Employee engagement and recognition programs can truly be a matter of life and death for healthcare organizations - here are six key reasons why.
You’ve put in weeks of research, reading, learning, getting to know vendors, and experiencing demos - you’re ready to present a proposal to your executive team. This can feel like a big hurdle to overcome. We sat down with Karim Punja, CFO at Kudos, to demystify what executives need to help make those conversations less nerve-racking. While the tips presented here center around making a case for an employee engagement and recognition platform like Kudos, they can also translate to any initiative or investment you’d like to move ahead.
Why now is the right time to implement an employee engagement platform:
According to Deloitte’s Q1 2021 CFO Signals Report, 66% of CFOs think this is a good time to take on greater risks, up from 49% in Q4 2020. Activities related to talent retention were cited as an example of risks CFOs are willing to take right now. Evidently, there’s no better time to make your case for the benefits of an employee engagement and recognition platform – and we’re here to help.
When asked what he and his team want to know when evaluating a proposal for a new enterprise investment, Karim explained that he is always trying to answer two critical questions:
1. What is this going to cost?
2. Why are you proposing this? And why now?
Karim walked us through what it takes to answer those questions in a way that will make your proposal hard to refuse. As a CFA with over 15 years of experience in corporate financial management and planning, this guy knows his stuff - we’re confident these trade secrets will help you move the needle forward on your project.
Let’s dive in so you can start building your plan:
Answering Question 1: What is this going to cost?
Before approaching your C-Suite and especially your CFO to propose investing in an employee engagement and recognition platform, make sure you’ve considered the total cost.
First, Karim emphasized the importance of presenting transparent pricing, including an accurate quote or contract that outlines all costs, including any implementation fees, additional support costs, and the total length of commitment. Sometimes options can be helpful too, like a discount on a 3-year commitment, for example. Finance experts deal with specific, measurable things; your finance team will not be able to sign off on approximate numbers. When it comes to employee recognition and engagement platforms specifically, your CFO may ask about reward markups. At Kudos, rewards are optional and extra (we never markup rewards or sell points), but that’s not always the case.
It’s also important to outline a budget for the program going forward. When budgeting for recognition, a good rule of thumb for casual rewards, team events, and milestones is to allocate between $125 to $250 per year per person, for example, some clients use the equivalent of 1% of payroll. You may already have a budget set aside for many of these things like your monthly birthday celebrations, years of service awards, company picnic, etc. Make sure to show your budgeting plan moving forward to make everything easy to assess.
Total Cost of Ownership
Finally, most CFOs will want to take a close look at the Total Cost of Ownership. "Total Cost of Ownership is one of the most important things I look at,” says Karim. This goes beyond just the budget and contract. Some questions you should be prepared to answer include: Who will manage this new platform? How many hours per week will that person devote to it? Is another full-time employee required? How much change management will be necessary during implementation? Try to include answers to those questions in your formal proposal. Another important aspect to consider with enterprise software is how long it will take to implement and be fully operational. With Kudos, for example, implementation is quick and straightforward so that clients can get up and running quickly. Lengthy implementation cycles delay the benefits of the system, which is an important consideration. Providers should be available to help you build out a plan to present an accurate total cost of ownership to make the analysis simpler for your finance team.
"Who will manage this new platform? How many hours per week will that person devote to it? Is another full-time employee required? How much change management will be necessary during implementation?"
Answering Question 2: Why are you proposing this? and why now?
Why are you proposing this system or solution? While this is a simple question, your finance team will be looking for specific answers.
Identify what problem this solution is addressing
First, you need to be prepared to explain the specific need or problem. Why are you proposing the employee engagement and recognition platform? Be specific! Are you switching from an existing provider to another due to poor customer service or markups? If this is a new initiative – have your employees recently reported low levels of engagement in a survey? Or are you experiencing higher-than-normal levels of turnover or burnout?
You should address this question by focusing on your organization’s unique needs. It is critical in getting your CFO on board and open to considering your proposal.
Return on Investment (ROI)
A second important metric to touch on is ROI. “I need to know how we can measure results. What does success look like?” asks Karim. Work with your provider for specific examples of ROI that you can share with your CFO. For instance, Kudos can improve employee engagement which in turn can reduce turnover employee turnover. On average, 50-60% of Fortune 500 companies' business spending is allocated to labor, including turnover, which is costing US companies 1 trillion dollars per year. The cost of replacing an individual employee alone can range from one-half to two times that employee's annual salary. The ultimate cost of disengagement is an employee leaving. Demonstrating that an employee engagement and recognition system addresses that is great for your case.
“When evaluating internal proposals, I always look for the tangible and intangible benefits,” says Karim. Tangible benefits have a more direct dollar value associated with them, such as reducing the cost of one system versus another; Intangible benefits are items that are not as simple to associate a direct dollar amount to but still can provide an incredible amount of value to the organization.
For example, beyond turnover, investing in employee engagement and recognition platforms has many benefits, including higher productivity, fewer safety incidents, lower absenteeism, higher sales, and higher profitability.
Finally, your CFO will inevitably have to weigh the Opportunity Cost of moving ahead with your proposal. Karim explains, “as a CFO, I’m constantly weighing where I need to allocate capital, and when. I need to determine the priorities today vs. six months from now.” What that means is you’ll have to be able to explain why you’re recommending that your organization move forward with an employee recognition platform now vs. in 6 months. When it comes to employee engagement, the disruption of 2020 was undeniable and has created unique challenges for organizations regarding culture, morale, and turnover. What’s more, the job market is hotter than ever; businesses that don’t find new, better ways to engage and retain their employees will become less and less competitive. These are both excellent arguments for an immediate need for a system like Kudos.
"The job market is hotter than ever; businesses that don’t find new, better ways to engage and retain their employees will become less and less competitive."
- Present transparent estimate or quote with no hidden costs
- Consider the total cost of ownership
- Explain why you are proposing the initiative
- Have a well-defined expected ROI
- Explain why this initiative needs to happen right now (opportunity cost)
CFOs have a lot of responsibility on their shoulders. They typically work directly with CEOs and board members to make the best recommendations possible on how an organization can best use its capital to achieve its business goals. Executive buy-in is critical to launching a successful employee engagement initiative. Beyond approval, if you can include an executive like your CFO in the demos and negotiations, they will feel connected to the project and help sponsor the program internally, a key indicator of success. Following the framework presented above will be an effective way to build the case for your recognition and engagement platform proposal.
About Karim Punja
Karim is a CFA Charterholder with over 15 years of experience in corporate financial management and planning. He has done extensive work in investment analysis pertaining to growth strategies, capital investments, restructuring and supporting new venture planning. Karim has also worked on multiple debt and equity financing initiatives, raising over $100M.
Interested in making a case for Kudos in your organization? Start the process today!
Kudos is an employee engagement, culture, and analytics platform, that harnesses the power of peer-to-peer recognition, values reinforcement, and open communication to help organizations boost employee engagement, reduce turnover, improve culture, and drive productivity and performance. Kudos uses unique proprietary methodologies to deliver essential people analytics on culture, performance, equity, and inclusion, providing organizations with deep insights and a clear understanding of their workforce. Book your demo today!