3 Budgeting Tips for Employee Engagement Programs
Starting an employee engagement program takes lots of planning, including setting up the right budget. Here are 3 tips to help you succeed.
When you’re able to increase employee engagement, you set your business up to achieve higher retention rates, better customer satisfaction, and long-term business growth. Thus, starting an engagement program will bring lots of important benefits.
But you have to approach it the right way. One major factor is the budget for your new program. Where do you begin? Let’s look at these key strategies:
- Set SMART goals
- Know what to allocate toward engagement
- Split the program budget into three
- Use a platform like Crewhu
Before you start creating a budget, you need to know why you’re starting the engagement program. What specific problem are you trying to solve? What do you want the outcome of your efforts to be? Nailing down these goals will be the first step in making a realistic budget that will help you reach them.
Your engagement program goals need to be SMART goals:
- Specific: Focus on specific outcomes and avoid vague language. Go beyond the big picture and think of the small steps to get there.
- Measurable: How will you keep track of progress? What numbers will you track?
- Attainable: Goals must be reasonable and affordable, and the timeline must be rational.
- Relevant: How does the engagement program align with your company’s values and mission?
- Timely: Have clear end dates or deadlines so everyone is on the same timeline.
When you create SMART goals for your program, you’re on your way to creating a successful budget. A few examples of goals could be:
- Increase employee retention
- Decrease customer churn
- Improve company culture
- Improve employee productivity
Next is understanding how much of your overall company budget to set aside for the program. The best practice guidance is to allocate 1% to 2% of your payroll expenses. So, if you allocate $900,000 per year for payroll, you should set aside at least $9,000 (1%) for engagement initiatives.
Break that annual number down by quarter or month. For each quarter you would have $2,250 to spend on the program. Then, figure out how many employees will be participating. If you have 15, you would be spending $150 per quarter or $600 per year on each employee.
Breaking the budget down this way helps you understand what you’re working with for each potential activity or contest.
Note: You may already be spending a portion of your budget on employee recognition without knowing it. Figure out what you spend on things like birthday gifts, work anniversaries, wellness programs, and similar initiatives. You can either repurpose those funds or include them as part of your budget.3. Split the program budget into three
Now that you have your annual and quarterly budget for the program, how do you then divide up those numbers? What should you be spending that money on, exactly? There are three key areas of focus:
1. KPIs. Key performance indicators are the metrics that help you reach the SMART goals you set for your program. For example, if your goal is to increase customer satisfaction, one crucial KPI would be the customer satisfaction rate (CSAT). To stay within your budget, identify only a few KPIs for each team or contest.
2. Peer-to-peer recognition. Being recognized by peers is a valuable tool for engagement. Allocate part of your budget to give employees the chance to reward one another.
3. Awards and contests. Finally, allocate funds for awards and contests as part of your program. This will likely take up the biggest portion of the budget. If an employee has been at the company for five years, for example, maybe they receive $100. Or implement an employee-of-the-month award.
An example of how to allocate your budget to these three areas would look something like this:
- KPIs: $750
- Peer-to-peer: $675
- Awards/contests: $825
- Total: $2,250
These numbers will vary, but always make sure you break them down, so you never spend more than you intended. Focus on the KPIs that will help you reach your goals and pair them with contests and recognition strategies that are affordable and effective.
Investing in employee engagement is one way to improve company culture and increase satisfaction for both employees and customers. When these aspects of the business are in alignment, you’re more likely to grow for years to come.
Get started with Crewhu for employee engagement
Creating a successful employee rewards and recognition program requires SMART goals and a solid budget. You can't put a price on motivated employees, but you will see the results in your bottom line.
For more on creating goals and setting the budget for your employee engagement program, download this month’s free resource guide: A Framework for Growth.