Recognizing employees for their valuable contributions is a proven method for maintaining staff engagement and productivity. In fact, recognition in any shape or form – big and small – can have an immense impact on company work culture.
In this article, we’re going to decode the impact of employee recognition in the workplace. We’ll go over some of the key factors that keep employees engaged – and those that might be hurting your company culture, without you even knowing it.
Let's begin.
What is Employee Recognition and Appreciation?
Employee recognition is the public acknowledgement of workers who have contributed to the company’s success in various ways – through project completion, milestone achievements, outstanding performance, or embodying company values.
The universe of employee rewards is huge! Some of the perks used as motivators can range from simple words of appreciation to cash bonuses, high-value gift cards, a pay raise, or a promotion – as well as other special company privileges.
Why is Employee Recognition Important?
The main purpose of employee recognition is twofold.
On the one hand, it is important to celebrate the achievements that come from hard work. It sends a powerful signal that the successes of your employees matter to you and the company. It’s proof that their work is valuable.
This alone can have a massive impact on employee morale and engagement.On the other hand, employee recognition helps build trust. This, in turn, helps strengthen employee retention and loyalty. In other words, there are plenty of turnover bucks to be saved just by having a solid recognition program in place.
Only a Fraction of the Workforce in the Global Market Feels Valued
In a recent study conducted by Gallup and Workhuman, as much as 40% of employees reported having received recognition just a few times a year. This is one of the driving factors for job dissatisfaction, disengagement, burnout, and turnover.
This equation is pretty straightforward. To vitalize the high-performing company culture you want, the company's approach to productivity and efficiency must have a strong human element.
As the aforementioned study highlights, recognition done well can be the difference between having a workforce that is closely connected to company culture and having one that runs on fumes.
Motivation as High-Energy Workplace Fuel
Think of your workforce as a complex rocket engine with hundreds of potential single-point failures. It’s virtually impossible to prevent each and every one of these failures, but if you knew that up to 90% of them could be mitigated with a solid recognition tool – well, it would be a no-brainer, right?
Here’s the thing: employee motivation plays a fundamental role in performance and company success. This is especially true for high-achievers and top talent. Motivated employees are more efficient and productive. They stay committed to their roles within the company and often experience higher levels of career satisfaction.
Another fun fact: engaged employees are less afraid to take on new challenges because they’re eager to learn and incorporate new skills that make the team stronger and more innovative.
Statistics show that 69% of employees will work harder if their efforts are recognized. And according to Gallup and Workhuman, a whopping 80% also report being more productive when recognition is used to motivate them!
Why Employee Recognition Matters
The link between recognition and retention cannot be understated. It takes massive resources to find, recruit, and onboard new talent. And for every new talent deciding to look for greener pastures, more bucks are lost.
By being adamant about showing appreciation, business leaders and HR managers can greatly reduce turnover costs and boost workforce loyalty. There’s a lot of research out there showing that employee recognition can slice turnover by up to 30% – in some cases more!
The Impact of Recognition on Employee Performance
Every workplace, without exception and regardless of industry, can reap the benefits of having a solid recognition strategy. There’s just no getting around the positive impact of rewards and recognition on employee motivation.
The key is to use positive reinforcement as a tool to encourage great work. By aiming a bright, flashing spotlight on excellence, you’re showing your team what excellence looks like.
The Varied Nature of Recognition Programs
Recognition can take on a wholly different character at different companies. Some have service awards, while others lean towards peer-nominated recognition programs. This can help foster a culture of appreciation and collaboration among team members – but there’s also a risk of favoritism and bias if not managed properly.
Some companies have formal recognition policies that are distributed and updated yearly. Others go for a more informal approach – cake in the staffroom, an invitation to lunch, a once-in-a-while bonus check, or a gift card for work well done.
Specific Examples of Employee Recognition Initiatives
Companies have a wide range of recognition tools available that can – either separately or in conjunction – contribute to improving employee engagement.
Below are some common examples.
1. Recognition based on Performance
Performance-based recognition is a highly effective way to reward outstanding employees.
What counts as recognition-worthy performance should be clearly stated in your company’s recognition policies or guidelines and available to all employees. This ensures transparency and fairness in the recognition process.
2. Service Awards
Service awards aim to reward tenure at the company. Employees who have been with the same organization for many years are often eligible recipients of service awards. Generally, these awards are given after a certain number of years and at intervals of 5 to 10 years at a time.
The biggest drawback is that service awards are too few and far between unless the recognition period is shortened to every six months or a year. This is enough time for an employee to start looking for work elsewhere if they feel unappreciated.
3. Peer-to-Peer Recognition
Does “employee of the month" or "employee of the year" ring a bell?
Peer-to-peer recognition programs often encourage acknowledgement between colleagues. It’s a great opportunity for employees to reward and celebrate each other instead of receiving kudos from management.
On the positive side, this can do wonders to promote teamwork and camaraderie within the team and across the entire workplace. On the downside, it could potentially hurt the work culture if there’s bias and favoritism. Also, if peer-to-peer recognition becomes competitive – or overly politicized – it can create tension and resentment within the team.
You can learn more about team recognition and how it can be used to foster a culture of appreciation in the workplace here. You can also learn more about peer-to-peer recognition here!
Future-proofing your Company with Employee Recognition
Hundreds of studies speak for themselves—engaged employees are more productive and enthusiastic about their work, and this stems from working at a company that recognizes hard work. We can call this a full-circle fact!
Happy employees tend to have a positive attitude that is contagious and builds morale. They make more supportive co-workers, more innovative workers, and healthier colleagues. In this sense, the benefits for companies weigh just as heavily as the benefits for employees.
Research has demonstrated that companies investing in solid employee recognition programs can save more than $16 million annually just by having a culture of recognition.
Make employee recognition part of your success strategy in 2024. Best wishes in your endeavor to create a work culture where motivation and performance drive excellence!
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