One of the first things clients ask us is, “How much should I budget for a Recognition program?”  It’s a tricky question, and depends somewhat on industry and company history.

Here’s what we recommend.

Budgets are up. Way up, compared to the cost of living. According to research by the Incentive Research Foundation (IRF), 65% of companies reported that their budgets for recognition and rewards would increase in 2016 and that’s certainly been our experience with our clients.

In fact, for merchandise and gift card programs – often used for Years of Service or Employee Engagement programs – the IRF found that there have been notable increases in per person spending in the last year alone. In 2014, 23% of companies reported that they averaged $50-100 per person. In 2015, that number dropped to just 11% of companies rewarding at that level. Why? Because most of them had increased their spending. In 2015, most companies rewarded $101-200 per person.

In 2013, we set out to review what was happening with our own clients’ recognition programs. You can find the resulting whitepaper here. Overall, within each industry, we estimate there has been a 20% increase in spend per person since that time, as the labor market has tightened. But some industries have been putting a greater emphasis on recognition and rewards as integral to their strategy, and are investing even more in their programs.

Here’s a snapshot of our Recognition programs year to date, as of August 2016:

With four months still to go in the year, these numbers will only rise.

Every organization is different, and budget is just one of many important considerations. But, an investment in Recognition is an investment in engagement with your organization, and affects business outcomes down the line.