Today, organizations use various third-party recognition platforms to appreciate the good work and achievements of their employees. However, a small number of organizations still rely on employee rewards and recognition tools that were developed internally. In this article, we look at why these organizations should consider switching from such in-house employee recognition platforms to third-party platforms.
It’s important to understand the reasons why organizations had opted for internally developed tools for employee rewards and recognition in the first place.
Many of them continue to use them despite the availability of advanced employee recognition platforms in the market.
So, let’s look at the top reasons for preferring an in-house system over a third-party employee recognition platform:
1. Need for Greater Customization
2. Need for Greater Control over the Product Roadmap
3. Data Privacy and Security Concerns
4. Need for Internal System Integration
5. Better Cost Management
An in-house employee recognition platform is often specifically designed to meet the unique recognition needs of the organization.
The tool matches the exact requirements of the organization from the perspective of the recognition process.
The tool also incorporates the expectations of the workforce accurately in terms of the user experience.
Typically, organizations would look at their immediate and medium-term needs while developing such platforms internally.
They would have also found it challenging to identify third-party recognition platforms that would have provided the exact features or offered the required level of customization at that time.
Having an in-house rewards and recognition system provides greater control for the organization. It gives them full control over the design, implementation, and administration of the rewards and recognition program.
Most importantly, they can make modifications to the program as and when they want.
They can incorporate those changes in the in-house recognition platform without significant delay.
Often, this is not the case with third-party platforms as the control over the product roadmap rests with the vendors rather than the organizations using the software.
One of the major reasons that make organizations feel skeptical about using a third-party recognition platform is concerns about the safety and privacy of their business and employee data.
With in-house employee recognition platforms, organizations can maintain strict control over how and what data they collect, store, and transmit.
They also use stringent data privacy and security policies and measures to prevent its misuse.
Many organizations are not comfortable with third-party vendors that use cloud-based applications and store employee data in the cloud due to security concerns.
Organizations with in-house R&R systems design them in such a way that they can be easily and directly integrated with other systems used in the workplace. The integration can help in making the recognition process more streamlined and effective.
In-house systems can be deeply integrated with internal platforms in a way that might be difficult in the case of third-party systems.
Organizations are well aware of the challenges of integrating these in-house systems with third-party platforms provided by vendors.
Usually, an in-house R&R tool can be more cost-effective in the long run despite the high initial investment and effort.
This is because third-party recognition platforms often charge hefty monthly or annual subscription fees based on the number of users.
As the headcount grows the costs are likely to grow significantly. Moreover, even small changes or modifications to the platform might also be chargeable by the vendor.
Organizations typically develop the platform through in-house IT resources or by outsourcing it to IT services companies.
While the initial development costs might still be significant, the maintenance costs might be nominal and do not increase with the headcount.
Hence, an in-house R&R system might prove to be a more cost-effective option as compared to third-party recognition software.
While organizations may see several advantages with in-house rewards and recognition tools initially, there are significant disadvantages with them in the long run.
So, here are the key disadvantages of using in-house R&R tools:
1. Difficult to Leverage Best Practices
2. Difficult to Maintain
3. Difficult to Upgrade
4. Difficult to Scale
5. Inadequate Redemption Options
6. Poor Integration with Social Media and Cloud Apps
7. Lack of Mobile Apps
Typically, an in-house recognition platform focuses only on the specific needs of the organization, in the immediate and medium term.
Hence, it might not incorporate features that reflect the best practices of employee recognition such as gamification and social integration.
Hence, the lack of such advanced features can limit the effectiveness of the recognition program.
Maintaining and updating the in-house recognition system often requires expert resources. These resources may not be readily available internally or might be too expensive to hire.
This directly impacts the ability of the organization to keep the system functioning at a high level of efficiency.
It might lead to a drop in the system availability and performance, which can negatively impact the user experience and process flow of the recognition program.
Quite often, the organization might find it challenging to upgrade the in-house recognition platforms regularly. This may be due to constraints of resources, budgets, or expertise.
The business requirements based on which the platform was developed might change over time.
However, since the platform is not upgraded to stay in sync with the changes, it might not meet the current requirements and expectations of the organization and the workforce.
Also, the technology used for development might have become outdated over time. Hence, the platform might not work as efficiently as required.
This may also impact the user experience and processes of the recognition program negatively.
It is not just the business requirements that might change over time, but there might be a significant increase in the headcount of the organizations and the number of work locations as well.
This can lead to a substantial increase in the workload on the in-house platform and the infrastructure being used.
Since most in-house systems are not designed to handle higher volumes of data and transactions, this may lead to a deterioration in the performance and availability of the platform over time.
A significant number of employees working remotely might further compound the problem as they might be using lower bandwidth network connections.
Most in-house recognition systems often lack sufficient and meaningful redemption options such as a wide selection of gift cards and merchandise.
Usually, these programs offer a single brand of gift cards or a limited set of merchandise.
Logistics and delivery of merchandise might also pose a challenge, if not outsourced and coordinated properly.
Hence, the employee experience can be impacted negatively as employees might not have enough freedom of choice or access to preferred brands and products.
Social media integration has become a must-have feature for any successful recognition system. However, most in-house systems often lack this critical feature.
This makes it cumbersome for employees to share their rewards and recognition on social media platforms such as LinkedIn and Facebook.
Also, integration with other popular cloud-based applications such as Slack, MS Teams, Workplace, etc, might be challenging for in-house recognition platforms.
The lack of such features further dents the employee experience as enough social buzz cannot be created around the recognition program.
Mobile apps are important elements of an employee recognition platform. They provide the freedom for employees to use the platform on the go.
Most employees are habituated to using mobile applications for most of their personal as well as professional activities.
However, in-house recognition systems very often do not provide the facility of mobile apps.
This can prove to be highly disadvantageous for organizations as it can reduce the employee participation rate, and eventually limit the impact of the program.
Despite the initial advantages of using an in-house platform for employee recognition, its effectiveness typically deteriorates over time as the organization grows and evolves.
The business requirements change and the headcount increases, making it difficult for the in-house platforms to cater to the changing needs of the organization.
Third-party employee recognition platforms offer significant advantages to organizations, especially in the long run. So, let’s take a look at what they bring to the table:
1. Advanced Out-of-the-box Features
2. Higher Level of Configurability
3. High Level of Reliability and Scalability
4. Robust Data Security Features
5. Availability of Experts
6. Flexible Pricing Models
7. Vast Redemption Options
8. Availability of Mobile Apps and Integration Options
Good third-party employee recognition platforms bring to the table a host of high-end out-of-the-box features such as gamification, analytics and insights, and social integration.
These features can drive employee engagement and enhance the impact of the recognition program significantly.
Also, newer versions of these platforms are released regularly, that come with new and innovative features that represent the evolving best practices from the industry.
These help in driving up the employee experience and building greater traction in the recognition programs.
Organizations often opt for in-house recognition platforms to cater to their specific needs. However, today, good off-the-shelf recognition platforms offer a high level of customization to cater to various use cases.
These platforms provide features that can be easily configured to match the exact scenarios and processes for each organization.
It saves significant time and effort in building such features from scratch, in the case of in-house platforms.
Third-party recognition platforms are much easier to scale up for a large number of users. They are also likely to be more reliable than in-house platforms.
These off-the-shelf platforms leverage best practices of software engineering and high-end cloud infrastructure such as serverless architecture, load balancers, autoscaling, and content delivery networks.
These platforms also undergo rigorous functional and load testing, that minimizes the possibility of failures and service disruption. Also, adding new users with increasing headcount becomes a seamless process.
It doesn’t require major changes to the system architecture and infrastructure as required by an in-house platform.
Most well-known third-party employee recognition comes with advanced security features such as application firewalls, encryption, multi-factor authentication, role-based access control, activity logging and monitoring, etc.
Accredited agencies often test and certify the security readiness of these platforms. These security measures also comply with major industry standards and regulatory frameworks.
Hence, these third-party platforms ensure the same or even higher levels of data security as compared to in-house platforms.
Most recognition platform vendors have a team of technical and functional experts who design, develop, maintain, and upgrade those platforms.
These experts ensure that the technology, system architecture, and infrastructure are up-to-date and in sync with the changing business requirements.
The functional experts come up with the product roadmap with regular enhancements and the release of new features.
They also help and guide client organizations to incorporate these new features in their recognition programs, thereby improving the employee experience and the impact of the programs.
Most recognition platform vendors charge low or no upfront fees. This makes it easier for organizations to switch from in-house platforms.
Also, several vendors offer different pricing models such as pay-per-use and tiered pricing. This ensures that the per-employee cost reduces as the headcount increases.
Other options such as feature-based and fixed pricing might also be available.
Availability of multiple pricing models enables organizations to select the most appropriate one taking into consideration various factors such as current headcount and the projected headcount growth.
Third-party recognition platforms come with in-built catalogs for redemption, which include a vast number of options such as gift cards of multiple brands and a curated selection of merchandise.
These platforms are also tightly integrated with logistics platforms that ensure seamless delivery of the items.
These platforms provide employees with extensive freedom of choice including well-known and popular brands of gift cards and products. Hence, they provide great end-user experience and engagement for the employees.
Most third-party recognition platforms offer mobile apps for both Android and iOS devices.
This enhances the employee experience and engagement as they can use the platform anytime, from anywhere.
Also, good recognition platforms offer a whole host of integration options with social media platforms and popular cloud-based platforms used in workplaces.
These include collaboration tools, HRMS, CRM, Learning Management Systems (LMS), and Project Management tools.
They also enable single sign-on options with platforms such as Office 365 and Google Workspace.
These built-in integration options can help make the process flow across different systems used at the workplace seamless and thus, improve the employee experience.
In most cases, switching to a third-party employee recognition platform from an in-house platform can prove beneficial for the organization in many ways. However, it is important to do enough groundwork to identify and select the right employee recognition platform that can cater to the specific needs of the organization.
Lead author: Sagar Chaudhuri, the Co-Founder and CEO of HiFives. He is an HR Tech Evangelist with over 25 years of corporate and entrepreneurship experience. In the past, Sagar has worked with companies such as Genpact, Infosys, and ICICI Bank, in leadership roles. He has an engineering degree from IIT Kharagpur and an MBA from IIM Lucknow. Connect on LinkedIn
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