What Is Employee Recognition? The Ultimate Guide

Employee engagement is crucial to powering a company towards its goals. Recognition for engaged employees and the work they proudly produce maintains that employee’s level of engagement and encourages others to perform in similar ways.

What Is Employee Recognition?

Employee recognition is anything an employer does to communicate appreciation for an employee’s work or length of service. Common approaches include tying recognition to organizational values and goals, as well as the overall talent strategy—the company’s plan of action to boost employee performance.

Key Takeaways

• Employee recognition programs improve recruitment and retention.
• Use a variety of employee recognition programs to increase opportunities to recognize more employees and to allow for differences in culture, generation and experience/responsibility levels.
• Align employee recognition programs to organizational values, talent strategies or specific outcomes for best results.
• Use regular feedback to help employees reach performance levels that will help them with career development and recognition for achievements.

Employee Recognition Defined

What does employee recognition mean? Employee recognition can take many forms, but the desired outcome remains the same: keeping motivation and engagement high. There are different approaches to employee recognition. Some are public, like a luncheon, party, award ceremony or an employee of the month award with a framed picture on the wall. Others are more personal, such as a bonus or raise, additional days off with pay, or use of a company perk like a country club or resort condo. Many companies combine the two approaches in a mix of public and personal recognition.

Why Is Employee Recognition Important?

Employee turnover is costly and a top workforce management challenge. Employee recognition programs play an important role in retention, according to 68% of companies in a survey from the Society for Human Resource Management (SHRM). The same survey found 56% of companies said employee recognition programs improved recruitment.

Who Gives Employee Recognition?

Who gives recognition and how do you show employee recognition? It will vary depending on the circumstances and what kind of recognition you’re planning on sharing. Ideally, co-workers feel comfortable complimenting and recognizing peers in daily interactions. But employee recognition programs should not leave appreciation to chance. The effort is too important for retention and recruitment efforts. The best practice is to define in the policy who is responsible for giving the different forms of recognition.

• Top-down recognition: This is the traditional form of employee recognition. A company executive, manager or team leader spearheads the recognition activity.
• Peer recognition: Co-workers either lead this form of recognition or join with managers to decide who should be recognized and what that should look like.

Employee Recognition & Company Success

Employee recognition programs lead to more company successes through higher employee engagement, improved employee experience, better employee morale, greater employee retention rates, a brand boost and more employee referrals for recruitment. It can also have a positive effect on other important business measures and financial metrics such as productivity, sustaining output and controlling costs. So, what does recognition mean to an employee? It means the company notices and appreciates their contributions in the workplace. It means a more positive relationship and closer ties.

11 Benefits of Employee Recognition

Start with strategy. Think about the goals of the program and how it would relate to challenges and opportunities for your company. Here are a few benefits to consider when designing your plan.

1. Hiring: People are attracted to organizations that value the contributions of employees, and recognition is central to that. It’s an important part of an overall talent strategy that you can share with potential employees.
2. Excellence: Employee recognition programs instill a sense of pride and encourage employees to produce excellent work.
3. Productivity: When employees feel their efforts matter and are worthy of recognition, their productivity increases. Recognition programs also encourage them to sustain those high levels of productivity.
4. Employee Engagement: More than half of today’s workers are not engaged at work and feel no connection to their employer. Even more alarming is that 13% of workers are actively disengaged and are likely to spread their unhappiness. Employee recognition programs are an important step to increasing employee engagement and helping them feel more valued and appreciated.
5. Retention: When good employees leave your company, replacement costs, retraining and recruiting are all major challenges that also carry a significant cost. Two-thirds of HR professionals say that employee recognition programs help lower turnover rates.
6. Values: Think about values important to your company and workforce. Perhaps it’s accountability, diligence or learning. Find examples of employees demonstrating those values for recognition. It’s a way to encourage the growth of those particular attributes among your workers.
7. Trust: Trust is a two-way street. Your employees need to trust the company and need to feel like they’re trusted. When they feel their opinions are valued and they that the company trusts them to do their best work, they’re more likely to be engaged and less likely to leave. Employee recognition programs help build and sustain trust.
8. Morale: Recognition and morale are closely intertwined. Employees feel appreciated for their work when they and their peers are recognized for a job well done.
9. Team culture: Employee recognition programs are a good way to reinforce a team culture by making it a team event, or even recognizing an entire team. Fostering an environment where people appreciate the contributions of others improves morale and raises the bar on performance.
10. Customer experiences: Employee recognition can foster better customer experiences if you tie employee rewards and recognition to specific customer experience benchmarks. Customer satisfaction surveys, anecdotal feedback and sales performance can all be indicators of a positive customer experience with measurable outcomes you can use for employee recognition programs.
11. Performance & innovation: Connect employee recognition and rewards with specific performance benchmarks to build employee engagement. This may vary by industry or team. For some it might be sales goals, and for others it might be improving efficiencies in production. Whatever the case may be, allow employees to provide input on the improvement and innovation process to reach the goals. By listening to input and trusting employees, they’ll feel more engaged and dedicated to reaching goals. And recognition for their work helps them stay motivated and engaged in the process.

Types of Employee Recognition

What are the types of recognition? It’s not a one-size-fits-all solution. What works for your organization may not work for others. Think about areas your company is trying to improve, whether that’s specific sales goals, cost cutting, retention or many other desired outcomes. Keeping those goals in mind while you design your employee recognition program helps you improve efficiency and measure your efforts.

Keep the makeup of your workforce in mind and allow for differences in culture, the generation they come from and experience/responsibility levels so everyone has an opportunity to be recognized if conditions are met. Here are a few types of recognitions you can use when designing your program.

• Micro-recognition: Micro-recognitions are small, interpersonal recognitions that are often informal and spontaneous. Sometimes, they’re even anonymous. Typically, they come in the form of gift cards, prizes or gifts. Sometimes they’re simply a card or note of appreciation. You may also have human capital management (HCM) software with recognition opportunities built-in so employees can recognize and thank their peers. These tend to be more frequent than traditional employee recognitions and are often perceived as more heartfelt. This is an effective way to sustain employee engagement, goodwill and intrinsic motivation levels.
• Informal recognition: Informal recognitions can be anything from a congratulatory email to a spontaneous free lunch or a fruit basket delivered to a desk. It’s not the prize so much as the feeling of respectful and mutual camaraderie that counts.
• Formal recognition: Formal recognitions tend to be viewed as career builder events by employees and are typically highly valued. These are often public events that include a keepsake of the occasion and are added to the employee’s work record as an achievement.
• Peer vs superior: Peer recognitions build team cohesiveness. Where recognitions from superiors or managers are more often used to build careers.
• Attributed vs anonymous: Occasionally, employee recognition programs will allow for anonymous praise. Perhaps an employee notices a peer going out of her way to help a customer or staying late to help a colleague finish a project. They can be a lighthearted way to recognize employees going the extra mile. Keep an eye on them so they don’t turn inappropriate or problematic. Official recognitions should not be anonymous and should be attributed to specific managers, leadership or peers who are giving out the commendation.
• Reward events—social vs private: Often, rewards come in the form of physical events, like a reward trip or a luncheon. Social events have the advantage of allowing the employee to enjoy the limelight. Private events, however, are more interpersonal and can help strengthen relationships between employees and their managers or leadership.
• Behavior vs achievement: Employee recognition for behavior encourages more of the behavior and underscores the organization’s core values. Whereas employee recognition for achievements fuels intrinsic motivation and a competitive atmosphere.

Employee Recognition Best Practices

Best practices vary according to the organization’s workforce goals and overall values. But generally speaking, here are five your company may want to consider today.

• Make a strategy and align your employee recognition program to specific values, outcomes and goals.
• Use several types of recognitions rather than just an annual event to maintain momentum.
• Give employees a say in who should be recognized. They often know who is carrying the most weight in a project.
• Pin recognition to specific behavior or achievements to ensure fairness over favorites. If recognitions are seen as biased or political, they’ll lose value to employees fast.
• Measure results and continuously improve the program.

Employee Recognition Examples

There are many reasons to appreciate employees. Find what you most want to applaud and prioritize. Here are a few examples to get you started.

Examples of employee behaviors:

• Length of service
• Volunteerism
• Safety—such as a maximum number of days without an accident
• Improved relationships with customers

Examples of employee achievement:

• Meeting a sales goal
• Meeting a specific safety goal—such as creating a new hazard reporting tool
• Bringing in new customers/clients
• Improving processes
• Upselling or increasing revenue

Employee Recognition & Awards Ideas

You’ve decided to start a program and have some goals in mind. The only question that remains: How do you recognize an employee? That depends on multiple factors including your budget, how many awards you’d like to offer and how significant the recognitions will be. Here are a few examples of employee recognition and awards to consider.

• Bonuses
• Cash prizes
• Gift cards
• Free lunch
• Trophies, plaques, or other forms of memorabilia
• Flowers or fruit baskets
• Extra time off with pay
• Certificates
• Use of company assets such as company cars or vacation condos
• Company stock
• Achievement trips for top salespeople

How to Start an Employee Recognition Program

Your employee recognition program should be a part of your overall talent management strategy. When done well, it can improve recruitment and retention, along with employee satisfaction and engagement. HCM software can help you formalize your strategies and tactics, as well as track progress toward specific goals. From short shoutouts to coworkers within the software itself to creating progress reports for individual employees as they work toward goals, HCM is a useful tool for employee recognition and vital for talent management.

Here are a few steps to follow for creating a successful employee recognition program.

1. Deploy your HCM platform. It will help with each step along the way. Start with making sure your HR team, managers and even individual employees know how to access the HCM software and utilize the built-in resources.
2. Make a plan. Employee recognition programs are not a just a feel-good way to pass time. They’re a serious part of your business and workforce strategy, so treat it as such.
3. Connect the dots. Align specific types of recognitions to specific goals, outcomes or company values.
4. Choose the metrics. You’ll need to know if your plan is working or needs a few tweaks so pick metrics that align with the desired goals. Consider selecting some employee experience metrics and measure progress as you deploy your employee recognition program.
5. Go for an orderly rollout. Make sure everyone is aware of the program and how it works.
6. Put people in charge. Ensure recognitions are distributed accurately, fairly and on a timely basis by putting someone in charge of the program at large as well as in individual departments or areas.
7. Ask for feedback. Ask for anonymous feedback from employees so you can get a read on how well the employee recognitions are perceived.

Employee recognition programs can be a powerful tool in your overall talent management strategy. You want to find and keep the best employees, while helping them stay engaged in their work and satisfied with the work environment and culture. And recognition of their hard work through everything from a simple card saying thank you to cash bonuses and formal recognitions with plaques can boost employee morale and help you achieve specific goals and reinforce company values. It’s important to stay agile with changing circumstances and fluid employee desires.

HCM software can aid you each step of the way. From identifying possible areas of improvement to providing a space for peers to recognize one another and tracking individual progress toward goals, an HCM platform is a powerful tool that can make the difference between a lackluster recognition program and one that drives your company to greater retention and other sales and customer satisfaction outcomes.