A Guide to Building a Successful Employee Recognition Program

Employee recognition programs are employer initiatives that reward employees for exceptional performance and motivate them to excel. It is one of the driving forces of employee-oriented organizational culture. Rewards make employees feel valued and improve their motivation and engagement. According to a report, companies with highly engaged employees have 17% higher productivity compared to companies with disengaged employees. 

Employee recognition helps organizations enhance employee engagement and retention. As per a study conducted on over 1500 employees of an organization, 68% believe that public recognition positively impacts their ability to get promotion and raise. 

Many employees consider that recognition is an important part of their happiness at work. The study also highlighted that 82% of employees feel happier when they are recognized at work. A third of the employees think recognition improves their social standing and the way their colleagues interact with them.

Image Source

What are the benefits of an employee recognition program?

Employee recognition programs are becoming increasingly popular among organizations of all sizes. Let’s explore some key benefits of an effective employee recognition program.

• Low turnover

The companies are well aware of the relevance of employee recognition programs and their relationship with retention. As per a recent study, the core objective of 60% of employee recognition programs is employee retention. By rewarding employees for their contributions and providing ongoing recognition, businesses can create a culture of appreciation that helps to retain top talent. In today’s competitive marketplace, investing in employee retention is essential for any business that wants to thrive.

According to a survey by SurveyMonkey, 63% of the employees who have been recognized have indicated that they are unlikely to look for new opportunities. 

• Engagement

A good employee recognition program is crucial for engaging and motivating employees. Such programs provide opportunities for workers to feel appreciated and valued, which in turn can increase their motivation and level of engagement with the company. Additionally, these programs can help to establish a positive culture where employees are encouraged to support one another and take pride in their work. Whether it’s a reward of bonus points or public praise from the boss, effective employee recognition programs play an essential role in keeping employees motivated, inspired, and happy at work. So if you’re looking to create a more engaged team, it’s important to invest in an employee recognition program that really works.

• Increase employee motivation

Recognition and rewards are motivational factors for employees since 39% of employees feel underappreciated at work, leading to low morale and productivity. In addition to formal organizational level recognition programs, you should encourage informal department and team level rewards to keep employee morale high.

• Attract talented employees

A recognition and reward program can help you create this powerful brand by showing your employees that they are valued and appreciated. Through regular rewards for good work, you can demonstrate that you care about the work that your team does and their professional development. This will send a clear message to potential job seekers that joining your organization is worthwhile, thus enabling you to attract talented individuals from across your industry. And with talented employees come greater success for both your business and each individual employee, helping you build an even stronger employer brand in the long run. 

What are the types of employee recognition programs?

Recognition and rewards differ across the industries and organizations, and how you appreciate and acknowledge your employees will depend on your company policies. The rewards can range from appreciation certificates, cash bonuses, company-wide call-outs, gift vouchers, company-sponsored outings, etc. In a survey, 57% of employees mentioned cash bonuses as a preferred reward, while 20% mentioned visibility to senior leadership as their preference. 

Employee recognition can also be classified as structured or unstructured programs. A structured program is a systematically designed recognition and reward process with well-defined goals and metrics for employees to work on. The periodic evaluation assesses employee progress and rewards them for achieving the goal. Besides performance awards, there are other institutionalized rewards such as services awards and employee-of-the-month award that recognizes employees based on intangibles.

Unstructured programs are informal recognition and reward processes that empower mid-level managers to appreciate and honor department and team-level employees. The recognition is for multiple things that may directly or directly contribute to the company’s success. A shout-out to an employee during a team meeting for going beyond the call of duty, leading to high client satisfaction scores.

Some common and frequently used rewards are:

• Bonuses

An employee recognition program is a great way to show your employees how much you appreciate their hard work. There are many different types of bonuses that can be given out, and it’s important to choose the ones that will be most meaningful to your employees. Cash bonuses are always popular, but you could also give out gift cards, free products, or even paid time off. Whatever you choose, make sure it’s something that will show your employees how much you value their contributions.

• Certification of appreciation

A formal certificate acknowledges employee contribution to the company goals and/or recognition of individual excellence.

• Written praise

A simple appreciation message sent electronically through email does not only serve as a tangible record of each employee’s achievements but also encourages team members to continue striving for excellence. 

• Verbal praise

Verbal praise can be an effective tool for boosting employee morale. When given in a sincere and specific manner, praise can help employees feel valued and appreciated, motivating them to work harder. In addition, praising employees in front of their colleagues can help to create a sense of camaraderie and teamwork. So next time one of your employees does a great job, don’t be afraid to speak up and let them know how much you appreciate their work.

• Company-sponsored outings

Company-sponsored outings are a great way to recognize and reward employee performance. These events can range from casual outings like office happy hours or professional development seminars, to more extravagant trips or experiences like ski trips, sporting events, or weekend getaways. Whatever the event may be, these outings serve an important role in building camaraderie and team spirit within the workplace and providing employees with valuable opportunities for learning and growth. 

What are the characteristics of an employee recognition program?

You need to incorporate the following characteristics in your employee recognition program to make it successful.

• Timely rewards

When it comes to employee recognition, timing is everything. If you wait too long to recognize someone for a job well done, then that person may not even remember what they did to deserve the praise. And if you give recognition too quickly, then the recipient may not truly appreciate it. But when recognition is given at just the right moment, it can have a powerful impact. Whether it’s recognizing a major achievement or simply acknowledging good work on a daily basis, timely recognition helps employees feel valued and motivated. By making a habit of praising good work as it happens, managers can create an environment where employees feel inspired to reach their full potential. So if you want your team to succeed, be sure to recognize them at just the right moment – and reap all the benefits that come with it!

• Visible recognition

Public recognition of employees amplifies the impact of the employee recognition program.  Sharing the information with a wide section of the audience makes more people know about the individual and organization’s achievements. You should publicize individual achievement through all employee communication channels and even the organization’s social media channels. It will motivate other employees to achieve a similar level of excellence.

• Inclusive

Recognition and rewards should not be confined to limited sections of employees who directly contribute to revenue and profitability.  Confining recognition and rewards to a limited section of employees sends the message that only certain types of work are valued, which can lead to resentment and division among workers. Furthermore, it can create a feeling of hopelessness among employees who feel that their hard work will never be noticed or appreciated. Instead, companies should strive to create a culture of appreciation and acknowledgment, where all employees feel valued for their contributions.  Every employee contribution should be valued even if thei contribution may not directly correlate with the organization’s financial performance. 

How to build a successful employee recognition program?

• Develop a business case for employee recognition

The first step is to create a business case for an employee recognition program in your organization.  Before launching any employee recognition program, it’s important to develop a business case for employee recognition. This means clearly articulating the tangible and intangible benefits of the program and how they will contribute to the organization’s overall success. You need to do detailed research to value all tangible and intangible benefits from the program, such as improved employee engagement, productivity, reduced turnover, etc. You also need to assess the program’s scalability when your team strength increases, how the program will scale, and the impact on financials. Only then will you be able to gain buy-in from senior leadership and secure the necessary budget and resources.

• Define program objectives and criteria

When it comes to employee recognition programs, clarity is key. Employees should have clarity about the evaluation process and criteria for qualification. You should provide clarity about the behavior and actions that will be incentivized. There have to be clear guidelines for what constitutes average or exceptional performance. Accordingly, employees can strive to perform to stand a chance to qualify for the recognition and reward program.

Leaders and intermediate employees have different perspectives when it comes to the fairness of the recognition and rewards program. As per a study, 89% of executive leadership believes reward programs are fair to all employees, while only 62% of employees in intermediate positions believe in the fairness of the program.

The clarity about program objectives and criteria will help prevent dejection among employees who may feel short-changed when they don’t receive the rewards. The clarity will enable employees to do a self-assessment about their own qualification for awards and prevent any disappointment on not receiving the reward.  

Another factor that you need to consider is the frequency of awards. To maintain its sanctity and value, you should limit the frequency of structured awards to quarterly, half-yearly, and yearly. The unstructured awards can be periodic with greater frequency.

• Multi-dimensional rewards and recognition program

You should not limit your rewards to only financial incentives. Employees value both monetary rewards and emblematic recognition, even as more than 50% of employees favor financial rewards. 

You need to evolve the reward mechanism with time and assess the additional options such as health packages that you can add in keeping with the times. You can also consider sponsoring employee training in deemed institutions for your high achievers. When you invest in specialized employee training programs, it helps to improve engagement. 

• Effective launch and implementation

When you launch a new program or revise an existing program, you should ensure that all employees receive the communication and are aware of the program. All employees should be clear about the purpose and how to use the program. The program should have visibility, and employees should be aware when their peers receive the awards. 

Based on industry and business segments, you need to decide on preferred communication channels and platforms for disseminating the information.

• Evaluate your program effectiveness

You should periodically evaluate your program’s effectiveness by evaluating its impact on employee performance, productivity, engagement, and retention. Using a structured approach that incorporates both quantitative and qualitative elements goes a long way. For instance, you could set key performance markers upfront and then assess whether these markers are being met after a certain period of time. This will help you gauge the effectiveness of your program while taking into account feedback from employees themselves. 

• Update your employee recognition program from time to time

Making sure that your employee recognition program is up to date is key to keeping your team motivated and engaged. After all, you want to make sure that the perks and rewards you offer are aligned with what today’s workers value most. This means regularly reviewing feedback from employees, as well as looking at trends in the broader workplace landscape. 

Employee activities that are being considered for evaluation need to be evaluated for its relevance. Similarly the evaluation criteria and rewards also need to be periodically evaluated to determine if they require modification. For example the employee recognition program required modification during pandemic when the team worked remotely and restrictions on people’s movements were in place. The reward of gifts vouchers that requires employees to visit physical stores has to be replaced with the ones that can be utilized online. 

You need to collect the relevant data from your recognition and reward program, and other systems to arrive at an informed decision for improvements.

Conclusion 

The bottom line is that employee recognition programs are a key factor in creating a productive and successful workplace. When employees feel appreciated and valued, they’re more likely to give their best effort and be happy with their job. If you want to create or improve your current employee recognition program, start by considering these tips.