How Much Does an Employee Recognition Program Cost?

How Much Does an Employee Recognition Program Cost?

August 15, 2013

A common question we hear from companies considering an employee recognition program is “how much should we budget for it?”  Typically these companies have done some initial research, have spoken with colleagues, and are interested in ballpark numbers in order to do a cost-benefit analysis. But because there are so many variables to factor into developing a milestone or a manager spot award program, for instance, it can be difficult to determine pricing without a detailed RFP process.

While recognizing this challenge of determining costs of a “typical” program we also have worked with many clients over the years, and we have developed a robust database of engagement programs. By mining this data and combining it with a few rules of thumb based on our experience, we’ve come up with some guidelines that can help provide rough pricing estimates.

cost-of-engagementHere’s what we found:

  • Milestone (Years of Service) programs in which employees are recognized on service anniversaries such as 5, 10, 15 and up to 40 years, will typically cost about $45 per employee annually.
  • Manager Spot Awards, Peer Recognition, and “Living the Values” programs cost in the range of $15 – $65 per employee annually.

Estimating Your Investment

With these numbers, you can determine a starting point for your budget, A milestone program, for example, can be estimated by multiplying your company’s total number of employees by the $45 per-employee rate. So a 5,000-person company might be in the  $225,000 range, while a company with 1000 employees might roughly spend $45,000 year.

However, your particular situation will likely vary depending on various factors, such as how often you want to recognize employees (every 5 years, or just on years 10 and 25), and how much you want to award. In our white paper  we show typical milestone payments across 15 of our clients. For instance, one client awards $250 for a 15-year milestone, another $500 and still another $1000. Some clients  award for year 1, followed by every 5th year through 40 years, while others only award years 10 – 40.

Whether you are new to employee recognition or are looking to refresh your current program, it’s always useful to get a quick snapshot of a typical costs across a range of companies. These guidelines should provide valuable insight into this important area of employer-provided benefits.

For more details on how much an employee recognition program cost, including charts on milestone payments across 15 clients and the cost-per-employee for other recognition programs, download our in-depth white paper