything. It is to identify a handful of measures that can help management understand whether an initiative is producing the desired results.

Start With the Business Objective

The RRN guide How to Assess the True Impact of Incentive, Recognition, Loyalty and Related Engagement Efforts recommends beginning with a basic question: What specifically is the program intended to accomplish? If the goal is improved employee morale, what business outcome should that produce? Lower turnover? More employee referrals? Better productivity or quality? Higher customer satisfaction?

If an incentive program is designed to increase sales, organizations can examine not only participation and awards earned but incremental revenues, profitability, customer retention or other relevant outcomes. Much of this information already exists within accounting, HR, CRM, sales and operational systems. The challenge is connecting program data with the business measures that matter.

Applying Quality Management Principles to People
The Measuring the Impact of a Holistic Approach to Employee Engagement resource illustrates how statistical process and continuous-improvement principles long used in manufacturing and quality management can be applied to people management. Through a theoretical case study, it shows how organizations could track recognition, training, communications, employee referrals and suggestion programs alongside productivity, turnover, human capital ROI, innovation and other outcomes.

The significance is the methodology: track the processes intended to produce improvement along with the desired outcomes over time and look for relationships that merit further investigation.
That approach changes measurement from an exercise designed simply to justify a program into a management tool for improving it.

Measuring ROI of People Management
Jack and Patti Phillips of the ROI Institute address the broader issue in Driving With Both Eyes Open: Why ROI of People Management Is the Next Business Imperative. Their approach focuses on several questions: What happened? How much improvement occurred? How do we know the initiative contributed to that improvement? What was the value of the result? The important implication for the IRR field is that impact measurement should be considered during program design—not added after the program is already underway.

Recognition and the Financial Conversation

WorkProud CEO Michael Levy's The Financial Case for Recognition brings together research connecting employee experience, human capital practices and recognition with financial performance. The broader point is that recognition need not be viewed simply as an HR benefit or cultural initiative. It can be considered one element of a larger people-management system whose contribution should ultimately become visible in organizational outcomes.
Likewise, human capital measurement is becoming increasingly connected with financial analysis. Measures such as productivity per employee, retention, recruiting efficiency, workforce skills, succession coverage and internal mobility can help organizations understand whether they are effectively managing one of their largest investments—their people.

From Proving Value to Improving Results

The greatest opportunity from impact measurement may not be proving ROI. It is continuous improvement. If one group participating in recognition, training, communications or incentives consistently demonstrates better retention, productivity, sales or customer satisfaction than another, management has useful information. It can investigate why, identify what is working, address weaknesses and improve program design.

Participation tells management what people did. Satisfaction indicates how they felt about an experience. Impact measurement asks what changed as a result. For an industry increasingly positioning incentives, rewards, recognition and motivational experiences as tools for improving performance, answering that question may become increasingly important.

Other RRN Impact Measurement Resources

Enterprise Engagement Alliance Services

Celebrating our 17^th year, the Enterprise Engagement Alliance helps organizations enhance performance through:

1. Information and marketing opportunities on stakeholder management and total rewards:

ESM Weekly on stakeholder management since 2009. Click here to subscribe; click here for media kit.
RRN Weekly on total rewards since 1996. Click here to subscribe; click here for media kit.
EEA YouTube channel on enterprise engagement, human capital, and total rewards since 2020

2. Learning: Purpose Leadership and Stakeholder

Management Academy to enhance future equity value for your organization.

3. Books on implementation: Enterprise Engagement for CEOs and Enterprise Engagement: The Roadmap.

4. Advisory services and research: Strategic guidance, learning and certification on stakeholder management, measurement, metrics, and corporate sustainability reporting.

5. Permission-based targeted business development to identify and build relationships with the people most likely to buy.

Contact: Bruce Bolger at TheICEE.org; 914-591-7600, ext. 230.