Culture advantage guide
Unlocking the untapped potential of your people through recognitionSign Up for Free Masterclass
Is your leadership team always chasing the next big idea?'
The disruptive strategy. The latest product innovation. The newest financial plan. The overlooked marketing or sales tactic that will give you an edge over your competitors.
You pour endless resources into new approaches for marketing, sales, product development, and production processes hoping that this campaign, this methodology, or this hack will be the magic ingredient you need to add to take your company to success.
But every advantage you find quickly fades. Because everyone else is doing the same thing.
In today’s world, information flows fast, which means that every new disruptive strategy is quickly discovered, analyzed, and actioned by every leading company. And as soon as that happens, it’s no longer disruptive.
When every possible competitive advantage is common knowledge, is there any sustainable competitive advantage left?
There is one.
It’s a competitive advantage that will last for years.
It can’t be easily reproduced by your competitors.
It can fuel innovation, market intelligence, productivity, collaboration, and a whole lot more.
Company culture is the ultimate advantage.
Organizations which invest heavily in creating a healthy, positive, and collaborative environment are rewarded with gains in almost every area.
They attract better people, who bring the knowledge to drive them forward.
Their teams enjoy their work more, and come in every day with the passion and energy they need to reach their goals. They collaborate more, because they feel more connected with each other.
They bring new ideas to the table, because their employers invest in their growth and empower them to try new things.
Culture is the great multiplier. It drives more innovative, disruptive strategies and processes across every area of your business.
The best companies already understand this. In a recent IBM study, companies that outpaced others in terms of profitability, innovation, and revenue growth all had one thing in common – HR execs which were striving to consistently reinvent and improve their culture.
Not only is culture the ultimate advantage, it’s an advantage your employees are clamouring for. Millennials are now the largest segment in the workforce, and they are looking for companies with great culture where they feel their contributions matter and are valued. Studies have shown that millennial employees prize ‘cultural fit’ above all other factors when looking for a job.
Couple that with the shift to remote work caused by the pandemic, which has made it more difficult for people to feel connected and engaged, and you can see why improving culture isn’t just an advantage, but an imperative.
This is underlined by ‘The Great Resignation’, which has seen thousands of employees all over the world leave their jobs in search of more supportive, enriching, and connected work environments.
So why aren’t more companies looking to invest in culture?
Unfortunately, most leadership teams tend to see investing in HR as a cost centre rather than a revenue generator or cost-reducer.
The problem is that the impact of investing in culture is seen as intangible, meaning most executives and managers fail to truly understand its benefit.
In an increasingly data driven world, leadership teams tend to favour strategies which provide clear, measurable ROI over more subjective initiatives. Technological innovations, marketing campaigns, sales techniques, and other traditional business functions are able to provide more demonstrable results, so they attract more investment.
The value of investing in culture, on the other hand, is more difficult to quantify.
What does a great culture really mean, for both employers and employees?
How do you actively shape the culture you want to create in a visible, measurable way?
How do you make culture tangible?
An employee recognition program is traditionally seen as a small perk, a nice-to-have, the cherry on top of other efforts to create a better work environment.
But it can be so much more than that. When used intentionally and strategically aligned with your core values, mission, and vision, an employee recognition program can help actively create the culture you want.
Recognition can help align your people with your organizational goals, make it easier for them to connect with their teammates, and empower them to succeed.
It can help you create a culture where they have a sense of purpose, opportunity to grow, and where their wellbeing is a priority.
And the best part? You can measure it. By aligning your recognition program to your core values, you can see which of these values are being applied by employees, and which aren’t, and how it grows over time.
By analyzing how widespread recognition is at your company, you can see just how connected your team truly is.
By seeing how often employees recognize each other, you can see firsthand how recognition empowers your employees.
With this knowledge, your team can pinpoint areas that are holding you back, address cultural issues, and identify new initiatives and opportunities that will help shape the culture you want.
All the while, your recognition efforts will continuously reinforce your cultural vision to your employees, and encourage them to take actions that reflect it.
Your employee recognition program becomes the Rosetta Stone that translates your culture from an intangible, abstract idea into a visible, measurable strategy that drives tangible success.
The ROI of using employee recognition to shape culture is mind-blowing. A well-executed program can easily deliver:
This amounts to an incredible 1400% return on your investment.
And that’s before you consider how much improving your culture will drive more innovative strategies, collaboration, and intelligence in every aspect of your business. Not to mention the benefits to your employer brand, increased employee advocacy, and your ability to attract better talent.
Best of all, you’ll be able to sustain these advantages. Where knowledge loss due to employee churn can really hurt a business, companies with great culture are better able to retain their talent.
By keeping people longer and building a more collaborative culture, you keep more expertise in your company, meaning your employees will continue to grow with you for years to come.
With a more engaged, collaborative, and passionate team that is constantly challenging themselves to grow and improve, your culture will be your ultimate advantage, and recognition is the key to tapping into it.
The reason we believe so strongly in using culture as a competitive advantage at Guusto is because we’ve done it.
Building Guusto has been a rollercoaster with a lot of ups and downs. We had a lot of setbacks, and nearly threw in the towel many times.
But if I could break down our story into parts, there are two distinct phases: The BEFORE and AFTER.
The BEFORE was when we focused almost entirely on customer problems and finding ways to generate revenue. Things were going in the right direction, but growth was slow and the competition was somehow always a step ahead.
We just kept telling ourselves things like: “We just need to build this new feature, or send better cold emails, or optimize this marketing campaign, or... or... or...”
The BEFORE was when we instructed people what to do, checked their work, and then paid them in a very transactional way for delivering it. It’s not like Guusto was a bad place to work, but something was missing. As a result, overall team performance was always mediocre.
Then one day, a wake up call came in the form of a 1-star review on Glassdoor. 😬 We knew there was lots of room for improvement, but we thought we had been doing a decent job of empowering, mentoring, supporting, and recognizing our employees. It turns out we were wrong.
The review rocked me to my core, and I had serious doubts about my ability to lead. How could we sell employee recognition software if we weren’t doing a good job of recognizing our own people? Something had to change.
Which brings us to the AFTER…
The AFTER was when we decided to make our people and culture the top priority. The AFTER was when we worked hard to create a workplace where people felt appreciated, connected and inspired.
The irony was that we were selling an employee recognition tool that we did not use internally. So we started to frequently send rewards to people for demonstrating core values, and gave all employees budgets to do the same with their colleagues.
As soon as we did this, everything started to change…
Our people came to work more energized and engaged. They took ownership of projects, started collaborating more often, and generated new creative ideas. We stopped losing great people, and started to attract amazing talent. This all led to better results and the business took off, growing over 1000% in the next 3 years.
We learned the hard way that you can’t leave culture to chance! Now we’re on a mission to help HR leaders build simple recognition programs to shape great culture at their organizations.
Culture isn’t just the advantage your organization wants, it the one it needs right now
It’s never been more important for companies to invest in culture. There are 3 major shifts happening in the world of work at the moment which are driving changes in the attitudes and expectations of employees.
Millennials are now the largest segment in the workforce, comprising as much of 35% of total workers. Like other generations before them, millennials have their own working preferences, priorities, and aspirations, and are now looking to shape the future of work to fit what they want.
For this generation, that means workplaces where they feel they have a purpose, opportunities for growth, and where their contributions matter.
The pandemic has led many companies to shift to remote or hybrid work. While this has had many positives for employees, it has also made it harder for people to feel connected and engaged at work. Forward-thinking companies need to bridge the gap by working harder to create culture in this new, virtual environment.
For this generation, that means workplaces where they feel they have a purpose, opportunities for growth, and where their contributions matter.
The rise of remote work has also made it easier for employees to change jobs. With opportunities to work from anywhere, employees won’t hesitate to make a switch in order to find the right environment for them.
Finally, ‘The Great Resignation’ has highlighted some of the inherent cultural issues at companies across industries. Between April and September 2021, more than 19 million US workers quit their jobs, while 41% of employees have stated that they are considering leaving their position in the next year.
One of the chief driving factors behind this has been demand from employees for more positive, supportive work cultures where they feel valued, connected and engaged.
It might be tempting to view each of these 3 shifts as problems, challenges which make your job harder. Your leadership team might even tell you that the initiatives you’d need to put in place to meet the demands of the current workforce just aren’t cost-effective.
But what if you did take this opportunity to change your culture for the better? To create the flexible, nurturing, and inspiring environment that employees want?
And what if we told you that, not only would this not hurt your bottom line, but it would actually drive better results for your business?
There’s a period of Guusto’s history that we refer to as ‘The Long Slog’. After we started seeing HR people using our app to send gifts to employees, we started working with HR leaders to build a more robust employee recognition program. At the same time, we became the first company in Canada to close a round of equity crowdfunding.
We had a business idea that we knew had potential, some cash, and experts to help us make our product better. Everything seemed set up for Guusto to be a success. But then…
The Long Slog. For a few years, growth was slow. We tried everything from marketing campaigns to new sales techniques to product development strategies, and everything in between. No matter what, our competitors always seemed to be a step ahead.
The problem was that everyone else had access to the same playbook as us. If we found a good idea for a marketing campaign, a competitor could find it too. A new product innovation? Someone else had already done it. A unique sales approach? It was old hat by the time we even tried it out.
The information age has made it easier than ever for anyone to get the knowledge they need to start building their business. But it also means that any competitive advantage you find will be fleeting.
Except, of course, for your culture.
Because your culture is unique to your company, it’s the one thing that your competitors can’t replicate, no matter how hard they try.
It’s also sustainable. The advantages you gain from fostering a great culture will continue to be felt as your team grows and learns, becoming more knowledgeable, capable, and resilient.
In a way, it’s the competitive advantage that every other competitive advantage grows from. It’s the great multiplier.
Company culture creates...
94% of senior executives say culture is the most important driver of innovation (McKinsey)
72% of leaders say culture helps successful change initiatives happen (PwC)
94% of people managers believe a positive workplace culture creates resilient employees (SHRM)
Companies with strong cultures report a 4X increase in revenue growth. (Forbes)
Strong culture makes you 89% more likely to see an increase in customer satisfaction (PwC)
Happy employees deliver 31% higher production levels (Talent Works)
Companies with highly engaged employees have 59% lower turnover (Acadal)
Leadership Purpose-driven employees are 50% more likely to move into leadership roles. (LinkedIn)
We’re not the only ones who believe this. Countless business leaders have spoken about the value great culture can create, and in Deloitte’s 2016 Global Human Capital Trends Survey, 82% of executives agreed that culture is a potential competitive advantage.
A recent IBM study also revealed that companies whose HR teams strove to reinvent and improve their culture outpaced others in terms of profitability, innovation, and revenue growth.
With that in mind, you’d expect that most businesses would be investing heavily in building a strong culture, wouldn’t you?
Let’s look at some other statistics:
Only 28% of executives understand their culture well, and just 19% believe they have the ‘right culture’.
Only 54% of junior employees feel a personal connection to their company’s purpose.
Only 46% of frontline employees feel that culture is more important than strategy or operating model in their company.
25% of employees don’t know what their company’s mission is, or are indifferent to it.
19% of employees don’t understand their company’s core values, or don’t know them.
56% of percent of employees believe that they don’t have any career advancement opportunities.
37% of employees want organizations to reshape their culture to provide better work-life balance.
From executives to frontline employees, there is a large portion of the workforce that don’t understand what their culture is supposed to be, don’t believe in it, or don’t feel it provides them with what they need to be happy and successful at work.
Even when leaders recognize the value culture can bring to their business, they don’t understand what good company culture really means.
Culture is much more than just ping pong tables and happy hours
Every company wants a culture that really drives success. But what does that really look like?
Does it mean more team-building activities?
More company social events?
Beanbags and ping pong tables in the office?
All of these things are great, and might make your employees happier.
But ultimately, they won’t have much of an impact.
Your people might socialize more, but it probably won’t translate into meaningful collaboration during office hours.
Team-building events might seem like they’re improving your team spirit, but it won’t last.
And don’t be surprised if after a while, everyone is a bit tired of ping pong.
Too often, company culture is cosmetic. Management will put a few snacks and games in the office, organize happy hours after work, write their core values on the wall, and think, “Great! We have a culture now.”
Real culture goes beyond these surface-level components. It’s a deeper ethos that guides how your people do things, make decisions, and behave towards each other.
That’s what company culture really is. But what exactly makes a great company culture?
Properly shaping our culture was something we failed to do in the early days at Guusto. As we looked to correct this, we thought deeply about what great culture really is.
After some discussion, we decided that a great company culture for us would be one where our people have:
We call this the POW Model for Company Culture.
For people to truly ‘buy in’ to a company, they need to feel connected to the company’s Purpose. They need to understand how their job is meaningful and their contributions are impactful.
Once they do, they will pursue their work with passion.
64% of millennials won’t take a job if the company doesn’t have a strong sense of corporate social responsibility. (Cone Communications)
Create Purpose, Mission and Vision statements
Clearly articulate the why, how, and what of your organization.
Make employees ‘purpose-aware’
Connect your people with your purpose by explaining not just what to do, but why it matters.
Be transparent with your people
Consistently communicate where the company wants to go.
Focus on social impact
Promote volunteerism, initiate company partnerships with worthy causes.
Hire with purpose
Ask candidates how they connect with the company’s purpose during interviews.
People in today’s workforce need to feel they have Opportunity. Not just promotions and pay increases, but the chance to develop new skills, feel challenged, have a voice, and experience success.
When this happens, your people will prioritize their personal and professional growth, and be more engaged, more likely to innovate, and more willing to support others.
74% of employees believe they are not achieving their full potential at work due to a lack of learning and development opportunities. (Middlesex University Institute for Work Based Learning via HR Magazine)
Push to get better every day
Challenge your people to strive for continuous improvement.
Make sure your people aren’t afraid to fail.
Encourage your people to share interesting articles, books, courses, etc. with peers.
Budget for Professional Growth
Allocate resources for learning and development.
Create career development plans
Give every employee a clear path to growth.
To do their best work, people need to feel a sense of Wellbeing. They need to feel part of a community that is inclusive, where they are safe and supported.
When they do, they will bring their strongest, most capable, and authentic selves to work.
Create a safe environment.
Encourage your employees to take an empathetic, nurturing, and inclusive approach to working together.
Connect your people.
Run team-building events and activities, and encourage collaboration whenever possible.
Promote work/life balance.
Let your employees know that it’s okay to set boundaries and prioritize their own self-care.
Encourage healthy habits.
Run wellness challenges, and cultivate healthy workplace habits (standing desks, staying hydrated, etc.).
Recognize your people!
Recognition is a fantastic way to foster a more positive, inclusive, and welcoming work environment.
Good company cultures don’t just happen, they are created
No one wants their company to be a bad place to work.
HR teams don’t like to see disengaged employees.
Managers don’t try to make the people under them feel like they have no opportunities to grow.
CEOs don’t enjoy reading one-star Glassdoor reviews.
Yet, this is the reality in a lot of workplaces right now. The Great Resignation has shone a light on just how many employees haven’t been happy at their companies, and it’s likely been this way for some time.
So, why is it happening?
The problem isn’t that companies actively try to create bad working cultures. It’s just that, in many cases, they expect their culture to take care of itself.
They assume that if they hire good people, a positive culture will form as a result. They leave culture to chance, and hope for the best.
But that doesn't happen.
In the absence of a clear connection to the company’s wider mission, vision, and goals, ‘micro-cultures’ will develop across the organization, and every group will operate differently.
Some groups will operate in silos, focusing on fulfilling short-term goals that may not align with the company’s long-term vision.
Other groups might become disconnected from the teams and departments around them, because they don’t have enough outlets for communication and collaboration.
Others might be less likely to take initiative or embrace challenges, because they aren’t being empowered to take ownership of their work.
If your vision of your culture doesn't reflect the reality of working at your company, if all your employees aren’t encouraged to consistently live your core values in their day-to-day work, they really are just meaningless words on the wall.
When you don’t intentionally shape your culture, it shapes itself. And not always in the best way.
If our story sounds familiar to you, you might be wondering what you need to do to get your company on the right path.
How do you eliminate micro cultures and unite your people? How do you get rid of bad habits? How do you create new ones?
And how do you get employees to buy into this process, rather than feel forced into changing?
There are many elements to creating a more aligned, connected and empowered culture. But one of the most effective ways of creating it is to reinforce it in everything you do.
This is where employee recognition comes in.
When used strategically and intentionally, an employee recognition program can become the most valuable tool that you have to actively shape your culture.
Employee recognition isn’t a reward for success. It drives success.
Employee recognition is a nice-to-have, right?
It makes employees happier and offers a little additional incentive, but it’s not essential. It’s something that you do if you have room for it in the budget, but it shouldn’t be prioritized over other expenses that drive the real results for your business.
This is the way a lot of companies think about recognition. As a bonus, a small additional perk, but not a must-have.
The problem is, it might be a bit more essential to your employees than you think.
Employees across a range of different industries have been vocal about wanting more supportive, enriching, and connected work environments. A big part of this is feeling like their contributions are valued, which means recognition matters now more than ever.
But how can you make it a priority if you have more immediate needs in your budget?
In our view, a big part of the problem is that most companies' view of recognition is backwards.
They see it as a reward for success. Something for employees to enjoy after they reach their goals.
Strategies, resources, and larger incentives like commissions are what brings the real success, and recognition is just the cherry on top.
But what if you viewed it the other way around?
What if instead of being a small reward for the job well done, recognition was seen as something that actually drove success?
What if it was a powerful tool that could be used strategically to drive performance, culture, and action in the workplace?
That’s our vision for the future of employee recognition at Guusto. By taking a strategic, intentional approach to employee recognition, you can instill the values and behaviours you want to see from your people, and turn your culture into something that actually drives your company towards tangible results.
So, how do you do it?
Earlier, we spoke about how we created the POW Model for Company Culture as a roadmap for the culture we wanted to build at Guusto. But of course, creating that kind of environment is easier said than done.
The sense of Purpose, Opportunity and Wellbeing that employees have can sometimes be difficult to impact directly.
How do you encourage the right behaviours and approaches? How do you phase out ingrained habits or ways of thinking? How do you do this in a way that keeps everything running smoothly, and gets your team behind what you’re doing?
That’s when we realized that our own platform could be the tool we needed to put our plan into action. Recognition could help us improve in each of these areas, we just needed to to use it more intentionally.
With that in mind, we created the ACE Your Culture Framework, a 3-step strategy to shape culture, and more specifically, to leverage recognition to do it.
Align your people to increase their sense of Purpose and Wellbeing
Connect them to provide more Opportunity and promote Wellbeing
Empower them to encourage the pursuit of Purpose and Opportunities
Alignment is crucial to ensuring everyone works as a team in your organization. It’s about communication and transparency, and giving everyone the information they need to excel.
When there’s no alignment, then there’s no trust.
And without trust, you have no chance of building a great culture.
If you want to Align your people and foster trust, you need to build consistency into your recognition program.
This doesn’t mean that you send recognition like clockwork at scheduled times. In fact, this would be counter-productive, as the reward comes to be expected.
Frequent, variable rewards attached to actions do a better job at reinforcing behaviour. They feel like nice surprises, and release dopamine into our brains.
Also, recognition is more effective when immediate (or close to it). Not 6-12 months later at a performance review when no one remembers what actually happened. Recognizing people immediately for their work will help build a stronger association between their actions and rewards.
But building consistency starts at the top. Your management team needs to ‘walk the talk’ if you want everyone to buy in.
People pay attention to what leaders are doing, so if your managers and executives are using your program consistently, other people will, too.
Your leadership can set the tone for your recognition program by:
Consistently recognizing employees who push the company towards realizing its Mission and Vision
Making an effort to personally recognize people at all levels of the company
Recognizing people publicly at all-hands meetings
This creates a consistent foundation for your culture.
We’ll never get somewhere if we don’t know where “where” is.
Your mission and vision are the overarching goals that drive your company, but there are thousands of other short, medium and long-term objectives you'll need to meet to get there.
And when employees meet these objectives, they need to be celebrated.
You should recognize people for meeting objectives on both an individual and team basis. This helps to improve teamwork, while also encouraging each person to strive to do their personal best in their own roles.
Putting rewards in place for objectives also forces you to set very clear objectives, which is really powerful.
Depending on your industry, some examples of objectives that might deserve recognition could be:
100 happy support calls with no issues unresolved
1 week with no delayed shipments
50% overall company revenue growth over 1 year
Fewer than 10 bugs in a new feature release for a software product
10% jump in eNPS scores in a HR pulse survey
For best results, tie recognition to ‘real’ company objectives that represent real improvements, rather than just ‘rewarding people for showing up’ and hitting basic targets.
In many ways, your core values are the cornerstone of your company culture. While your Mission, Vision, and objectives will remind people of your big-picture goals, core values are much more actionable.
They should serve as a touchpoint to guide the decisions your employees make, their working approaches, and how they treat others.
Making them a key part of your employee recognition strategy can help you do that.
You can do this by:
Reiterating your core values in meetings and internal communications
Setting each of your core values as ‘Gift Reasons’ in your recognition program
Rewarding the monthly ‘top performer’ in each core value
By simply recognizing employees for demonstrating your core values, you highlight their importance and reinforce them to your team.
This strategy also serves to draw a clear line between your ideal culture and how it translates into your day-to-day work, making it easier for your employees to understand what it looks like in action.
And because they’re being rewarded for acting in line with your values, they’ll keep doing it.
Over time, demonstrating your values will become second nature to your team.
When we talk about connection at Guusto, we’re talking about getting people to care personally about each other so they have a sense of belonging. This is especially important in today’s landscape of remote work, distributed teams, and asynchronous communication.
When there’s no connection, there’s no collaboration.
And without collaboration, your team is just a group of individuals.
Recognition can be an incredible tool to foster a sense of unity and belonging in your organization by bringing mutual respect and appreciation to your culture.
Peer-to-peer recognition can be vital for fostering connection among your employees.
Employees don’t have a lot of ways to show their appreciation to each other. They may think the world of their colleagues, but opportunities to let them know don’t come up often enough. This can foster disconnect and leave people feeling isolated.
Peer-to-peer recognition gives your employees agency to recognize each other that they wouldn’t normally have, and that can be incredibly impactful.
Peer-to-peer programs can be monetary, where each employee gets a budget for rewards, or non-monetary, where employees recognize colleagues but without a tangible reward. Either way, it can have a massive impact on morale, connection, and engagement.
You can also use peer-to-peer recognition to further connect your team by:
Running weekly or monthly draws for additional rewards from peer-to-peer shoutouts
Offering a monthly reward for most recognition received or given
Offering a quarterly reward for the most recognized employee for each of your core values
These tactics can do wonders for team spirit, and drive further connections and collaborations.
Recognition can also play a vital supporting role in your efforts to build community in your organization.
Attaching rewards to your team-building activities can help to boost participation and excitement. You can also recognize your social and planning committees for all the hard work they put in to make these initiatives possible.
There a number of ways to build recognition into your team-building efforts, such as:
Building wellness challenges and offering rewards to everyone who meets certain goals
Offering rewards as prizes for team-building events like office trivia, games, etc.
Sending gift cards for employees to enjoy coffees/Uber Eats on you during team-building events to reward and encourage participation
To truly connect your teams, it’s important that your team-building activities are as inclusive as possible. For instance, your wellness challenges should focus on obtainable goals, so you don’t put off people who are less active than others. You should also include both physical elements like exercise, and mental wellness elements like meditation.
In addition, you should use team-building activities to build connections among employees who might not get a lot of opportunities to do so in their day-to-day work. For example, you could create cross-disciplinary teams for your events with employees from across different departments or locations, so that your people get the chance to interact with colleagues they might not have a lot of contact with.
You can also get creative with your events, and work in activities that help your employees get to know each other better, such as trivia questions that relate to facts about their coworkers.
Recognition is more effective at connecting teams when it’s public.
When one employee publicly recognizes another, it shines a light on that person’s contributions for the whole team, and encourages them to appreciate that person more.
Employees who see others recognizing each other will also be encouraged to recognize their teammates more, accelerating adoption and usage of your program.
You can drive public recognition by:
Highlighting recognition through the company intranet, bulletin boards, newsletters, and other channels.
Creating a recognition channel in MS Teams or Slack
Recognizing employees at team meetings
Do keep in mind that some people don’t like the spotlight, and prefer more private recognition, and that’s fine! But celebrating those who do appreciate being acknowledged publicly can help you build a culture of recognition more quickly.
At Guusto, we make time for public recognition every week at our all-hands meeting.
We use the Draw feature on our platform to run a prize draw for anyone who’s been recognized through our Shoutouts feature that week, with rewards for each winner.
Next, we invite verbal shoutouts from anyone who wants to publicly show their appreciation for a colleague.
We also award monthly prizes to the top 3 on our Leaderboards for most Shoutouts given and received.
Empowerment is all about helping your people acquire the skills they need, and then letting them own their projects and results.
This means allowing people to take risks, push beyond their comfort zones, and most crucially, to make mistakes.
In companies where people are afraid to fail, there’s no innovation. People aren’t empowered to push to get better, so they don’t.
When there’s no empowerment, there’s no leadership.
And without leadership, there’s no success.
You can use recognition to empower your people by rewarding them for owning projects, leading effectively, and developing their skills.
If you want employees who aren’t afraid to take risks, innovate, and lead, they need to be confident.
And the best way to build that confidence is to invest in giving them the skills and knowledge they need to succeed.
You can use recognition to incentivize learning and development by recognizing employees when they:
Complete courses and trainings
Implement new learnings in their work
Bring innovative ideas to their roles
Again, it’s important to recognize employees for trying new things even if they fail. This will make your people feel safer when taking on new challenges.
What’s more, don’t forget to recognize managers and senior staff for taking the time to help others learn and develop. This will ensure that it’s prioritized at all levels of your organization.
Coaching should happen at all levels of your organization, with everyone from executives to junior employees helping others to get better.
You can also coach recognition itself. A culture of recognition doesn’t happen overnight, and in many cases you might need to give team members a push to embrace recognition and do it consistently.
After you launch your program, talk to employees about why their participation is important, and coach managers and have managers coach employees in how and when to recognize each other.
You can also take further steps to coach managers and employees in recognition by:
Encouraging them to set goals together and reward success
Integrating recognition into performance reviews
Sharing recognition benchmarks with your team
The last point can be very effective. You can share data from your program, and you can also seek feedback from your employees about whether they feel recognized by your company through surveys and share these results with your managers.
We spoke previously about how peer-to-peer recognition can help connect teams and give every employee a voice, but it’s arguably even more important that your managers are empowered to reward their people.
Managers have limited means to make their top talent feel valued. They usually don’t have much control over pay and other benefits, perks, or even advancement opportunities. Recognition can become one of the most valuable tools at their disposal when it comes to engaging and motivating their people.
For this to happen, the rewards they offer employees need to be tangible, which means giving them a budget for recognition, and making sure they use it.
When giving your managers budgets, you should take steps to:
Make your program as simple as possible
Minimize approvals as much as possible
Share habit-forming tips and strategies to help them recognize their team consistently
This gives your managers ownership of the program, helps drive adoption, and ensures they don’t feel like they have to jump through too many hoops just to recognize someone.
So, now that you see the potential of culture as a competitive advantage, how do you get others to see it, too?
The problem is that great culture can be somewhat subjective, making it harder to measure. As a result, leadership teams tend to give more priority to things that provide more tangible, visible returns, and have clearer markers of objective success.
This makes getting stakeholder buy-in a challenge.
How do you convince them that this is something your company needs to prioritize?
How do you link the culture you're building to gains in areas that matter to them?
And how will you even know if your efforts have been successful?
One of the best things about a recognition program is how easy it is to track your results. You can see how many of your employees are using recognition, how much they are doing it, and why.
These are more than just vanity metrics. They’re highly instructive KPIs which you can use as a barometer to track how aligned, connected, and empowered your people are.
And as your program progresses, you can also track correlations between your culture-building efforts and gains in objectives that really matter to your leadership, like engagement, turnover, and production.
We’ve seen this for ourselves. Since we started using recognition to shape our culture, Guusto has seen:
Over 100% sustained revenue growth every year
220% increase in headcount in 2021 alone
Turnover rate slowing to under 2%
Several of our clients have had similar experiences. Once you start really recognizing your people, it won’t take long to see the rewards for your efforts.
You just need to know where to look.
In the previous chapter, we talked about how recognition can help you shape culture by Aligning, Connecting, and Empowering your team.
So when you measure the success of your program, you should focus on these 3 areas. Here are 3 simple KPIs you can use to track your people’s alignment, connection and empowerment through recognition.
In an aligned company, everything your employees do should reflect your core values. But how do you know if this is happening?
Recognition can actually provide a simple solution to make your core values measurable.
You can explicitly tie recognition to your core values by setting them as ‘Reward Reasons’ in your recognition system. Not only does this reinforce your core values, but you can also use your reporting to track which values are being put into action in your workplace, and which ones aren’t.
As your program progresses, track the growth of each value in terms of the number of times employees are being recognized for demonstrating them. As your team becomes more aligned, each value should gain traction.
Measuring your core values through recognition can also tell you which values you need to work harder on instilling in your employees.
If you find that your team isn't using a particular value as a gift reason very often, you can coach managers and employees to put that value into action more often.
This KPI can also tell you where the company as a whole can improve, providing you with direction on what additional resources, policies, and processes you need to put in place to build the culture you want to see.
Let’s take Guusto’s core values as an example:
Because each of these values helps guide our team’s daily work and decision-making, their representation in our Gift Reasons report can be very instructive. For, instance:
If an employee is not getting recognized for demonstrating the ‘Lead’ value, their manager might encourage them to take more ownership of their work.
If we found that a manager wasn’t using ‘Leap’ as a gift reason, our leadership team might speak to them to highlight the importance of encouraging employees to take risks.
If employees aren’t being recognized for our ‘Learn’ value, that could be a sign that we need to invest more in learning and development resources.
If a specific department isn’t strong on our ‘Listen’ value, it could mean that they need to make more space to give and receive feedback from others.
It’s like a 360 performance review that provides you with a tangible measure of how well your company is living its culture.
In a truly connected company, there’s a sense of belonging.
Collaboration happens naturally, because people feel comfortable reaching out to each other for help.
Feedback is easy, because everyone plays their part in making the process positive and constructive.
Most importantly, everyone feels valued for their efforts. They feel like their contributions are seen and appreciated, which is where recognition comes in.
But recognition can only help you connect your employees if they use it.
To truly see the value of recognition in creating connections, your employees need to use it as a tool to actively foster those connections.
That’s why the most important metric you can measure to judge how well your recognition program is connecting your team is simply the percentage of people that are participating in it.
In Guusto, you can easily see the participation rates for your program in your reporting dashboard, and track its progression over time:
Participation targets will vary depending on the size of your company and the nature of your program. Also, keep in mind that not all participation rates are created equal, and a good benchmark will depend a lot on the software you are using.
If you are using a points program, it will be much easier to achieve high participation rates, if your people are only sending a small number of points with minimal cash value. 10 points could be worth as little as ten cents on some companies’ programs. You could need 100,000 points to buy an $18 toaster from Walmart!
If you’re using a system like Guusto, which offers dollar-for-dollar value on rewards, your participation might be lower, but the rewards being sent will be much more tangible, meaningful, and ultimately more impactful.
While a good overall participation rate will always be a key benchmark in any recognition program, you can get a sense of how well your program is helping your team connect with each other on a more granular level by tracking:
Participation across departments/locations
Are some teams embracing recognition more than others? You can compare and contrast participation across different departments or locations to find out.
Participation across seniority levels
Are your managers playing a key role in creating a culture of recognition at your company, or are they falling short? Are your employees using peer-to-peer recognition? Is your leadership setting an example from the top down? Looking at which employees are leading the way with recognition will tell you a lot about your program, and about your culture as a whole.
Are different departments in your company working together, or in silos? Look at whether your employees tend to recognize people from other business functions or just within their own teams to see how collaborative your culture really is.
Participation from a DEI perspective
Is your culture truly inclusive? Tracking the prevalence of recognition across different groups can be a valuable measure for your DEI efforts.
Again, this data won’t just tell you about where your employees could improve, but also where your company as a whole is falling short.
You might find that you need to make more of an effort to foster collaboration between departments, step up your DEI efforts, or just better communicate your desired culture to different teams.
When recognition truly empowers your people, it becomes more than just a means to show their appreciation to each other. It becomes a tool they use actively and strategically to drive outcomes.
Your leadership, managers, and other employees will be incorporating it into their day-to-day work to drive innovation, collaboration, and growth.
It gives them a voice, and the agency not just to create the culture you want to see at your company, but drive the culture they want to see as well.
This means they’re not only using it, but using it frequently.
As a result, when trying to measure how much recognition is empowering your people, it’s best to look beyond overall participation and instead track how often your employees are recognizing each other.
In Guusto, this can be easily measured by tracking the Average Gifts Sent in your gifting reports, or the Average Shoutouts sent in your Shoutouts report.
The average recognition sent will vary depending on the number of employees involved, the budgets allocated for rewards, and whether you are using monetary recognition, non-monetary recognition, or a combination of both. As with participation rates, the average gifts sent will also be higher if you are using a points program, but the gifts themselves will have less value.
Just as you can track participation on a more granular level, you can also track the average recognition sent by department, seniority, or other criteria to compare and contrast your results across the company.
There are also a number of additional metrics you can track to gain deeper insights into how recognition is driving empowerment among your team:
Percentage of budget used
The percentage of your overall monthly or quarterly gift budget that is being used is another way to measure how empowering it is for your team. If the percentage is high, it’s a sign that they’re seeing an impact from it.
Percentage of people using full monthly budgets
In addition to tracking what percentage of your budget is being used, you should also keep an eye on the percentage of people who have used their full monthly budget. This will give you a sense of how widespread adoption is across different departments and employees.
Finally, you should pay close attention to your Leaderboards and see who is sending recognition the most. Do you have a few top performers driving a lot of your usage, or is it more evenly spread across your team? Do the same people always occupy the top spots, or does it change over time? Are your top performers the people you expect?
Combined with your data on average recognition sent, all of this information can be used to drive actionable changes to both your program and your culture. For instance, if people are using their full budgets frequently, it might be a sign that you should consider upping their budgets and expanding the program.
Opportunities for a Nudge
At the other end of the scale, if people aren’t making full use of their budgets and sending gifts regularly, you might need to do more to communicate the value of recognition and coach performance in your team.
Recognition can help make your culture measurable, but how do you measure the high-level impact that culture has on your company’s bottom line?
In the last section, we talked about some KPIs you can use to measure how your recognition program is driving better culture based on our ACE Your Culture Framework.
Now, we come full circle, back to the POW Model for Company Culture we discussed in Chapter 2. By using recognition to align, connect, and empower your people, you create a culture they will have Purpose, Opportunity, and Wellbeing.
And each of these things can drive tangible gains in a number of areas.
Having a sense of purpose will make your team more engaged, passionate and committed.
And that can result in huge gains in one metric that all of your leaders care about – productivity.
According to Gallup, companies with higher than average employee engagement levels benefit from up to 21% higher productivity.
Even if we’re being conservative and estimating your gains at half of that – around 10% – that’s still a massive return.
That’s even before you take into account the effect that great culture can have on helping you recruit better talent. By helping improve your employer brand, your culture will make your company more desirable, and you’ll even have employees advocating for you and referring people in their network. With more and more star employees on board, you’ll get even better results.
Measuring any productivity gain you might see from recognition is as simple as looking at your productivity levels at the start of your program, and then tracking any changes as the program progresses.
Productivity metrics will largely depend on what business you’re in, but some examples might be the average response or resolution time to customer service tickets, the number of rooms cleaned per hour by hotel staff, or manufacturing output at a factory.
When your people feel like they have opportunities to grow and develop at your company, they’ll stick around longer.
When you factor in hiring, training, ramp-up, loss of expertise, and higher workloads for other employees while a position is vacant, it’s estimated that employee turnover costs around 38% of the average salary of that position. When you consider that the average turnover rate at most companies is 44% annually, that’s a huge net loss.
However, Besin by Deloitte research found that companies that scored in the top 20% for building a “recognition-rich culture” had 31% lower turnover rates.
Even if we estimate your gains from recognition at about half of that, you’re still looking at a 15% reduction in turnover, which could be huge for a lot of companies.
Not only that, but an engaged workforce can speed up the onboarding process by about 10%, leading to even more cost savings.
Again, measuring the impact your recognition program has on retention is as simple as benchmarking your turnover rate (the percentage of employees who have left the company over a given period) at the start of the program and then tracking any changes as you move forward. We’d recommend reviewing it after one year, as that should be enough time for your efforts to drive meaningful change.
We’ll preface this by pointing out that the ROI of improving employee wellbeing is immeasurable.
Making your people feel supported, happy, and healthy will drive gains in productivity, retention, and countless other areas.
But one very specific gain you can see from employee wellbeing is reduced absenteeism. When employees are healthier, they’ll be less at risk of burnout, which means less absenteeism and less costs from lost productivity.
The average employee is absent around 8 days per year. A happier, healthier, more engaged workforce could gain you back as much as 1 day per person.
To measure the impact recognition has on absenteeism, simply benchmark your absence rate at the start of the program, and then review as you move forward. Keep in mind, though, that a lot of things can cause absence, so be sure to take into account seasonal bugs, changes in policies, and other factors.
There’s an additional gain you’ll see from using an employee recognition software program like Guusto that’s often overlooked – reduced admin time.
While some companies opt to run ad hoc or in-house recognition programs, this can be incredibly labour-intensive. Between approving requests, ordering and sending gifts, and keeping track of expenses and taxable benefits, the time needed to administer these programs adds up fast, and some companies even need to take on new hires just to run the program.
Software like Guusto makes administering recognition a breeze, and can save you up to 10% of the total cost of your program in reduced admin time.
How does this all add up to 1400% ROI? Let’s break it down.
As an example, let’s take a company with a $25 million annual payroll). If they invested just 1% of that into recognition, here’s what their ROI would look like using our conservative estimate:
Team member count:
Growth per year:
Cost of rewards:
($2.50 x 500) = $15,000
1 day average reduced absenteeism:
10% efficiency gains:
10% reduced onboarding costs:
15% reduced turnover:
10% increase in productivity:
How does this all add up to 1400% ROI? Let’s break it down.
As an example, let’s take a company with a $25 million annual payroll). If they invested just 1% of that into recognition, here’s what their ROI would look like using our conservative estimate:
(1,557% per year)
Purdy’s Chocolatier is a Canadian confectionery manufacturer and retailer with over 900 employees spread across 70 different locations.
Purdy’s has always prided itself on its great culture, and has been recognized as an Aon Best Employer, as well as one of the 2020 Glassdoor Best Places to Work.
But something was missing. While their employees were mostly happy, they consistently received feedback in surveys and exit interviews that the company could be doing a better job celebrating wins and recognizing people.
Purdy’s implementation of Guusto is a perfect example of how to use recognition to align, connect and empower employees.
One of the most crucial steps Purdy’s took to make their program a success was ensuring their executives ‘walked the talk’ and set an example to employees by sending recognition frequently.
Purdy’s also tied their recognition program to their company’s core values, to ensure that people were being recognized for actions that reflected their culture.
Purdy’s used Guusto’s Shoutouts feature (then known as the Nomination Box) to create a peer-to-peer recognition program where all employees could recognize each other, supplemented with rewards budgets for admins.
Crucially, they also made the program company-wide, rather than divide into different locations or functions. This approach helped to really strengthen connections across the company as a whole.
The company also does monthly prize draws of all nominees for $50 gift cards, and highlights and promotes Shoutouts in internal communications and company meetings.
Purdy’s approach to their program is a perfect example of leadership ‘coaching performance’ in recognition.
The company shares weekly reminders to its staff to recognize each other, spotlighting eye-catching recent Shoutouts to inspire them. They also review their managers' usage of adoption regularly to ensure they are leading by example.
3x target participation rate in first month
20 Average gifts sent per month in 2022
10% Growth in ‘We respect and support each other’ value
Purdy’s recognition program exceeded expectations from day one. Their team had set a goal to try and get 40 shoutouts in the first month, but ended up receiving 3 times as many.
That number continued to rise, to the point where they were seeing 400 Shoutouts a month regularly.
More importantly, it was working. After running the program for a while, they found that the previous issues with recognition had largely disappeared from feedback.
This is even more remarkable considering the program has been driven largely by non-monetary recognition. While additional rewards are added in some cases, for the most part employees have gotten a lot of satisfaction just from saying ‘Thank you’.
This is a great testament to the sheer power of recognition, and shows how it can become a cornerstone of your culture regardless of your program budget.
As much as great culture can help drive success in a number of areas, the most valuable return you’ll see from your culture is people.
The people you’ll attract, retain, and develop as a result of your culture. The people who will go above and beyond to achieve your goals. The people who will drive innovation, growth, and differentiation for your business for years to come.
We’ve talked about how focusing on Guusto’s culture helped improve our revenue, headcount growth, and other key areas. But we thought you’d also like to hear what our employees think of the culture we’ve created, and what they have taken from the experience.
We created this manifesto because we truly believe that Culture is the Ultimate Competitive Advantage, and that Recognition is the best way to shape it.
We hope that this manifesto has helped you see that, too, and that you’re now on a path to a cultural transformation that will drive continuous growth in your organization for years to come.
And if you want to take the next step, we’ve got you covered…
So now you know the advantages of building great culture, how do you unlock them?
Our recognition masterclass will walk you through 9 steps you can take to use recognition to ACE Your Culture and build a more engaged, innovative, and driven team.
You’ll also get access to planning tools and additional resources to put your program into action!
The class is available on-demand, and you can sign up any time for free!