A Complete Guide To Employee Recognition

Employees are arguably the most important assets for a company. They deal with clients, define the work culture, and drive performance.

Yet, companies struggle to keep their top employees. Research says that the primary reason for employees quitting jobs is not getting enough recognition. Thus, managers not appreciating good work may prove to be quite costly.

To retain and motivate your people, your organization needs a vibrant recognition culture.

This article will walk you through the basics of creating such a culture.

What is Employee Recognition?

Employee recognition is the act of acknowledging your employees for their contributions. By ‘contributions’, I don’t mean just high performances. It can be for day-to-day tasks, teamwork efforts, ideal behaviors, or simply for the way they do things.

Everyone likes to be appreciated for their efforts. It reinforces that someone recognizes and prizes their efforts.

Employee recognition entails doing that in a meaningful way. You are letting them know that you notice and appreciate their efforts. This sincere act will boost employee morale and instill a sense of belonging at work.

Recognition has a tremendous potential to drive engagement, productivity, and employee retention. If you give your employees their due recognition, you can unlock their full potential.

Authentic employee recognition serves three greater purposes:

1. It showcases that the person has achieved a goal.

When a person achieves a goal, they feel excited and satisfied. This excitement of achieving the goal is amplified when others recognize their achievements. A simple “thanks” or "great work" can mean a lot for an employee who worked hard to reach a goal.

2. It highlights employee efforts.

Employee recognition is not just about high performances or achieving goals. It is also about people going above and beyond the expected. For e.g., an employee staying back late to support another with their work. Acknowledging such kinds of genuine effort helps build a strong culture of recognition.

3. It reinforces behaviors that align with company values.

An employee notices when a particular behavior is being frequently recognized. They understand what their employer is expecting from them. They tend to associate that specific action with getting rewarded. So it becomes more likely that they continue to do it in the future.

Components of Employee Recognition

Employee recognition is commonly associated with employee rewards. Both of these terms are often used interchangeably but are different terms.

Here are the key differences between recognition and rewards:

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Recognition

Recognition simply means acknowledging one’s inherent value, behavior, or contribution. It is an intangible form of acknowledgment whose worth cannot be measured definitively. It can be a meaningful ‘well-done’, a high-five, or a special shout-out on social media.

These gestures help build an emotional connection between the company and the employee. Employees feel valued and that they matter. It is an excellent source of motivation and plays a critical role in employee retention.

Related: 50 Best Words of Appreciation for Employees

Rewards

Rewards are a tangible form of acknowledgment. It usually has a monetary value attached to it. Unlike employee recognition, which is more emotional and relational, rewards are transactional. For a particular input, you get an output in return.

You may reward an employee with free gifts, vouchers, discounts, or points-based rewards. In return, you can expect higher returns from them in terms of performance. They are likely to be more satisfied, productive, and engaged. Rewards have a notable role in attracting top talents to your company.

Note: A points-based reward system allows the giver to reward points to a recipient. You may tie these points to a specific monetary value. The structure of a points-based system may differ from company to company. But usually, these points are redeemable for merchandise, gift cards, or other incentives.

Theoretical Foundation of Employee Recognition

Employee recognition is based on the theories of behavioral sciences and human psychology. These theories can help us understand how recognition affects employee behavior.

Two theories primarily stand out:

• One considers recognition as a basic human need, and
• The other considers recognition as reinforcement.

Recognition as a Basic Human Need

This perspective is inspired by Maslow’s Hierarchy of Human Needs theory. It says that all humans are motivated by some basic needs. Maslow gives five categories of these needs, often depicted in a hierarchical pyramid.

Maslow’s theory can be used to understand engagement levels at the workplace.

From the bottom of the pyramid, the needs of an employee are:

• Physiological (food, water, sleep, physical and mental health),
• Safety (job security, salary, benefits),
• Love and belonging (friends, social, team, family),
• Esteem (respect from others, recognition, importance, self-confidence) and,
• Self-actualization (creativity, learning, challenge).

Employees first try to meet their basic needs of survival. They need their physical and mental health in place to function. After that, they think about job security, income, and benefits.

But once these are in place, they aim to satisfy the next levels of needs: belonging and esteem.

Both are massive drivers of our human selves in the workplace. Employee recognition meets these two tiers of need.

Employees seek social acceptance to validate they belong among their peers. They also want to feel important, respected and recognized. When people acknowledge their efforts, it motivates them to maintain their hard work.

Once they feel accepted and recognized, they aim for self-actualization. This is a level that inspires creativity and learning.

Recognition as Reinforcement

Reinforcement in psychology refers to anything that improves the likelihood of something happening. It is a type of communication that inspires people to show the desired conduct.

Recognition as a reinforcement is based on the following idea:

Employees are likely to continue a certain behavior if they are appreciated for it. It provides a theoretical basis for the positive effect of recognition on performance.

Employee recognition is a type of positive reinforcement. You need to add more of it to the system to increase the likelihood of the desired behavior. In contrast, negative reinforcers are removed from the system to inspire action.

Let’s have a look at some benefits of a successful employee recognition program.

1. Higher Employee Retention

Most companies struggle with high employee turnover rates. One of the main reasons for this is a flawed recognition culture. 79% of people who quit their jobs cite ‘lack of appreciation’ as their reason for leaving. (OC Tanner)

When you duly recognize employees, they get emotionally invested in their job. So they naturally tend to stay longer. This leads to reduced turnover and higher retention.

2. Higher Employee Engagement

Employee recognition is a primary driver of employee engagement in a company. Employees feel valued when their inputs are recognized timely and regularly. They begin to put in discretionary labor to continue their good work. It also results in increased productivity and better customer service.

72% of businesses agree that recognition does impact engagement positively. (Harvard Business Review).

3. Improves Work Relationships And Team Work

It is said that people don’t leave their jobs. They leave managers. So managers need to build strong relationships with team members.

Frequent recognition from managers can help improve manager-employee relationships. It helps in communication, builds trust, and bridges the gaps between them. For better results, managers should be trained on how to recognize employees effectively.

Employee recognition also helps in improving peer relationships. A culture where peers don’t hesitate to encourage each other is great for team morale and engagement.

4. Creates a Culture of Recognition

Recognition is contagious and is often reciprocated. Everyone likes getting appreciated. At the same time, people also like giving appreciation, cheering, and encouraging others. It provides a sense of satisfaction and helps build solid connections with peers.

When employee recognition becomes the daily norm, it profoundly impacts the company culture. It creates a positive environment where people value others’ efforts, qualities, and strengths.

5. Strengthens Company Values

83% of HR Leaders say employee recognition strengthens their organizational values. (Globoforce)

Companies may have different core principles like dedication, honesty, punctuality, excellence, and others. They would want their employees to work in ways that are in line with these principles. So they design their rewards and recognition programs set with company values.

Employees get recognized when they exhibit desired behaviors. This strengthens the organizational values in their everyday actions.

6. Build Employer Branding

A strong culture of recognition helps to strengthen employer brand value. Candidates get attracted to a company that values employees’ contributions. Positive employer branding becomes more significant with increasing war-for-talent.

Recognition also promotes employee advocacy. When workers feel happy at work, they share their positive employee experiences. Thus, they become active ambassadors for the organization.

7. Improves Employee Motivation

Employee morale rises when leaders highlight an employee's contribution to the business's success. It keeps employees motivated, happy, and they feel good about what they do.

Employee recognition also has a physiological impact on performance. Getting appreciated or loved creates ‘oxytocin’ in the body. Research says people under the influence of this ‘love hormone’ perform better. It reduces stress and can decrease absenteeism.

Related: 25 Employee Recognition Statistics You Shouldn't Ignore in 2021

Here's our take away from the above!

The work environment today has become ultra-competitive. Businesses are looking for the best talents and skills in the labor market. But even top-performing employees need high motivation to excel.

In Dale Carnegie’s words,

People work for money but go the extra mile for recognition, praise, and rewards.

Millennials entering the workforce expect instant recognition for doing a good job. They wouldn’t mind moving to greener pastures if they do not feel valued.

So companies are continuously strengthening their culture of recognition.

Learn More: Employee Recognition in the Remote World

Here are some traits you can recognize in your employees to build a good company culture:

1. Behaviors Based On Company Values

Every company has its unique core values. They may be based upon punctuality, client-friendly, integrity, humility, adaptability, transparency, or others.

These basic principles crafted by leadership act as expectations from employees. Rewarding people for these traits is an excellent way for companies to set an example.

2. Innovation and Creativity

Creative and unique ideas are the seeds of innovation. An innovative employee will come up with new ways to solve old challenges. They come up with novel and valuable ideas and should be encouraged to innovate. Doing so will encourage others to tap into their creativity and think outside the box.

3. Intrinsic Motivation

Some employees do not need supervision. They are proactive and motivated from within to perform a task well. Their intrinsic motivation needs to be recognized.

4. Team Player

Team players collaborate really well and are assets to have in the workplace. They motivate and offer help to others without any hesitancy. So you should recognize this trait by appreciating them publicly or through rewards.

5. Willingness to Learn and Improve

Companies should recognize employees who are the first to volunteer for any task. These employees treat challenges as opportunities for learning. Even though they might might fail, they have a willingness to improve. Encouraging this quality ensures that workers become skilled in various areas.

6. Adaptable

Employees go through many changing roles and styles of work in their jobs. They face new challenges and crises now and then. Those who can adapt to these changes and perform well need to be appreciated. It is a valuable skill in today’s dynamic and fast-paced economy.

7. Performance-Based Recognition

This is the most straightforward employee conduct to recognize. You appreciate and reward them if they have achieved the desired goal. It is simple to measure and focuses on the outcome of their set goals.

8. Years of Service

People are staying with businesses for shorter periods of time. The average tenure of employees aged between 25 to 34 is 3.1 years. (Bureau of Labor Statistics)

The cost of replacing these employees can have quite a high impact on the business. Recognizing years of service shows an employee's tenure means something to the employer. This helps in employee retention as well.

9. Individual Value

Employees want to feel valued as individuals. They want you to recognize them for who they are and not simply for what they do. You can acknowledge your staff for their unique abilities, personalities, and talents.

In her book “Make Their Day!”, Cindy Ventrice talks about recognizing individual value. She stresses providing opportunities for growth to show employees that you care. You can help them learn new skills and take on new responsibilities. This way, they can develop professionally.

Read more: 50 Rewards and Recognition Ideas to Boost Employee Recognition

Based on who gives recognition, we can classify employee recognition methods into the following types:

Top-Down Recognition

In his book "I Love It Here", Clint Pulver talks about the critical role leaders have in promoting a culture of recognition at work. They are the ones who establish a company’s core values. So they would naturally want employees to stick to it.

When employees display behaviors that mirror company values, leaders must praise their dedication. It creates a considerable impact on morale and engagement.

Direct-Report Recognition

Cindy Ventrice defines this as the recognition employees receive from reporting managers. She says teams respond more to their acknowledgment than those from senior leadership.

Managers have an important role in reinforcing organizational values upon employees. They can do this by providing frequent recognition of employee efforts.

They know the most about what an employee does all day. So it can prove to be the most authentic appreciation. Managers are also more likely to know what type of recognition will appeal to the employee.

Peer-to-Peer Recognition

Recognition from peers has a unique significance and can have the most substantial impact on employees. Peers who often work closely notice qualities that managers overlook. When peers recognize each other’s contributions, it strengthens their bond and builds trust. This ultimately increases engagement and retention levels.

Peer-to-peer recognition is also self-perpetuating. Leaders seldom need to take action to keep it going.

In their book “The Carrot Principle”, Adrian Gostick and Chester Elton gave the below classification of employee recognition.

Day-to-Day Recognition

These practices may recognize daily efforts. They are frequent, low-cost, and often intangible. These may include friendly nods, a pat on the back, or a thank-you email for employees’ efforts.

Day-to-day recognition can be mainly considered as a token of gratitude. They can be effective in maintaining everyday morale.

Above-and-Beyond Recognition

It focuses on recognizing employees when they go above and beyond what's expected of them. You may recognize notable results like saving costs, innovations, exceeding targets, and others. It usually consists of formal recognition in front of the whole team.

Career Recognition

It includes celebrations of professional milestones, years of service, and significant career growth. Such employee recognition is associated with different phases in an employee lifecycle.

Celebration Events

These events focus on celebrating achievements instead of rewarding performances. Tying up these celebrations with team successes boosts teamwork.

For example, teams would love to celebrate the completion of a grueling project. You may also acknowledge individual contributions during work anniversaries or birthdays.

Also Read: 33 Remarkable Birthday Wishes For Employees

Here's what we can take away from the above!

It is critical that you give the right form of employee recognition at the right time. With teams going remote, creating a sense of connection is more important now than ever.

It is vital to consider that every employee has unique needs. There can be no one-size-fits-all approach.

One employee may prefer verbal or social appreciation. The other may prefer tangible rewards.

Putting a little thought behind your employee recognition strategy can go a long way.

Here are some simple employee recognition ideas:

• You can start with a sincere ‘thank you' and a personalized note focusing on the significance of their work’.
• Wish your workers on their birthdays and celebrate work anniversaries.
• Acknowledge critical habits of punctuality and diligence.
• Organize outdoor activities such as team lunches and team-building exercises.
• Provide a day or two off or a short paid holiday for outstanding performances.
• Include a printable certificate along with verbal appreciation to establish its authenticity.
• Prioritize wellness at work and plan out a robust wellness program for workers.

With digital employee recognition solutions, peers can now recognize each other instantly. Companies are giving out benefits, reward points, and special shout-outs through these platforms. All these make recognition more frequent, easy, and effective.

Also Read: 50 Great Work Anniversary Wishes and Quotes for Employees and Peers

Here are some things that an employee recognition program needs to have/do to be successful:

1. Clear Vision

Before you implement an employee recognition program, you must be clear about its goals. Do you want more engagement or higher retention? Or perhaps you might want more sales. It will be best to set your program’s objectives in line with the overall mission and goals.

2. Timely & Frequent

Every achievement, big or small, should be appreciated at the right time. It should also be offered often and regularly. It might not be very fruitful to recognize an employee for something they did months ago.

3. Simple & Easy to Use

It should be simple for people to recognize each other's efforts. A good employee recognition program makes it easy for employees to recognize peers. But the formal recognition process should be easy to use too. Tech-based rewards and recognition software can be a huge help here.

4. Specific & Flexible

A thriving recognition culture specifies what kind of behavior it expects from employees. When employees know what is being recognized, they are likely to do it more often.

Programs should also be agile and flexible for employees to recognize each other on the go. It also makes it easier for distributed teams to stay connected through appreciation.

5. Inclusive

A strong employee recognition campaign requires pan-company commitment. Top leadership should constantly promote and participate in appreciation. Only then will employees take it seriously. Employees themselves need to play an equal part in recognizing other employees.

6. Measure Impact

Your recognition program may be up and running. But you also need to measure its impact on engagement and well-being. The best way to know this is to ask the employees themselves.

Do they feel appreciated enough? Are they motivated to contribute more to the team? Employee surveys are pretty cost-effective.

With pulse survey tools like Vantage Pulse, you can collect instant, fast, and real-time employee feedback.

7. Evolving & Adaptable

With changing times, business demands change. Along with it, employees’ needs change too. The best employee recognition programs are those that continuously evolve and adapt accordingly.

Here's the take away from the above:

The bottom line is that different individuals are motivated differently.

Employee recognition programs need to acknowledge the worth of every individual. At the same time, there should be an alignment with the organizational goals. Only then can it positively impact business outcomes and engagement levels.

In other words, recognition needs to be authentic and, at the same time, impactful. With this aim in mind, we have come up with a new framework. It will help you build a vibrant recognition culture at work.

Recognition at work is like the air employees need to breathe upon and thrive. So you need to make sure you provide it in the right manner. It should be impactful as well as authentic.

To help you build this, we at Vantage Circle have created a new framework: the AIRe Framework for Employee Recognition.

The AIRe Framework is a powerful tool for companies to design, review, and implement their recognition programs.

It is based upon three themes of employee recognition:

• Appreciation (A)
• Incentivization (I)
• Reinforcement (R)

All these should be delivered with a solid and genuine Emotional Connect (e).

The critical points of the AIRe Framework:

• It believes that if a person makes genuine efforts towards a goal, they should get recognized.
• Recognition doesn’t always have to be exclusive or tied to outstanding achievement. Sometimes, it just needs to be about appreciating and valuing the person’s efforts that they put in daily.
• Recognition programs should be clear on the behaviors they want to reinforce.
• Programs can use Emotional Connect to amplify the impact of employee recognition.

The AIRe Framework establishes a benchmark for companies to determine why their employees feel underappreciated despite receiving frequent and timely recognition.

But don't just take our word for it. Here is a link to our AIRe Audit tool, which will give you a free online analysis of how effective your current rewards and recognition practices are.

Themes of Recognition under AIRe Framework

1. Appreciation

Appreciation refers to an acknowledgment of employee contributions. But it is not just about high performance or extraordinary results. It can also be for things like day-to-day tasks and teamwork efforts.

2. Incentivization

It is the practice of including incentives to motivate the employees. Incentives encourage or tend to encourage action. Incentives can be a goal in itself which employees strive towards. These incentives can be both monetary and non-monetary.

3. Reinforcement

Reinforcement guides employees towards the behaviors that the company wants to promote. Once appreciated, they are more likely to continue doing that work.

Emotional Connect

Emotional Connect is the driving force behind successful employee recognition. It refers to the "feel-good" factor that an act of recognition brings. Both for the one receiving it and the one giving it.

The utility of recognition comes from how it is given rather than what is given. It is not the monetary value of the recognition that matters much. Instead, it is the process of how it is being given that can have a tremendous impact on the receiver.

Here is where personalizing the recognition comes into play. Each employee is unique. What might motivate one won’t necessarily motivate others.

In his book "Practicing Recognition", Roy Saunderson defines recognition as:

"the transfer of positive emotions from one person to another."

Whether it is given verbally or in written format, it should be done with real emotions. Otherwise, it will seem mechanical and insincere.

Applying the AIRe Framework

AIRe Framework breaks down each of the themes of recognition into dimensions. Companies can use these dimensions to assess their employee recognition programs.

Appreciation

Coverage
Coverage refers to how much of the workforce is covered by the program. As everyone likes appreciation, recognition programs should cover all employees from all levels.

Frequency
Psychologists say that there’s no such thing as too much recognition. But the frequency must go with the needs and expectations of employees.

Incentivization

Impetus
Impetus refers to the value of the rewards given. It can vary from person to person. The point is that the award values must be meaningful in relation to the average salary levels for each segment of employees.

Clarity
Clarity analyzes if employees understand how awards are determined and what they need to do to get recognized. If the employees are not clear on what to do to qualify for recognition programs, it won’t drive impact.

Reinforcement

Specificity
Specificity is the extent to which the program guides employees towards various behaviors. There needs to be a clear set of behaviors that the organization promotes. It will help create a broader organizational impact. But also, promoting too many behaviors might lead to confusion.

Alignment
Alignment reviews if the employee recognition program is deviating from the company's core values. Behaviors promoted by the program need to match with those promoted by the core values.

Emotional Connect

Personalization
Personalization is the extent of customizing a recognition program for your people. It may include sending personalized notes, giving them their choice of rewards.

Delivery
It is the way recipients receive recognition. In-person delivery with a personalized note is a powerful method. Even the smallest of positive gestures can make a huge difference. Simply tap into your creativity to appreciate your people better.

Here's the take away:

Organizations should adopt these principles to review their employee recognition programs. First, design them through the lens of Appreciation, Incentivization, and Reinforcement. Then, base them upon a solid Emotional Connect.

This way, the recognition strategy can improve the overall work culture.

A digital solution can make it very easy for employers to reward and appreciate employees. It can make recognition smoother, faster, regular, and more frequent.

Let’s see how:

1. Instant Recognition

It is a world of instant gratification. Employees find little value in getting praise for something they did months ago.

It is also to be noted that the workforce today consists mainly of millennials. They prefer on-the-spot recognition to yearly reviews. They need acknowledgment as soon as they achieve a goal or excel at work.

With a digital employee recognition solution, you can instantly recognize employees for their work. Within seconds, you can post an appreciation post, and they will receive it in real-time.

2. Flexible Rewarding

A digital recognition platform can give employees the power to choose their rewards. Through a points-based system, you reward them with redeemable points. They will have the flexibility to choose from multiple reward options such as gift cards.

3. Peer-to-Peer Appreciation

With a digital solution, employees can also take part by appreciating peers. It helps build a culture of recognition, motivation, and happiness. Employee recognition platforms can make peer-to-peer recognition fun. Employees can engage and interact with each other by interacting through a real-time social feed.

4. Automated and Personalized Recognition

Employees like to be wished on special days like work anniversaries and birthdays or occasions like the Employee Appreciation Day. A digital employee recognition solution can duly recognize them automatically at the appropriate time.

Recognition platform Vantage Rewards offers a Wish feature so that everyone can celebrate these special occasions. It also has the Service Yearbook feature, which is a personalized online yearbook. It allows peers to collect and share memories for someone’s work anniversary.

5. Recognition On The Go

In today’s world, employees do not work only on their computers and laptops. They also connect through multiple devices like tablets and mobile devices.

For recognition programs to succeed, it should be easy for employees to take part while on the go. Our solution, Vantage Rewards, is compatible across multiple devices and platforms (Android, iOS).

6. Involve Leadership

Employee recognition programs are more successful when senior executives and stakeholders participate. One way to integrate leadership into the program is through Panel Awards. It is a multi-level approver award system that provides employees with a fair and equal chance to win.

Digital recognition platforms like Vantage Rewards provide this feature. Here, managers nominate potential candidates. After that, the panel of selected approvers votes for the nominated employees.

After they decide the winner, the reward is announced instantaneously. It comes up in the Vantage Rewards' social feed.

7. Easier Management

Managing an employee recognition program for a large workforce can be difficult. This is especially true in the case of a manually designed reward system.

Digital recognition platforms like Vantage Rewards come with a feature called Management Dashboard. It can help management get a top view of the entire program. Admins get to analyze recognition-based activities across multiple teams in the dashboard.

8. Reflect Your Brand

Digital employee recognition platforms may come with white label solutions to reflect your brand. You can customize these tools accordingly to reflect your company's branding.

E.g., in Vantage Rewards, you can integrate your logo and company colors into the tool. You can even include company videos and manuals to reflect your company culture.

9. Data-Driven Insights

A tech-based recognition strategy helps measure the impact of recognition with valid data. You can identify the significant contributors in your teams. It also becomes easier to identify gaps in your program.

Vantage Rewards comes with a Dashboard option. It reports you on how to reward fairly, equitably, and consistently, as per performance.

10. Integrations

Companies use different team collaboration tools like Microsoft Teams, Slack, and others. Every company also uses its particular choice of HRMS softwares.

You can easily integrate solutions like Vantage Rewards with these tools. Integrations make it easier for teams to appreciate peers while they collaborate digitally.

11. Recognize Your Global Workforce

Today, most companies have gone global. Employees sit in different corners of the world and coordinate together. It is nearly impossible to recognize such employees in an in-house recognition program.

A digital solution makes it easier and faster to appreciate global employees. It also plays a vital role in instilling company values in the global workforce. Companies can now better communicate the value they place upon the entire workforce.

Recognition solutions like Vantage Rewards help companies reward employees working in different countries. It automatically adjusts the rewards as per the standard of living of the country they live in. It uses the SOLI framework to do this.

12. Easier Budgeting

A manually run employee recognition program has many hidden costs. The costs include time, paperwork, coordinating with a global workforce, ensuring visibility, etc.

With a digital recognition solution, budget allocation becomes easy. You can have complete control over how your budget is being used up, and even track it in real-time.

The Conclusion

Employee recognition is no longer just a nice thing to have in an organization. It is a critical component of every successful business today. So companies are going above and beyond to make recognition a natural part of their culture.

Dr. Bob Nelson says,

Take time to appreciate employees, and they will reciprocate in a thousand ways.

Be mindful, genuine, and sincere about acknowledging employees’ uniqueness. Appreciate them with what they place importance in.

Personalized recognition can go a long way. It can have an unparalleled positive impact on employee experience and well-being. It ultimately will have a dramatic effect on the company’s bottom line.