by Rob Zell:

When teaching leadership and management skills I refer to maintaining and/or enhancing self-esteem as a foundational practice for all leaders. When I do, I typically get a few participants who give a very subtle eye-roll or smirk. I can understand why: as leaders in a fast-paced, bottom-line focused organization, who has time to manage the self-esteem of others? Aren’t we all big boys and girls? We all come to work and have a job to do, so let’s just set aside all the personal feelings and get the job done.

While it’s certainly true that we owe it to the organization to be a little thick-skinned about feedback and look at criticism as a means to improve, a little praise and recognition goes a long way. It also has a measureable impact on the organization and profitability. Don’t believe me? Let’s look at a couple of examples.

I recently read an article about a server who comped a dessert for a family because the kids were well-behaved in the restaurant. As a parent, I try to influence my kids to behave in restaurants out of respect for other patrons and the staff. To be recognized for your efforts as a parent by complete strangers makes you feel pretty good. The value of the recognition in this example was four dollars. But what’s the return?

  • Net profit* from family that returns to dine there one extra time (on a ticket of $60) = $3.00
  • Net profit from 10 extra guests from the family sharing the story (Average check of $20) = $10.00
  • Net profit from 10 extra guests who see the story on crowd sourcing review site = $10.00
  • So the ROI is (($23 – $4)/$4) *100 = 475%

*figures based on average net profit of 5% of guest check

Not too shabby. And I think my estimates are on the low end. A small amount of recognition, for something we hope all parents teach their kids (it’s what they are supposed to be doing – teaching manners, etc.), leads to a HUGE return on investment.

Of course most of the people I teach aren’t facing the guest. But they do manage or work with many people across the organization. How important is maintaining/enhancing self-esteem for those people? Let’s dig into that idea.

In a study by the Corporate Executive Board, discretionary effort is defined as, “Employee willingness to go ‘above and beyond’ the call of duty, such as helping others with heavy workloads, volunteering for additional duties and looking for ways to perform the job more effectively.”

Discretionary effort and “Intent to Stay” make up employee engagement. Engaged employees are more committed both rationally and emotionally (read that as engaged heart and mind) than non-engaged employees. So how engaged do you think employees are? In the same study, researchers found that engagement rates had dropped by almost 4% in Q4 of 2012. The level of discretionary effort hovers in the 25-26% range for most industries. The Intent to Stay metric hovers around 36%; the converse is that about 60% of the workforce is thinking about leaving their company in the next year.

So what’s the value of making an impact on these metrics? Let’s say we take an organization of 2,600 people. Using these figures, almost 2,000 are just “putting in their time” and about 60% (about 1,500 employees) are thinking about leaving, even going so far as to send resumes and make calls. Providing just a small amount of recognition, in order to engage 10% of the 2,000, could increase productivity and commitment. If just half of those were part of the 1,500 considering leaving, a mere 100 people, and they stay, we save approximately $1.1 million in turnover costs.

The point is that maintaining/enhancing self-esteem is easy, cheap and provides big return. It doesn’t take much time or effort to write a note, say “thank you” for quality effort or provide specific motivational feedback. Even providing developmental feedback with the attitude of “do no harm” can go a long way to engage and retain employees. We all like to feel that the work we do is valued and appreciated.

How often you provide recognition is up to you. The argument that we shouldn’t recognize people for doing their job doesn’t really hold up in the face of these figures. We hired people to perform a specific job for us. If we want them to continue to do those tasks with us and contribute discretionary effort, we owe it to them to provide recognition to keep them engaged.

What do you do to recognize your employees? Have you noticed a return on that effort?

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