The Importance of Recognition and Company Culture During A Labor Shortage

by | December 16, 2021 | Blog, Lincoln's Insights

Recently, I was communicating with a successful, national distributor about the topic of recognition and the labor shortage. In trying to better understand their strategy and needs, I asked my contact to describe how they recognize their employees. He replied that, having been in business for nearly a century, everything they do is designed with a long-term mindset. Specifically:

  • Their business has an anniversary celebration every few years to recognize their key stakeholders.
  • This strategy isn’t just for employees—it’s a multi-tiered operation, planned out for the entire year, in which suppliers, employees, and customers are all invited to participate in their own version of the program
  • Suppliers are recognized during company-sponsored events
  • Employees are offered individual travel awards for their service
  • Loyal customers are provided with a heightened group incentive travel award.

My contact explained that by doing this, his organization was providing a unique recognition strategy that made everyone throughout the value chain feel appreciated. It also established a strong foundation for the company culture, something that each key stakeholder would associate with the business and its brand.

This got me thinking. Recognition should not just be as simple as, “Here’s a golden watch. Thank you for your service.” There’s certainly room for this, but a solid recognition strategy needs to do more if it’s truly going to be effective.

Today’s Labor Shortage Environment

In a previous blog, we touched on the unprecedented labor shortage facing owners and operators across industries. This isn’t news to distributors, who have highlighted the dearth of skilled labor as one of the major challenges they’re facing this year. Needless to say, it seems like hiring strong talent will continue to be top of mind across the distribution space, but we also don’t want to ignore the other half of this equation: employee retention.

We often hear a lot about the importance of customer acquisition and retention. These are constant buzzwords because they’re consistent business challenges that, when overcome, can lead directly to better sales. On the other hand, “talent acquisition” and “employee retention” don’t seem to be as buzzy outside of the tech space. This is probably because in more traditional industries they have become clichés—accepted industry norms that are simply part of the cost of doing business.

But with the current labor shortage having no immediate end in sight, these typically mundane issues are beginning to move up the list in c-suite strategy meetings. Increasingly, distributors and manufacturers are needing to look for ways to both fill their labor gaps with strong new talent, as well as retain existing talent with tactics and tools normally reserved for customer-centric strategies. So, what do they have at their disposal? Below are a couple of ideas.

Idea #1: Improving Company Culture

A great place to start when looking to recruit, retain, and develop talented individuals and teams is to focus on the big picture. Your organizational culture will likely be an important consideration for any employee. This is especially true during a labor shortage, as you jockey for position and market share with competitors who are having the same issues.

According to the Society for Human Resource Management (SHRM), corporate culture is “the social operating system shaping organizational values, defining how people work and determining how they succeed within an organization.” The key terms here, “social”, “values”, “how people work”, and “how they succeed”, all point to where the emphases should lie when building an outstanding company culture.

  • Social

Even in a time of remote work, the workplace remains a social environment. If a workplace is lacking a social component, chances are employees won’t enjoy working there. This doesn’t necessarily mean you have to go out and immediately install a ping pong table in the break room. However, you can establish annual employee-focused events, or find ways to break a large organization down into cohorts or teams and create opportunities for these teams to socialize and compete. You could even include a team incentive to further increase engagement and workplace cohesiveness.

  • Values

In addition, organizational values are a big part of company culture, and these two things—values and culture—should be a focus of company communications. Finding ways to define your culture to prospective employees can go a long way towards reinforcing the values you want it to represent.

One way to do this is through video testimonials from current employees who can speak to what the company stands for and what it means to them. Another way to reinforce values is by refining your organization’s mission statement—or developing one if you haven’t already. People today feel more aligned with mission-driven companies, and a strong, actionable, and impactful mission statement can give your employees a north star they can consistently point to and rally behind.

  • How People Work

How people work has been a hot topic in the post-pandemic world. In fact, a recent Harris Poll found that over three-quarters of employees want a more flexible work environment, specifically in terms of their schedule and location. As employers reevaluate their remote working protocols, walking the tightrope between satisfying employee desires and keeping operations running as efficiently as possible will become ever more important. It may benefit business leaders to consider what kind of work can be done remotely, and to more proactively look to implement policies and practices that take employee schedules and general work-life balances into account.

  • How People Succeed

Finally, how people succeed plays a key role in determining the relative strength or weakness of organizational culture. Common sense dictates that employees want clear goals set for them, and they want to be adequately rewarded when they achieve them.

Typically, we think of money when it comes to rewards in the workplace. However, studies have shown that money is not always the best motivator, and now this may be truer than ever. With that in mind, a professionally managed incentive program, one that rewards for specific, high-impact, and achievable KPIs can be the difference between keeping employees engaged and inspired and causing them to look for greener pastures outside your organization.

Idea #2: Offering Employee Recognition Awards

An employee recognition strategy can certainly be used to improve company culture, but it also deserves a place of its own as an employee retention tool. That’s because when employees feel under-appreciated, it can undermine any other efforts you’ve made to bolster engagement specifically and your corporate culture in general. In fact, a Gallup workplace study highlighted recognition as one of the key elements in improving employee engagement, making significant impacts in everything from absenteeism and productivity to turnover and even customer loyalty.

Making a point of showing everyday appreciation is a good place to begin, but there are other steps that can be taken as well. For example:

  • Having the company CEO or high-level executive give a team or hard-working individual a shout-out at each companywide event can be an effective method of dispensing informal recognition.
  • Providing meaningful awards for key workplace anniversaries or outgoing (i.e. retiring) employees sends a signal to employees that they are seen and respected, rather than purely “human capital”.
  • Creating an ongoing points-based recognition platform—one that functions either with a top-down or peer-to-peer approach—is also a great way to embed employee recognition into your organizational DNA, providing a constant reminder that your business “walks the walk” when it comes to appreciating its workforce.

Conclusion

To recruit, retain, and develop employees, business leaders need to be very deliberate with how they treat and recognize these key stakeholders. While it might be easy to think that “their salary is ‘thank-you’ enough” or “they know that they’re appreciated”, these kinds of assumptions may not fly in the current labor environment. Standing out may demand a holistic reassessment of company culture, combined with an innovative recognition strategy.

The case study of the longstanding distributor showcases one way to structure such a strategy when addressing the labor shortage. Not only does it intertwine employee retention with that of customers and partners, but it also effectively dovetails recognition with the broader company culture. If we truly believe our people are our most valuable assets, then perhaps it’s time we start to build our approach around this belief. It may require a strategy that is both broad and creative, but when done right, the result may be an organization that lasts a century and succeeds no matter what the macro environment looks like.

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