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Appropriate recognition supports company´s success
How Chief Financial Officers contribute to employee retention
Strategic recognition of employees not only drives their loyalty, but may also generate a positive impact on the financial development of the company. Using appropriate recognition programs, Chief Financial Officers may establish permanent employee performance enhancement and additionally safeguard the overall development of the company.
By Manfred Pfeil
Especially in times of a strained economic climate, many a CFO will subscribe a common saying like “All of our employees should rejoice being employed in our company”. These kinds of statements reveal that scores of managers in Europe do not really esteem their employees as company’s most important resource. Such attitudes are also manifested when it comes to incentives: in the area of finance, gratifications are mostly defined in terms of an annual bonus. Generally employees receive an annual bonus, if predominantly result-oriented targets were met, however, behavioral patterns are commended much less. But personal attitude and attention of employees primarily affect the positive impression of shareholders, customers and suppliers, if it comes to the company´s overall performance. No matter if acting as Treasurer, Controller, Purchaser or Receptionist: each employee above all represents your company, even in private life.
We all heard of well-intentioned, somehow old-fashioned and more or less unsuitable approaches of many CFOs to express recognition in terms of the annual Christmas dinner or an annual bonus payment, equally distributed to all employees of the department. These activities do not actually correspond to tangible projects and miss out on personal, positive employee perception. Your staff members expect continuous and realtime recognition with plausibly rendered feedback based on measurable performance figures, which can be influenced by personal behavior.
If service delivery to customers constitutes one of your major company values, managers should not simply take note of “the extra mile” an employee takes in this field, but should explicitly esteem this performance as positive example and make it clearly visible for other employees. This allows strategic recognition to grow and motivates others to imitate such behavior. The Watson Towers Talents Report 2003 already highlighted, that 15 percent increase of employee engagement corresponds to a 2 percent raise of operating margin.
Cost-saving approach for Chief Financial Officers by employee retention
A close relationship of employees with the company pays off from the point of view of Chief Financial Officers: companies with low employee retention will suffer from much higher costs caused by loss of know-how, recruiting efforts or absenteeism compared to expenses created by introduction of a structured recognition program.
Basic prerequisites of strategic recognition are constituted in a definition of characteristics and relevance of company values and visions which are linked with strategic business objectives. Simultaneously available market offers must be searched for Employee Recognition Programs, which allow low effort implementation and help to save costs. Additionally, CFOs and all other managers must participate in workshops to cultivate personal, positive attitudes in relation to the defined company values and how to promote such positive behavior as standard for the workforce.
Any Employee Recognition Program selected should allow expressing recognition in increments from a basic acknowledgement of expected behavior to various higher-graded ratings. Most important, express your appreciation on the spot and in public. The recognition given may be fixed in monetary value or in scores. These will be collected on a personal employee account to be exchanged individually for material assets only at any time selected by the employee.
Avoid additional Incentive-Programs
Upon introduction of a strategic Employee Recognition Program, all other possibly existing Incentive-Programs should be ceased. Additionally, the annual performance bonus of managers should considerably depend on results achieved by implementation and promotion of the Employee Recognition Program in their respective area of responsibility.
Normally, there is no need for CFOs to worry about additional costs generated by introduction of a Strategic Employee Recognition Program: money spent sporadically for incentives in the past, usually covers the majority of expenses required for an Employee Recognition Program.
Best practice companies like DOW, Symantec, GE, P&G and DHL already use strategic Employee Recognition Programs and successfully measure, how rising performance and motivation of employees causes tangible, positive improvements of facts and figures, deliverables, and stronger customer relationship and employee retention.
Manfred Pfeil is Managing Partner of Direct Search Consultancy treasury executives 53° gmbh, Hamburg.