Employee Benefits

The Impact of an Employee Recognition Program Policy

Uncover employee recognition program policy's potential to impact an organization's work culture. Recognize employees for their work and achievements to build a culture that attracts top talent, where engagement thrives, and where employees are motivated to do their best.
In This Post:
Expert Contributors:
Tracey Beveridge

Tracey Beveridge

HR Director at Personnel Checks

Jess Munday

Jess Munday

Co-founder of Custom Neon

Shaunak Amin

Shaunak Amin

Co-founder & CEO of STADIUM and SnackMagic

Matthew Bridges

Matthew Bridges

Employsure

Pavel Stepanov

Pavel Stepanov

CEO of Virtudesk

Maciej Kubiak

Maciej Kubiak

Head of People at PhotoAiD

Did you know that the number one reason Americans leave their jobs is that they don’t feel appreciated?   

Companies are looking for effective management strategies to attract and retain high performers while boosting employee productivity in today’s ultra-competitive work environment. But to win the war for talent, employers must understand how to positively motivate employees through recognition and rewards initiatives.   

And with National Employee Appreciation Day so close, there’s no better time to reevaluate your employee recognition program policy.  

What is Employee Recognition?

Employee recognition includes how an organization shows appreciation of its employees‘ contributions. Companies recognize employees for:

  • Employee milestones (length of service, birthdays, tenure)
  • Career achievements
  • Above and beyond goals and expectations
  • Retirement
  • Customer service accomplishments
  • Collaborative efforts
  • Leadership
  • Displaying desired behaviors

Money is no longer the primary driver of employee performance. Today, employees are not just looking for a big paycheck and good benefits. More than anything, employees want their efforts to be recognized and find a sense of meaning in their work.   

Jess Munday, Cofounder and People & Culture Manager at CustomNeon, on the subject of recognition notes, “Much research has been done to support psychologist Abraham Maslow’s theory on the hierarchy of human needs, with the 4th level centered around esteem needs, which includes a sense of accomplishment and achievement.  

“Praise and recognition from managers, customers, and peers go a long way in promoting a sense of self-worth, so the impact of employee recognition programs should never be understated.”
Jess Munday
Co-founder of Custom Neon

What Types of Employee Recognition Program Policies Exist?

Small businesses assume introducing an employee recognition program is expensive. It turns out that there are many inexpensive ways to make your team feel appreciated. From brand name merchandise to company-wide emails, employers develop creative ways to show their appreciation.

Employers can show employees they are doing an excellent job through many forms of recognition:

  • Formal or informal acknowledgment
  • Financial and non-monetary rewards
  • Tangible or intangible form
  • Private vs. public recognition
  • Structured and spontaneous recognition.

Simply put, there is no one-size-fits-all approach to showing appreciation. Even small personalized gestures of gratitude can be a powerful motivator.

Matthew Bridges from Employsure, confirms this sentiment by stating, “An effective reward and recognition program acknowledging the efforts of employees in a business is not a complicated tool to implement, and when done correctly it can lead to more positive results for the company and drive-up employee engagement and retention. 

Monetary reward and recognition, including bonuses, commissions, and other generous reward packages such as scholarships, can help drive up employee engagement.  

Similar effective tools include non-monetary recognition like a peer recognition program, merchandise, experiences, trips, and additional leave. Celebrating an employee’s ‘workiversary’ through an internal company-wide post or even a phone call from management or even the CEO can leave a positive imprint on employees.”

As a result, many employers run a pilot program before finding the type of employee recognition program that works best for their employees. 

Why is Recognition Important for Businesses Today? How is Recognition Changing?

From labor shortages to hybrid work arrangements, the workplace has changed a lot over the last couple of years. Due to the dynamic and unstable economy, employees have to work under increasing pressures that often go unnoticed.  

Employee recognition should not be overlooked but embraced and incorporated to suit the new modern workplace. Recognition is a powerful tool that allows businesses to respond to the many challenges of today’s workplace, and ensure a better employee experience. 

1. Different generational needs

To assess the importance of recognition in today’s workforce, we need to consider that the labor demographics consist mainly of younger generations. Gen Z and Millennial employees seek recognition and require more feedback than older workers.   

For instance, one study found that giving financial recognition to the newest generation of workers, no matter how small, provides a great sense of personal fulfillment. When these workers are recognized, they go above and beyond to do their job well and become your most influential brand ambassadors. 

2. Hybrid work arrangements

Shaunak Amin, Co-founder & CEO of STADIUM and SnackMagic, highlighted this in their response, “Gone are the days of 9 to 5. With flexible hours, it’s more a policy of getting your work done vs. the amount of time you spend on it. But working round the clock can lead to burnout, disengagement, and high employee turnover rates. Now that teams consist of remote, hybrid, and in-house staff members, employee recognition matters more than ever to attract and retain top talent.  

Holding virtual events to recognize employee efforts and reward them with limited edition swag, specialty snack boxes, or gift cards incentivizes employees both socially and monetarily and creates a culture of recognition for your business.  

This culture of recognition motivates your employees, adds value to your brand, and helps job seekers view your company as a great place to work.” 

3. Flattening corporate hierarchy

Similarly, we see many companies adopt a collaborative organizational structure instead of a hierarchical one, which also means fewer promotion opportunities. Hence, various policy interventions are needed to recognize, reward, and reinforce strong performance.

What are the Benefits of Employee Rewards and Recognition Programs?

Every company culture is unique. However, one universal truth applies to all employee recognition efforts. Recognition of employees early and frequently is the top driver of employee engagement. Continuous recognition strengthens peer relationships, builds trust, and reinforces a company value culture. 

Matthew Bridges also reflects this sentiment: “A company’s people are its product, and these people should be richly rewarded if they meet and exceed expectations. Suppose staff are engaged and remain connected to the culture of the business. In that case, they will deliver exceptional service to customers and clients, ultimately helping the company reach its mission and goals.”

Employee recognition helps to:

  • Increase employee motivation
  • Boost innovation
  • Encourage high performance
  • Attract top talent
  • Create a positive work environment
  • Show appreciation
  • Foster a learning environment
  • Promote fairness and transparency
employee recognition

What is the Impact of Employee Recognition on Businesses?

For many organizations, it is hard to implement and measure the ROI and positive impact that an employee recognition program policy brings. We have gathered first-hand insight into practical examples and cases where employee recognition impacted productivity in organizations.

1. Increase revenue

Pavel Stepanov, CEO of Virtudesk, shared their approach “Our employee recognition program has significantly increased our employee productivity. It has also boosted the morale of our employees and allowed them to experience a great sense of accomplishment when they are recognized. 

We give incentives and awards to our high-performing teams and top virtual assistants every month. And this inspires our employees to do more, perform well, and become more loyal to the company.  

Keep in mind that employees are the front line of your business. Without them, your operations are greatly affected. Our company has been getting more referrals and sign-ups from our clients who have experienced outstanding services from our virtual assistants. This only means that if you keep your employees happy and productive, your clients are happy too. It will increase your sales and revenue and will pave the way to growing your business.” 

2. Improve business processes

Recognition has a drastic impact on employees’ innovation. One study found that employees who receive strong recognition are 33% more likely to innovate proactively. In addition, they generate twice as many ideas per month and are twice as likely to be highly innovative. 

Tracey Beveridge, HR Director at Personnel Checks, provided us with an insightful take on employee recognition by stating, “Without our employees, our businesses are nothing, and without their drive and determination, we have less chance of growing. As our most valued asset, we ensure we show they are appreciated and when people go above, and beyond the call of duty, we make a point of recognizing it.  

We also realize that our employees are in the best position to suggest changes to the way we run things, as they are the ones on the front line dealing with the daily processes. ” 

To address the effect recognition has on employees’ contributions, she added, “For this reason, we run an incentive scheme where we recognize the employee’s commitment to improvement – whether it’s something small like implementing a kitchen rota so that people take it in turns to wash all the coffee cups, meaning less time spent by everyone in the kitchen each day and joint responsibility of chores or something that will have a positive effect on the main business, such as integrating an automated system to have prepaid postage labels printed to save time and money when sending out documents. 

Any suggestion authorized by managers to proceed receives a voucher for the person to spend on themselves. Having this scheme in place provides opportunities for employees all around the business to make a difference and doesn’t just focus on the high achievers in each team.” 

3. Increase retention rate

One shocking statistic of the workplace reality is that 45% of U.S. workers reported that they hadn’t been recognized at work in six months or more, while another 16% said they had never been recognized at work. If employees’ efforts are routinely ignored, they are twice as likely to quit within a year.   

An expert insight provided by Maciej Kubiak, Head of People at PhotoAiD that addresses staffing shortages, notes, “The team is what makes and determines the value of a company. That is why our main priority is to increase our retention rate to the maximum.  

We have used various formulas to do this, from more competitive salaries to greater flexibility. Still, these are widespread measures that other companies are also adopting, so competitiveness in the HR field is higher.  

So, we came up with the idea of implementing a system of “surprises for the sake of it.” 

For example, let’s imagine it’s Valentine’s Day, and you think, “I must buy flowers for my partner for Valentine’s Day.” It’s your decision, but don’t you think giving a gift one day has more impact for no reason? The illusion is much greater because you don’t expect it. We have opted for this policy, and every now and then, we send a corporate gift to our employees for no reason. The latest surveys have shown a 20% increase in labor productivity.” 

What are the Different Methods of Employee Recognition?

A multi-dimensional method with praise coming from every direction plays a vital role in improving engagement.

1. Day-to-day recognition

It is important to note that recognition does not always have to be tied to outstanding achievements. Sometimes, it is just about appreciating the employees‘ daily efforts. Employees on all levels of the business hierarchy, both salaried and wage employees, should receive acknowledgment for their work.

2. Peer-to-peer approach instead of top-down

Recognition from leaders does not always work. Top-down recognition is sometimes viewed as political and may not reach the quiet top-performers. Peer-to-peer recognition is more significant to many employees, as peers can recognize qualities and contributions that managers fail to acknowledge.

3. Recognition from all sides

Jess Munday stated, “At Custom Neon, we have implemented employee recognition programs, and there are many different facets to it, from customer feedback to peer nominations and manager’s choice awards. We promote a recognition-rich culture, where praise is welcome and encouraged from every direction.  

On Fridays, we host a brief “Peak of the week” fun meeting as a positive prelude to the weekend, where highlights of the week are shared and celebrated. We orchestrated these as a way to champion the successes of all departments.  

Customer-facing employees, such as the sales and design team, often receive praise and positive feedback from satisfied customers. In contrast, achievements from the marketing department or tech team, who are also integral to our success, can otherwise go unnoticed.  

These efforts are recognized and celebrated in our monthly newsletter and via our internal Intranet platform. Furthermore, each quarter one individual is selected as our team member of the quarter. Prizes vary from days out, lunches, cinema tickets, and choosing the charity or community events we support each month.  

By celebrating effort, we motivate and inspire our team. The best workplaces are the ones that care for their team and place employee satisfaction, fulfillment, and engagement as the catalyst for business integrity and growth.” 

Conclusion

Recognizing employees for their work and achievements can help build a culture that attracts top talent, where engagement thrives, and where employees are motivated to do their best. Employee recognition program policy is more than an HR initiative– it has the potential to impact an organization‘s work culture and the bottom line.  
Written by shortlister editorial team

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