Why Your Business Needs Employee Recognition Programs

An essential component of a human capital management (HCM) strategy is retaining your best employees through talent management. It isn't just about hiring well; it's also about keeping employees once they've been hired. One way to help improve staff satisfaction and retention is to make sure employees are recognized and appreciated for their contributions. Formal employee recognition programs can help businesses reduce attrition and provide leadership teams with an ongoing means of identifying and recognizing top contributors.

But what are employee recognition programs? What are the risks of employee rewards programs to a business, if any? Here's a closer look at how employee recognition programs can help your company achieve its goals, including some examples of employee recognition.

What are employee recognition programs?

Employee recognition programs are formalized processes for identifying and recognizing milestones achieved by your team members. These programs specify which achievements will be recognized, which employees are eligible, the requirements for each achievement, and what rewards will be earned for reaching these achievements.

Two common formats for these programs include performance-based recognition and service recognition programs. Performance-based programs recognize staff members who meet or exceed workforce production goals. Service programs recognize employees on specific anniversaries in relation to their time of service. Each type of employee recognition program works in tandem to promote employee loyalty and high-performance contributions.

What is employee recognition in the workplace?

Employee recognition can take many forms. You can keep your workforce motivated by developing an employee rewards and recognition program with various tactics that commend the value of employee contributions. A thoughtful employee recognition example would be a display of appreciation for stellar employee performance in a particular project. High-quality employees can have a direct impact on company performance, so it's important to acknowledge these contributions and reinforce the positive behaviors that help improve business results.

What are the most common types of employee recognition?

While every company can develop its own recognition program, many companies find similar types of employee recognition to be effective. Appreciation can come in both tangible and intangible forms, and both forms have a place in keeping employees motivated.

Some common forms of employee recognition include:

• Employee bonuses and other monetary awards. Performance bonuses give employees the opportunity to directly benefit from exceeding targets that help propel the company forward.
• Public appreciation events. Company picnics, annual parties, team-building events, and other employee appreciation activities show staff that they're valued and help foster a positive company culture.
• Work promotion or increased responsibilities. Assigning new responsibilities can challenge and motivate employees by demonstrating that you want to help them grow and develop within their company role. Continued development can help the employee prepare for a promotion that could also come with a pay raise.
• Recognition of the employee's work in private. Recognition doesn’t have to be public or celebrated amongst a large group of staff members. Consistently telling employees when they did a good job can often be just as effective.

4 reasons to have employee recognition programs

People want to feel respected and valued for their contributions, and your employees are no different. Simply treating your employees well is an important reason for starting a recognition program; however, there are several other benefits that a solid recognition program can bring to your workplace.

1. Rewards and recognition improve employee engagement

A 2018 Society for Human Resource Management (SHRM) employee recognition study revealed that 80% of companies have some form of recognition program. Survey respondents overwhelmingly reported that employee recognition positively affects the overall employee experience (89%), employee relationships (87%), and employee engagement within the workplace (84%).

2. Employees who feel valued are more productive

When employees are unhappy about their working conditions, they're more likely to waste time, take extended breaks, and use company resources for personal benefit. Workplace recognition programs can help curb wasted resources and increase business productivity by helping employees feel supported and noticed.

3. Work recognition reinforces a business's core values

When recognition programs are tied to core business values, employers can see significant improvements in high-value business activities. For example, if a company's core value involves providing extraordinary customer service, its employee recognition program might offer rewards and praise for going above and beyond when serving customers.

4. The best employee recognition programs promote fairness and improve company morale

When employees are recognized without clear requirements for earning the recognition, it can backfire with unintended consequences. Awards like Employee of the Month can make staffers suspect favoritism, hurting company morale. Instead, structure your recognition programs around measurable performance standards or longevity metrics. If you want to recognize qualities that aren't as concrete, such as teamwork or customer service, consider opening up the program so that staff and managers participate in the nomination process. The best programs recognize contributors throughout the organization and motivate the entire staff with the possibility of recognition.

Creating and implementing a reward and recognition program

Understanding the benefits of a recognition program are helpful, but it's also important to understand the steps required and potential risks of creating and implementing a reward and recognition program.

Steps to create a successful employee recognition program

While the benefits of implementing a reward and recognition program may be appealing, the thought of developing one may be less so. Fortunately, the process of creating your program doesn't have to be complicated or time-consuming. Consider the following:

Set up criteria and eligibility for the program

As previously mentioned, the most effective programs provide opportunities for high-performing employees to be recognized in a fair and equitable way. Make sure to outline clear criteria for how and when all employees can earn a specific recognition by asking the following questions:

• Who is eligible for the program?
• How long will it run?
• What kind of actions will be evaluated?
• When will employees become eligible?
• What criteria will employees need to meet to earn a specific recognition?
• What awards will be given with each level of the program?

After answering each of these questions, evaluate your answers to ensure that the program is equally accessible to all employees.

Identify key business goals that the program will promote

One of the many benefits of implementing a reward and recognition program is that it can reinforce positive behaviors that lead toward key business goals. To make sure that your program is uniquely positioned to promote behaviors that are important to your company, identify the key business goals that your program will reinforce ahead of time, as well as the behaviors that will help you reach these goals. Use these behaviors to outline the recognition levels within your program.

Decide on how employee performance will be measured and evaluated

If employees can't see a clear path for earning recognition, they won't be motivated to work toward it. For each recognition level, you should be able to clearly explain how employee performance will be measured during each evaluation period. Specify how long each evaluation period will run and whether performance metrics are cumulative throughout the year.

Determine adequate employee recognition rewards

A majority of companies with recognition programs offer some kind of reward beyond verbal praise. Rewards could range from a certificate of achievement to gift certificates and cash bonuses. It's important that rewards rise to the level of the acts being recognized. For example, a five-year service reward is going to have a different and likely lower monetary value than a 20-year service reward. The values will vary from company to company, but it's important to have a consistent system for the sake of internal equity.

Communicate the program clearly to your employees

If you're updating your recognition program or creating an entirely new one, you'll want to get your employees on board right away. Use the launch of your program as a morale-building opportunity by clearly communicating the benefits of this program to your employees. By making recognition standards clear and easy to understand, your employees will be better positioned to track their own progress, helping them stay motivated.

What are the potential risks of employee recognition programs?

Recognition programs, when developed and/or executed poorly, can have a negative impact on company morale and business outcomes. If recognition efforts feel insincere, this can cause considerable wasted effort of time and resources. When recognition programs aren't implemented consistently, employees who aren't recognized for their achievements can feel slighted ,overlooked, discriminated against which may lead to disengagement or discrimination charges. To avoid these risks, it's important to have a proper, fair, and timely plan in place to recognize every employee who meets the specified criteria.

Examples of creative employee recognition ideas that you can learn from

While traditional rewards like food or gift cards are always appreciated, you may be looking for low-cost, nontraditional ideas or even non-monetary ways to make your recognition budget stretch a little further. To show your appreciation without breaking the bank, you could try one of the following:

• Have a traveling trophy. This award doesn't have to be a trophy in the traditional sense. Instead, let your employees get creative by creating their own version of a "trophy" that travels around to the person recognized overall by the staff as being that month's notable contributor to team performance.
• Feature your team. Show your pride and appreciation for your team by putting them front and center in a featured spot in your marketing materials. Consider having an "employee highlight" spot in your email newsletter, website, or social media pages.
• Revamp the break room. Upgrade the microwave, provide some free snacks, or add music. As a reward, give your employee the opportunity to change one thing (within reason) about the break room to make break times more enjoyable.
• Offer flexible scheduling. For the third year in a row, flexible scheduling tops employees' wish list for most desired company perk, according to the 2019 Paychex Pulse of HR Survey. Offering this as a reward in your recognition program can demonstrate that you value your employees and understand their needs for work-life balance.

Retaining employees with employee recognition

While some employees will come and go, a concerted effort to recognize and reward employees is a talent retention tool that can help reduce turnover. An effective HCM solution can make it easier to track and act upon helpful information, such as productivity levels and upcoming service anniversaries, helping you better manage an effective employee recognition program.