Everyone likes to feel valued and appreciated. That’s true in any setting, but particularly so in the workplace. Employers who neglect this aspect of operating a company do so at their own peril and stand to lose employees who contribute a great deal to the success of the business.

Exploring the concept of employee recognition is much easier than many people realize. Coming up with the most productive approach to recognizing and rewarding employees will be more involved. The good news is that the best strategy will provide something of value to the entire company, not just the employees. By starting with the essentials and following through to the creation of a viable employee rewards program, the benefits will manifest almost immediately.

Understanding the Concept of Employee Recognition

In the broadest sense, employee recognition is communication between owners, managers, supervisors, and employees that conveys the fact that the efforts of a particular employee are noted and appreciated. Exactly how that appreciation is given expression varies from one setting to the next. There are also multiple levels to conveying the appreciation.

Saying just "good job" is not enough.

The simplest method of recognizing the effort of an employee is through a one-on-one meeting. It doesn’t take up much time and may take place when only the employee and an immediate supervisor or other authority figure is present. Saying just "good job" is not enough though. One should say exactly what the employee did a good job on and be specific.

Recognition may also occur in a group setting. As an example, the employee who is being honored may be recognized during a departmental gathering. Again, it may be something as simple as noting the employee did a wonderful job of completing a demanding project. In this scenario, others are able to observe the recognition and may also add their congratulations and appreciation.

A more comprehensive and structured approach to recognition is a formal employee recognition program that is based on a foundation of specific goals and qualifications. This one is typically open to all employees of the company. Depending on the size of the operation, a committee is charged with evaluating employee performance and determining who, if anyone, should be recognized on a company-wide basis.

Here at Fistbump we are building tools to help companies of all sizes structure a comprehensive employee recognition program.

In all its forms, the recognition is intended to provide one more way for employees to feel wanted, valued, and appreciated. Far from being a simple formality or a means of being polite, that recognition is capable of producing long-term benefits for everyone involved.

Why Does It Matter?

The Effects of Employee Recognition, Pay, and Benefits on Job Satisfaction: Cross Country Evidence (Mussie T. Tessema1, Kathryn J. Ready, and Abel B. Embaye) as published in the January, 2013 issue of Journal of Business and Economics includes examples of why employee recognition should not be considered optional in the workplace. A few of those reasons include:

Maintain and encourage employee confidence: Acknowledging the contributions of employees builds confidence. That’s especially important when the employee has sought to try something outside the scope of his or her typical duties. Recognizing the effort and its value provides the confidence to try something else that’s new and could benefit the company.

Provide one more reason for the employee to stay: In order for employment to be successful, both parties must feel the relationship has real value. Employees who feel that they are important to the operation are less likely to look for greener pastures elsewhere. Employers who make it a priority to recognize and reward employees are less likely to experience higher levels of employee turnover. Along with providing more continuity to the enterprise, it also helps keep the amount of resources consumed in constantly training new employees to a minimum.

Builds greater trust between the employee and the employer: Employees who feel appreciated tend to trust employers. That comes in handy when tough decisions must be made and the reasons cannot be revealed until later. From the employer end, that trust factor also means that it’s easier to assume an employee has solid reasons for wanting to try a new procedure and be willing to wait to see the outcome.

Encourages employees to strive for greater participation in the company: With the confidence to move out, the employee is more likely to be on the lookout for ways to make a good thing better. Many employers have learned first hand what happens when employees identify ways to streamline processes and increase productivity. Knowing that those efforts will be rewarded makes it all the easier to participate in enhancing the operation.

Stimulates employee creativity: Employees who feel they are part of the company are likely to come up with creative ideas that improve the operation. Some of those ideas may even help the company tap into a new consumer demographic or inspire a new product that increases revenue and strengthens the company’s position in the market.

These are only a few examples of why recognition and rewards matter. Others may apply within specific industries, operations of a certain size, or companies based in specific geographic locations. Business owners and management teams can draw on general ideas presented in these publications and adapt them to their own specific company culture and circumstances.

What Research Demonstrates the Importance of Employee Recognition?

Industry-specific research into the merits of employee recognition are readily available. The value of those studies and surveys is not limited to the industries where they are conducted. Many of the basic findings can easily translate into other company models and industry types.

A good example is the work of Faisal Alazzaz and Andrew Whyte, (2015) "Linking Employee Empowerment With Productivity in Off-site Construction", Engineering, Construction and Architectural Management, Vol. 22 Issue: 1, pp.21-37. While acknowledging the wealth of anecdotal evidence regarding a connection between empowerment and productivity within this defined area, the study also builds a case for the reality of that connection based on empirical evidence. The results can easily apply to other industries like hospitality, electronics, and various service industries.

Employee Recognition and Performance: A Field Experiment is another example. Conducted and prepared by Christiane Bradler, Robert Dur, Susanne Neckermann, and Arjan Non for publication online in 2016, the paper chronicles the results of a controlled field experiment involving 300 employees. During the process, a portion of the employee force received recognition a couple of hours into the experiment. The results confirmed that recognition led to greater enthusiasm for the assigned tasks and a higher level of performance in general among those who were recognized.

Published in 2017, the Research Handbook on Work and Well-Being takes a closer look at the connection between the quality of on the job experiences by employees and the effect on employee and organizational health. Edited by Ronald J. Burke and Kathryn M. Page, the work builds a strong case for employee recognition and reward as a valuable resource that serves everyone well when the company goes through a temporary slump or a project proves to be more complex than originally envisioned.

Research based on different levels of recognition are readily found. Some are based more on experiences related by employers or employees while others are studies conducted under controlled circumstances. The majority confirm the value of recognition in multiple forms, including the creation and maintenance of a structured program for recognizing and rewarding employees.

Factors That Shape a Workable Formal Program

Words of gratitude are something employees always find welcome. The key is to take things to the next level and design a program that provides more formal recognition. Whatever the corporate culture, there are specific elements that should shape the form and function of the employee recognition program:

Define the Reasons for Creating the Program: This is a purpose-driven project. Identify specific reasons for wanting to create a more formal approach to honoring employees. The key is to be specific. Doing so will make it all the easier to identify other key elements in the program’s structure.

For example, it’s not enough to state that the aim of the program is to recognize employees who do good work. Define what is meant by good work above and beyond the basic expectations.

Seek Input From Employees: What would employees like to see included in the structure of the program? Expect to hear responses that range from holding some type of dinner for employees and their significant others to time off with pay to an employee of the month program with a bonus included.

Remember that the interviews don’t have to be conducted in person. There are a number of survey sites that allow for quick creation of a list of questions. Best of all, the employees can provide those responses anonymously. That may increase the willingness to participate in the survey.

Create a Steering Committee: For now, the committee is charged with organizing and analyzing the collected data. The goal is to develop a structured program that employees and employers alike will find workable. Include members of management, salaried employees, and hourly employees. Settle on Levels and Types of Recognition: The committee will determine what constitutes eligibility for recognition and even the possible forms of recognition. That includes certificates, trophies, special privileges for a limited time, and other rewards based on the type of action taken by the employee. What will be the reward for streamlining an aspect of the production process? What sort of recognition is given to an employee who salvages a major customer account? Those are examples of how a multi-leveled program comes into being and what sort of rewards are associated with specific actions. Involve HR But Don’t Dump the Program in One Department’s Lap: It’s tempting to create a program and then expect Human Resources to manage it. Resist the temptation. Just as people from all areas of the company participated up to this point, the future management of the employee recognition program must still be in the hands of a diverse committee. Do include someone from Human Resources, but ensure the representation remains broad. Practice is Still the Key: After all the planning and even the first employee is selected for recognition, there’s still some practice involved. That’s because positive words don’t come easily to everyone. Managers and others who may be called upon to present the formal recognition may feel awkward at first. That’s where practice ahead of time makes a difference.

Practice within the committee if necessary. It’s easier to come up with words everyone finds appropriate, ensure the process remained uncomplicated, and helps the presenter feel more confident in his or her abilities.

Formal Programs Will Evolve

There is no such thing as the ultimate employee rewards program. The structure at the time of the initial launch will continue to evolve even as the company experiences growth and the corporate culture changes. That’s not something to be feared. Instead, it should be embraced.

Changes in the program may be associated with the financial resources of the business. A company generating minor net profit will not be able to offer the types of rewards that a larger company can provide. As that smaller entity does increase revenues, the potential of offering something of greater monetary value is possible.

In like manner, the expansion of the business may alter the way that the company offers formal recognition to employees. A process that works fine when the business is composed of a single location will not be sufficient once the company operates a dozen locations. There will be the need to refine, alter, and otherwise update the program so that it remains viable in the years to come.

The key is remembering that an effective employee rewards and recognition program benefits the company as well as the employee. Never regard it as a marginal aspect of the operation. Keep it front and center at all times. The benefits in terms of increased productivity, lower training costs, and higher employee retention will more than justify the investment of time and money.