Why Employee Recognition Is Important For Business & Morale
One of the top reasons that people leave a job is a lack of employee recognition.
Recognition is a key motivator for any human behavior, but especially in the workplace. Employees expect that hard work will be rewarded—possibly in the form of promotions or other tangible rewards.
There are many forms of recognition and every employee looks for something different, so you'll want to engage all of your technology tools that support employee recognition efforts.
Ultimately, even a simple ‘thank you’ can go a long way towards improving your workplace retention and culture.
What is employee recognition?
Employee recognition is the practice of recognizing employees for their good work and living out company values. This can take multiple forms and have different purposes given different circumstances.
Examples of Employee Recognition
- Outstanding Performance: Recognizing individuals who consistently exceed expectations in their roles.
- Innovative Ideas: Acknowledging employees who contribute innovative ideas that benefit the company.
- Leadership Qualities: Recognizing individuals who demonstrate strong leadership skills, even if they're not in a managerial role.
- Adaptability and Flexibility: Acknowledging employees who adapt to change and handle challenging situations effectively.
Recognition and rewards are often confused, but there is a difference. Employee rewards are monetary tokens that are awarded to employees for their hard work, and maybe a direct result of their efforts.
If an employee closes a high-value deal for the business, they may receive a reward such as an enhanced bonus, a gift card or some other form of monetary reward. These rewards are things of cash value.
Recognition, on the other hand, does not have a cash value. We may think of those old-fashioned ‘employee of the month’ plaques hanging on a wall, but employee recognition can be anything from a verbal acknowledgement to a mass email to a shout-out in the latest employee newsletter.
Why is employee recognition important?
Employee recognition is crucial as it boosts morale, increases productivity, and fosters a positive work environment. It also enhances employee retention by making individuals feel valued and appreciated for their contributions.
Engagement
The Society for Human Resources Management (SHRM) says that 79% of employees work harder due to being recognized in the workplace, proving its value as a motivator.
Happiness
Research from the University of Warwick shows that happier employees are 12% more productive and that employees are less productive when unhappy.
Job satisfaction, a positive work environment and employees having a sense of purpose are all drivers of happiness in the workplace and can all be enhanced with employee recognition practices.
Productivity
Acknowledged and valued employees are more likely to put in extra effort and reach higher levels of performance.
Research from Deloitte shows that productivity and performance are 14% higher than in organizations without recognition programs or strategies.
Retention
Given the positive impact of recognition on the previously mentioned areas, it's not difficult to see a direct line toward a positive effect on retention.
SHRM research backs this up, noting that 68% of HR professionals agree there is a positive correlation for retention.
Trust
Enhanced recognition is not only beneficial for employees, but it benefits their managers as well. Almost 90% of employees indicated that they placed more trust in their bosses who took the time to recognize them.
what are the Business Benefits of Employee Recognition?
According to research, 91% of employees say that a strong culture of recognition will motivate them to work for a certain company.
The business benefits of employees investing their time and energy into the organization's success are substantial. Employee recognition contributes heavily to:
- Stronger Team Culture: Recognition fosters a sense of camaraderie and collaboration, strengthening team dynamics.
- Attracting Top Talent: A culture of recognition makes an organization more attractive to potential employees seeking a supportive work environment.
- Encouraging Continuous Improvement: Recognizing accomplishments motivates employees to maintain and improve their performance.
- Reduces Absenteeism: Employees who feel appreciated are more likely to have a positive employee experience and less likely to take unnecessary time off, leading to reduced absenteeism.
- Enhances Company Reputation: A reputation for valuing employees enhances the company’s image both internally and externally.
- Fosters Innovation: Recognized employees are more likely to be creative and innovative, contributing new ideas and solutions.
Each of these areas can impact the bottom line if they aren't something your organization does well.
Types of Employee Recognition
Formal Recognition vs. Informal Recognition
Formal recognition includes structured programs like Employee of the Month, annual awards, or milestone acknowledgments.
Informal recognition involves spontaneous gestures like verbal praise, thank-you notes, or casual acknowledgments in meetings.
Peer-to-Peer Recognition vs. Top-Down Recognition
Peer-to-peer recognition allows colleagues to acknowledge each other's contributions.
Top-down recognition involves managers or leaders recognizing the efforts of their team members.
Monetary Rewards vs. Non-Monetary Rewards
Monetary rewards include bonuses, raises, or gift cards.
Non-monetary rewards can be certificates, extra time off or public acknowledgment.
Private Recognition vs. Public Recognition
Private recognition involves one-on-one acknowledgment, like a personal email or a private meeting.
Public recognition includes acknowledging an employee's efforts in a public setting, like company meetings or newsletters.
Performance-Based Recognition vs. Behavior-Based Recognition
Performance-based recognition focuses on achievements related to job performance, like meeting sales targets or completing projects.
Behavior-based recognition focuses on actions that align with core values or culture, like teamwork, innovation, or customer service.
Tangible Recognition vs. Intangible Recognition
Tangible recognition includes physical rewards or gifts.
Intangible recognition consists of praise or acknowledgment without a physical gift.
How to build your employee recognition program?
Creating a culture of recognition is not entirely without its challenges. How should you properly recognize employee performance in a way that befits the employee’s effort?
This starts from the top, from managers, who set the example by scheduling time to recognize their team members, preferably publicly, for their contributions. They then encourage team members to recognize each other publicly too.
It might take a little while, but if leaders are consistent then, over time, a culture of recognition will form.
Showcase the work being done now
First, look at what exists within your current workplace culture and what might integrate well.
What measures do you have in place for tracking when employees exceed their goals or KPIs? If you're tracking the number of hours people work or number of projects someone is involved in, there's probably a story waiting to be told.
Do you have an internal mechanism that can help with your recognition program, like a newsletter or an internal messaging system (Slack, Teams, etc.)?
Also, remember to include everyone from rainmakers to support staff. Everyone deserves to have their efforts recognized and will feel better for it.
Timing is everything
For recognition to be effective, it should be done in real-time (or as quickly as possible).
Quarterly or annual announcements do not have the same impact as a true acknowledgement in the moment of someone’s efforts. Frequent, regular recognition will inspire employees to work as hard as their coworkers to reach those same heights.
Be bold with your praise
Ensure that recognition is public so that each team member can recognize their colleague’s achievements and be inspired by their good work.
If you can make the recognition visible outside the company too, even better. For example, one airline puts its employee of the quarter on the side of a plane!
Related read: How To Create An Employee Recognition Program That Works
Trends for 2024
As you dig into the trends that are shaping recognition, it becomes clear that pairing recognition and rewards is effective in meeting employee expectations.
Personalized rewards that matter for each individual
Personalized reward systems cater to the diverse motivations of employees, enhancing engagement and productivity.
Data-driven OKR software can help you scale this approach, allowing workers to select preferred rewards efficiently, making individualized recognition manageable for entire companies.
Gamification creates a competition for recognition
Gamification in recognition programs, using elements like leaderboards and incremental rewards linked to personalized goals, is leading to more engaged employees.
This approach transforms recognition into a dynamic tool for real-time learning and progress, offering frequent, meaningful acknowledgments that reduce uncertainty.
Well-being could be the most valued form of employee appreciation
Companies are increasingly incorporating wellness and eco-friendly options in their recognition programs, offering rewards such as vacations, spa vouchers, fitness classes and digital gift cards as a way to recognize high performers.
This sort alignment can be achieved using the help of employee engagement software that allows you survey employees about the types of recognition and rewards they value most.
Secure, Instant Rewards
Focus is shifting towards secure and immediate reward systems, with companies using automated platforms to efficiently deliver and redeem rewards, ensuring both operational efficiency and data protection.
These solutions boost recognition efforts while upholding data security and privacy.
Inclusivity and Diversity in Recognition
Recognition programs are evolving to better embrace diversity and inclusivity, by auditing for biases and ensuring fair practices for all employees, irrespective of age, gender, race, or identity.
Addressing workplace discrimination is vital for fostering innovation, creativity, and teamwork, and for enhancing overall employee performance.
Final Thoughts on Employee Recognition
Employee recognition is important to the health of a business and the company culture. It’s also easy to implement and can cost little, or nothing at all, to show employees appreciation for the work that they do.
These simple touches boost employee morale, and a happy employee is one that tends to stay for the long term.
For the human resources professional looking to spice up employee recognition, there are great resources available online with further recognition program ideas, and statistical insight as to how employee recognition programs can benefit the overall business.