Short Analysis of Recognition Practices in India

Over the last few years, there has been a lot of talk about Indian companies adopting global best practices in a number of management areas. One of the questions, clients invariably ask me when I meet with them, is to find out how other Indian companies are adopting “Recognition” and how much they spend on “Recognition”. I did an analysis of 30 large companies in different industries I had met with (think of it as the Sensex companies for Recognition), and collected some information about their Recognition activities and spends. Here are some of the key findings:

1) RECOGNITION ADOPTION: Adoption of Recognition as a strategic tool varies from being virtually non-existent (in one case) to being heavily integrated within their culture (in 2 companies, the practices seem to be robust enough to the extent, that my colleague and President of the Recognition Management Institute (www.realrecognition.com), Roy Saunderson (http://rideau.com/blogs/roy-saunderson), believes that they could be a candidate for RPI’s Recognition Best Practices award (www.recognition.org – Recognition Professionals International), if the companies applied.

2) RECOGNITION SPEND: Not surprisingly, the spend on Recognition is much lower than the North American standard of over 2% of annual Payroll costs. The annual Recognition spends in India range from .002% to about 1% of payroll costs, with the average and median both around 0.5% of payroll costs. To put the figures in perspective, if a company has about 15,000 employees and an average employee salary of INR 200,000 per annum, then they would be spending around INR 1.5 Crores annually on various Recognition initiatives. A number of companies on my list are probably spending more indirectly (e.g. travel costs related to big recognition events, additional travel costs for overseas holidays etc.), but I have used conservative figures based on whatever credible information I had with me.

3) RECOGNITION REACH: A bulk of the Recognition spend (over 70% in most companies) is focused on the top performers (10-15% of the employee population). This is an area companies have to really think about and determine how they can adopt Recognition in a manner that can touch a larger employee population – I am not professing recognizing and awarding employees for things that don’t merit recognition, but companies need to design recognition programs to recognize employees for exhibiting behaviours/company values and doing activities that drive towards the vision and business objectives. The focus currently seems squarely focused on business performance providing very few opportunities for the non-superstars to get recognized in a meaningful manner.

4) AWARDS: The most popular award for top performers is an international holiday with Bangkok clearly being the favourite destination. Other popular destinations were Goa, Dubai and Malaysia/Singapore. Cash and Cash equivalent awards are very popular and extensively used.

5) RECOGNITION PROGRAM OWNERS: Most of the Recognition programs seem to be driven by the HR resources supporting a business rather than by the line managers in the business. System adoption for Recognition programs is minimal (a few companies use their intranet and a simple plug-in solution to automate some of the processes), with a bulk of process around nominating and awarding employees being done manually by the HR resources. Two companies have adopted a globally proven and robust platform.

I can go on and on with my analysis (probably better suited for a white paper once I collect more information and obtain permission from companies to share specific data), but I will stop here and let you folks digest the information above.