The Power of Global Strategic Recognition Best Practice

The Power of Global Strategic Recognition Best Practice Institute On-line Learning Series June 23, 2009 12 p. m. Eastern Time

Who Is Globoforce? What Is Global Strategic Recognition? …

Strategic Recognition Drives Employee Engagement

Employee Engagement Defined An output-based concept describing how aligned and committed employees are to the company, such that they are at their most productive. International School of Human Capital Management Faculty of Employee Engagement London, England 2007

Employee Engagement Matrix X √ √ X X X Low Alignment High Alignment vs. Commitment Low Commitment High Adapted from Journal of Applied Human Capital Management Volume 1 No 1 2007

How Engagement Affects Financial Performance A 15% improvement in levels of employee engagement correlates with a 2% improvement in operating margin. Companies with HIGH Employee Engagement Towers Perrin Global Workforce Study 2007 -2008 Companies with LOW Employee Engagement -Towers Perrin

Recognition ROI “The most successful organizations make engagement an ongoing priority, not a once-a-year event. ” -- Blessing White, 2008 Source: 2008: Mc. Kinsey and Company; Compensation Roundtable Research

Best Practices: The Five Tenets of Global Strategic Recognition

Tenet 1: CLEAR GLOBAL STRATEGY

Evolution of a Clear Global Strategy Global Strategic Recognition By Geography Europe U. S. Asia By Division

Tenet 2: EXECUTIVE SPONSORSHIP WITH DEFINED GOALS

Executive Sponsorship with Defined Goals Strategic initiatives demand Operational Excellence processes driven by executive sponsors “Strategically aligned recognition drives “At Amgen, we measure success by our the behaviors, actions and results that lead to business success. At Dow, it is important that everyone understand why recognition is important, important know how to recognize employees effectively, and make recognition a part of every day. ” day ability to meet challenging business, functional, and individual goals while living the Amgen values I am enormously proud of the accomplishments of our Kevin staff. Sharer Bravo! enables Amgen staff Chairmanworldwide of the Boardto nominate others members Andrew Liveris President & CEO and be recognized for those accomplishments. ” accomplishments

Tenet 3: ALIGNED WITH COMPANY VALUES

Take the Company Values Off the Wall… … and Bring Them to Life! Team member recognizes another for “Integrity” Manager approves recognition Recipient acknowledged at team meeting Recognitions communicated across company

Aligned Values Reporting

Tenet 4: OPPORTUNITY FOR ALL TO PARTICIPATE

Maximize Program Impact by Maximizing Participation Old School Incentives $$$$ Innovative Recognition $ $ $ High $ $ $$$$ Lo w

Strategic Recognition: The Ideal Levels of Participation Companies with the highest employee satisfaction scores have recognition programs with weekly nominations touching 5 -8% of employees! This is the tipping point into strategic recognition. Number of nominations as a % of headcount over weeks since launch. Nominations under 1% of employees per week will not drive engagement, impact strategic issues, or affect employee satisfaction.

Tenet 5: POWER OF INDIVIDUAL CHOICE

Cash Is Not King Compensation & Cash Rewards Local Recognition Awards Choice

Recognizing a Diverse Workforce

Weekly Low Impact Tactical Recognition Strategic Recognition Program Employees engaged Culture of appreciation Strategic Alignment Monthly Low penetration. No values adoption company-wide Low Impact Tactical Recognition Bi-Annual Prestige Awards Focus on the Elite Little to no impact on company culture or employee performance Annual FREQUENCY OF RECOGNITION Daily Not All Recognition Programs Are Created Equally 0 10 20 30 40 Low, infrequent Psychic Income value to participants 50 60 70 80 PERCENTAGE OF EMPLOYEES RECOGNIZED 90 100

21 st Century Recognition is about: Global, Strategic, Recognition. Best Practices: • Clear, Global Strategy • Executive Sponsorship • Alignment with Corporate Values • Opportunity for All to Participate • Power of Individual Choice Deliver: • Increased Employee Engagement and Performance • Culture of Appreciation • Global Corporate Insight and Governance

The Power of Strategic Recognition in a Recession

Rescue Employee Morale & Productivity

Employee Stimulus Plan

The Critical Role of Recognition in Recessionary Times • “Recognition helps people to be resilient. Businesses right now. . . they’re trying to survive. And to survive you’ve got to have some psychological resilience. You’ve got to have employees who are positive despite the negative situations around them. . . I would argue that recognition is even more important in times like this. ” -- Jim Harter, Gallup, Oct. 20, 2008

2009 Globoforce Survey Says. . . Employee Morale, Productivity Are Dropping What impact do you expect layoffs and reduction or elimination of programs and benefits to have on the following areas?

Realize Savings on Recognition Investment

Consolidate Programs and Save • 50 -70% on current investment in multiple disparate programs • 30 -40% on shipping and handling • 10 -40% on inappropriate, inequitable awards • 100% of international shipping, customs & duties fees

Get the Most Bang for Your Recognition Investment “For the same amount of money, a non-cash incentive created more than twice the performance improvement. ” -- University of Chicago Study, 2003 “Paying people a compliment appears to activate the same reward center in the brain as paying them cash. ” -- Japanese National Institute for Physiological Sciences, 2008 “Acknowledging staff achievements – praising employees – had the same impact on job satisfaction as a 1% increase in pay. ” -- White Water Stra

Gain Competitive Advantage

Smart Companies Prepare for the Upturn Now “Companies learned important lessons in previous economic downturns about the importance of talent in creating competitive advantage, and so are reluctant to take actions that could hamper their recovery once the economy improves. ” -- December 2008 “Great companies see tough economic times as an opportunity to double down on their investment in people. Gallup’s most recent metaanalysis revealed that compared to the least engaged workgroups in a company, the most engaged workgroups have: • 62% fewer accidents, • 1% less theft and breakage, • 51% lower turnover (for low-turnover firms) • 27% lower absenteeism. ” -- November 2008 “Stressed organizations could be in danger of making employee reward decisions that they come to regret if they abandon too readily the principles that underpin their people strategies. ”

In Summary Global strategic employee recognition: Drives Employee Engagement Has 5 Important Tenets Aligned Power Executive Clear Opportunity with of. Global Individual Company Sponsorship Strategy for Choice All Values Rescues Employee Morale & Productivity in a Recession

Thank you! Any questions? www. globoforce. com www. globoforce. blogspot. com Special thanks to the Best Practice Institute