Currently valued at US$2.7 to $2.9 billion worldwide, the Everest Group reports that the rewards-and-recognition (R&R) solutions market grew at a rate of 9-11% in 2020 as enterprises globally grappled with COVID-19.
COVID-19 brought uncertainty and change to many organizations with respect to managing and motivating their workforces. The pandemic challenged organizations to align culture and values, offer engagements valued by employees, and provide face-to-face interactions and feedback.
In the middle of these challenges, Human Resource (HR) personnel tasked with enhancing employee experience and building more resilient organizations looked to third-party support in the form of R&R solutions.
R&R is a system where people are acknowledged for their performance in intrinsic or extrinsic ways.
Although enterprises took measures to save on their rewards budgets in 2020 and decision making slowed down, recognition platforms were still seen by senior stakeholders to be one of the key ways to solve issues pertaining to employee productivity, motivation and engagement.
Going forward, Everest Group predicts the R&R solution market will grow at 18-20%, reaching a US$3.3 to $3.5 billion valuation by 2022.
Everest Group’s “Rewards and Recognition (R&R) State of the Market Report 2021: The Era of Modernizing Employee Engagement” noted that COVID-19 brought unprecedented uncertainty in many organizations and now buyers are seeking holistic solutions to build employee resilience and future-proof their HR strategies.
Other key findings
The majority of enterprises adopting R&R solutions were small- or mid-sized enterprises. Buyers from the manufacturing, financial services, and healthcare industries have led the adoption of R&R solutions, while newer industries have experienced a rise in demand.
Buyers of R&R solutions prefer flexible solutions that cater to their company-specific requirements. To improve overall buyer satisfaction levels, solution providers need to bring in next-generation technology solutions, expand their existing offerings, and increase the flexibility of their solutions.
R&R providers are adopting a multi-prong approach to revamp their present capabilities:
- Developing smarter platform capabilities. R&R solution providers are infusing artificial intelligence, machine learning, automation and analytics into their solutions to develop more intelligent, intuitive and user-friendly platforms.
- Expanding beyond R&R capabilities. R&R solution providers are integrating their solutions with other collaboration and HR tools, unifying with social engagement platforms, and offering fitness and wellness platforms.
- Diversifying rewards catalogue. R&R solution providers are offering extensive catalogues based on the evolving needs of buyers. Rewards may comprise merchandise, gift cards and e-cards, discounts and perks, experiences and donations to favourite charities.
- Exploring new and innovative commercial models, such as more transparent and less complex pricing models.
Challenges faced by enterprises due to the pandemic will have a long-term impact on the way they engage with the employees. They will continue to explore new strategies to deliver a superior employee experience.
Enterprises will focus on employees’ mental and physical well-being and will ramp up post-implementation support and internal communication initiatives to promote R&R practices.