In today’s labor market, current and prospective employees care deeply about the employee experience. Building an employee recognition strategy is one of the best ways to drive a vibrant and healthy culture that attracts and retains top talent while reinforcing the bottom line.
What is Employee Recognition?
Employee recognition is the act of acknowledging and celebrating an employee’s accomplishments, hard work, and day-to-day contributions. This can be done in many ways, and is made significantly easier with employee recognition software.
Employee recognition can range from a quick “thank you”, or other employee recognition words relayed in a message, to a large-scale awards ceremony. The sky (and your budget) is the limit! Regardless of the form it takes, the purpose of employee recognition is to ensure an employee knows their work is valued. Employee recognition statistics show that this improves employee experience and, by proxy, employee engagement, and retention.
Although the two concepts are nearly always related, employee recognition is not exactly synonymous with employee rewards.
Simply put, the difference between employee recognition and employee rewards is that employee recognition can happen and have immense value even when no physical reward is given. Acknowledgment that their work is appreciated can be a powerful motivator for an employee. So you can have recognition without rewards, but you can’t have rewards without implied recognition.
Employee rewards have an implicit component of recognition. Or, receiving physical, financial, or non-monetary incentives would imply recognition— but pointedly expressing the reason for the reward is still much better than just giving it.
The effectiveness of employee recognition in improving the overall health of a business is evident in how many companies prioritize it. Many organizations use an employee recognition strategy to improve their employee experience. Employee recognition was an $11.1 billion market in 2021 and is expected to reach $34.1 billion in 2023.
Though these numbers are certainly impressive, many employees feel underappreciated. Only 40% of employees say they receive recognition from a manager, supervisor, or leader a few times a year, or even less than that.
Why Employee Recognition is Important (Stats)
Job and Organization Satisfaction
- A study from Great Place to Work found that employees who feel recognized at work are more likely to think that promotions are fair, demonstrating trust in organizational processes.
- Recognized employees are five times as likely to feel connected to their organization’s culture than peers who feel their hard work isn’t acknowledged.
- Organizations with robust recognition programs experience 31% less voluntary employee turnover than their counterparts.
- A 2022 study from Gallup and Workhuman (referenced above) showed that employees who feel recognized are 30% more likely to say that they plan to be at their companies in five years and are less than half as likely to actively or passively look for other jobs.
- Recognition is a top motivator for employees. In a poll from O.C. Tanner, 37% (found in the same Great Place to Work article referenced above) of employees responded that recognition, affirmation, and feedback are vital impetus that drive their great work.
- Over 40% of employees reported that they would put in more effort if they felt valued at work.
- Employees at organizations with recognition programs are 2.7 times more likely to be engaged.
- A study from Deloitte found that recognition increases not only employee engagement but also productivity and performance by 14%.
- Additionally, 83% of HR leaders reported that recognition programs positively impacted employee engagement.
These outcomes stem from the positive psychological functioning induced by frequent and specific employee recognition. When employees feel appropriately recognized for their contributions, they have a positive association with work and feel more psychologically safe. The positive impact of this culture of recognition can have a ripple effect throughout your organization and do wonders to mitigate employee turnover and improve the employee experience.
Types of Employee Recognition
- Audience: Are you recognizing an individual or a team? Both are important, but it’s necessary to keep your audience in mind when you are crafting your recognition strategy.
- Relationship: Are you recognizing a direct report, peer, or supervisor? If you’re a people manager, it’s essential to acknowledge your direct reports for their great work. However, peer recognition can be empowering, too. Peer-to-peer recognition is nearly 36% more likely to inspire positive results than manager-only recognition.
- Environment: Are you recognizing in public or private? Although large-scale awards ceremonies and company-wide shout-outs can be powerful and enjoyable for many, some are put off by them and prefer to be thanked in a one-on-one setting. It’s important to know what style of feedback your employee prefers so that you can make sure you’re not doing more harm than good.
- Attribution: Are you recognizing an employee anonymously, or are you attaching your name? Anonymous positive feedback can be great for those who are too shy to give feedback themselves. However, attributed recognition helps to build relationships and encourage conversation.
- Format: Are you recognizing an employee through a written message, or are you sharing positive feedback in conversation? Written recognition allows for asynchronous communication and, if it’s public, enables all employees to see it in their own time. Spoken recognition, on the other hand, creates a unique, unforgettable moment.
- Reward: Along with the words of recognition, are you attaching some sort of gift? Many employers have a budget to give away prizes, monetary awards, gift cards, or experiences. Some organizations host special awards ceremonies to honor stellar employees where they are presented a physical prize or certificate. Gifts aren’t necessary; a Deloitte study found that 85% of employees are satisfied with a simple “thank you.” But it always helps to be a little creative; check out 275 unique employee award titles for some ideas for acknowledging your team’s unique contributions.
Benefits of Employee Recognition
There are many benefits that an effective employee recognition program can bring to an organization. The most pertinent are that:
Desired Behaviors Are Reinforced
Recognition programs can be designed to reinforce specific behaviors and values that align with the organization's goals. By recognizing and rewarding employees who demonstrate these behaviors, the program reinforces the desired work ethic, performance standards, and cultural values within the company.
Engagement and Productivity are Fostered
A culture of recognition leads employees to know that their efforts will be seen and appreciated. Thus, they will be more likely to put forth their best selves and work hard. And as we know, employee engagement is a critical predictor of employee retention, wellness and well-being, and positive work culture.
Morale and Culture are Improved
Recognition programs create an environment where achievements are celebrated, teamwork is encouraged, and employees feel supported and appreciated. This can lead to improved collaboration, better relationships among team members, and an overall positive work atmosphere. When employees feel valued and recognized for their hard work, they tend to have a more positive attitude, higher job satisfaction, and increased motivation to perform well.
4 Examples of Employee Recognition Programs
Many human resources departments utilize employee recognition programs to bolster the employee experience, celebrate employees’ contributions, and boost morale. Below are some successful employee recognition program examples that may spur some ideas for your organization:
1. Connection to Company Values
Amazon recognizes individuals or teams who embody two of the company’s core leadership values: Bias for Action and Innovation.
When an innovative solution to a customer problem is invented and executed on the fly, the responsible party might receive one of the few “Just Do It” Awards (in the form of a Nike shoe) at an annual company all-hands. This award has a fantastic internal reputation and is highly coveted, spurring the kind of good work that drives the company to greatness.
2. Fake Money, Real Rewards
Zappos has a Zollar Program, where employees can earn play money (Zollars) by volunteering to help others and redeem it for merchandise at the Zollar Store. Employees (Zapponians) can also reward others with a premium parking space and $50 monthly bonuses (one per month). These playful but meaningful incentives instill a sense of company spirit.
3. Peer-to-Peer Recognition on a Global Scale
Cisco has its renowned Connected Recognition program where employees at any level can award others who go the extra mile and embody core company values.
The company saw tremendous results in the first year: 85% of employees gave or received awards that year, and momentum remains strong. Much of its success is owed to the financial investment that the company has poured into the program– 1% of payroll is attributed to the Connected Recognition program, a substantial sum for a global organization.
4. More is More
Disney employs a myriad of formal recognition programs for its employees. They offer several lifetime achievement awards— many in the form of subtle permanent details at their parks in honor of long-time workers.
Each year, the company awards a handful of recipients the Disney Legacy Award, which includes public recognition and a distinguishing name tag for all to see. Aside from these formal awards, Disney also has an online tool called “Recognize Now!” allowing employees to recognize each other for great work and helpfulness instantly. Finally, there are specific achievement-based awards for valuing diversity, environmental excellence, safety, and more.
Employee Recognition vs. Appreciation
Employee recognition and employee appreciation are often used interchangeably, but they are actually distinct concepts.
Employee appreciation has a broad scope and centers around expressing gratitude and recognizing the overall value, efforts, and dedication of workers. One typical example of employee appreciation is years of service awards that celebrate an employee’s work anniversary.
The goal of appreciation is to cultivate a positive work environment that prioritizes gratitude, respect, and support for all employees. Appreciation also encompasses celebrating personal life events like birthdays, weddings and engagements, births and adoptions, retirements, and so forth. Employee appreciation is about acknowledging and valuing the person behind the job.
Recognition is a more targeted type of appreciation focusing on work-based achievements, accomplishments, and milestones. It includes a structured process of identifying exceptional individual or team performance and providing acknowledgment of specific successes. As previously mentioned, recognition can vary from a simple “thank you” to a big event-style accouchement. Recognition is a way to drive a positive culture and a great strategy to motivate and inspire outstanding employee performance.
Employee Recognition vs. Employee Rewards
Employee recognition is also often confused with employee rewards. However, rewards are simply one element of a comprehensive recognition program. They can be used to celebrate an employee’s achievements. Examples include monetary bonuses, gift cards, promotions, additional vacation days, or other tangible incentives. As mentioned at the start of this article, recognition does not have to include rewards, but it can be a valuable and meaningful way to honor excellent work.
It's important to remember that recognition goes beyond tangible rewards. It encompasses various forms of appreciation, including verbal praise, written acknowledgments, public recognition, and other non-monetary gestures. While employee rewards can be a nice addition, they are not the sole means of recognizing and appreciating employees’ efforts and achievements. Recognition programs should be designed to encompass a broader range of acknowledgment methods to ensure that employees feel valued and appreciated in multiple ways.
Potential Pitfalls of Employee Recognition
Without proper planning, employee recognition programs can backfire despite the best intentions. When planning out your organization’s recognition strategy, be sure to keep the following pitfalls in mind.
Fairness, consistency, and transparency are fundamental components of any employee recognition program. We can all remember instances where an award felt like more of a popularity contest than an achievement of merit— and we want to avoid that as much as possible. Clearly communicate the criteria by which employees are evaluated for recognition.
Develop a set protocol for the types of recognition and rewards triggered by specific behaviors.
Alignment with company values ensures that recognition is purposeful and not random. Recognition that does not correspond to the organization’s core values or further its mission might not feel worthwhile to employees; a recognition program might be seen as a waste of precious resources.
When you’re rolling out your strategy, it is critical to communicate the value of such programs and the financial and cultural return you will reap. The best employee recognition programs will have a clear purpose on how it impacts the bottom line of the company’s strategy and culture.
Helpful Software to Manage Employee Recognition Programs
To ensure that your employee recognition program runs without a hitch, consider using some software to manage it. The right software can ensure that awards are sent correctly, in a timely manner, and to the appropriate parties. It can also help you stay within budget.
The best employee recognition software vendors offer comprehensive solutions that facilitate top-down, bottom-up, and peer recognition to make it a part of your company culture.
Employee recognition software typically offers a range of features designed to enhance employee engagement, motivation, and overall satisfaction. The most important features of such software may include:
A Platform for Recognition and Rewards
Employee recognition software provides a consistent platform for managers and peers to recognize and appreciate employee achievements and milestones. This often includes options for customizable rewards and incentives, such as monetary bonuses, gift cards, or non-monetary rewards like extra vacation days.
Some recognition facilitates social recognition by enabling employees to publicly acknowledge and commend their colleagues' accomplishments. This can include features like peer-to-peer recognition, comments, likes, and sharing success stories on a company-wide platform, or social media.
Performance Tracking and Analytics
Effective employee recognition software tracks and analyzes employee performance data to provide valuable insights. This insight allows managers to monitor individual and team achievements, track progress toward goals, and identify top performers or areas for improvement.
Incorporating gamification elements, such as badges, points, leaderboards, or challenges, can make recognition more engaging and fun for staff members. A bit of friendly competition motivates employees to actively participate in giving recognition while striving for recognition themselves.
Continuous Feedback and Surveys
An essential feature is the ability to provide ongoing feedback and conduct employee surveys to gather insights about their experience with recognition efforts. This allows organizations to make data-driven improvements and adapt their recognition strategies accordingly.
Integration and Communication
Seamless integration with existing HR systems, communication tools, and collaboration platforms is crucial. Integration ensures that recognition efforts are synchronized with other HR processes, making it easier for managers to give timely recognition and communicate effectively with employees.
Ideally, the employee recognition software should also integrate with the organization's performance management system. This alignment ensures that recognition is linked to performance goals, performance evaluations, and career development initiatives.
With the increasing use of mobile devices, the software should have a mobile app or a responsive design to allow employees to access and participate in recognition activities on the go.
Customization and Branding
Some employee recognition software allows organizations to customize the platform to reflect their unique culture and branding. This includes adding company logos, colors, and tailored recognition categories or values that align with the organization's mission and values.
Reporting and Analytics
Robust reporting capabilities are vital to track the impact and effectiveness of recognition efforts. The software provides detailed analytics and reports, including usage statistics, engagement levels, and the correlation between recognition and employee performance. HR teams therefore can track the adoption and effectiveness of the recognition program.
By incorporating these essential features, employee recognition software fosters a positive work culture, boosts employee morale, and enhances overall organizational productivity.
Last Words on Employee Recognition
An employee recognition program is a great way to boost employee morale, productivity, engagement, and retention.
Be sure to do your homework before investing in an employee recognition platform and thoughtfully plan out a values-driven strategy that reflects your company culture. Utilize employee surveys to understand what your employees really want, and how you can leverage integrations with existing programs to create a structured and synthesized plan. A well-planned recognition program has tremendous potential to help your organization stand out from the competition.