Recognition

6 Things Every Great Leader Should Know About Recognition

By George Dickson on November 09, 2015

Did you know that 3 out of 4 companies have an employee recognition program?

At face value, it would sound like the business world is making great progress, yet a recent study found that just 58 percent of employees even knew their companies had one.

What good is investing in an employee recognition program when employees don't even know it exists?

The same study Bersin & Associates conducted that revealed the statistic above also mentioned that:

  • Almost two-thirds of respondents felt that HR did not effectively enable recognition
  • Senior leaders are out of touch with how often employees are recognized

Great leaders effectively leverage recognition — both for the benefit of their team, and for the business. Here are six things every great leader knows about recognition, and that you should know too:

1. Employee engagement drives business performance

Towers Watson has studied employee recognition and engagement extensively, summarizing years of analysis in its Turbocharging Employee Engagement: The Power of Recognition from Managers white paper. Some key findings were:

Companies with highly engaged employees generate more marketplace power than their competitors.

The financial performance differences in operating and net profit margins were significant (5.75 percent and 3.44 percent respectively) — as were the 9.3 percent higher shareholder returns produced.

2. Recognition plays a crucial role in engagement

In an earlier global survey of nearly 90,000 employees, Towers Watson identified some of the factors that lead to a rise in employee engagement: "effective and caring leadership, appealing development opportunities, interesting work, and fulfilling tangible and intangible rewards."

Two strong drivers of employee engagement were: sincere interest in employee well-being from senior management and the personal development opportunities.

3. The source mattera

Recognition from immediate managers can boost two principal engagement drivers: opportunity and well-being. Towers Watson published another study on employee recognition which reinforced its earlier work.

This study found that manager-delivered employee recognition boosts employee engagement, especially in the personal development opportunity and sincere interest for the employee's well-being categories.

In high engagement workplaces, manager-delivered recognition led to a favorable engagement boost of 20 percent. In low engagement environments, the engagement boost was nearly 60 percent.

4. The most meaningful recognition comes from peers

It feels great to be praised for your work and have your boss show a genuine appreciation for your efforts. It feels great to be noticed and acknowledged. It is meaningful.

At the same time, have you ever been acknowledged from afar — say from HQ for reaching a milestone like a 5-year anniversary? It feels good, but not nearly as good as it does when it comes from an close colleague who sees and appreciates your hard work day in, day out.

Recognition from peers is particularly meaningful.

In fact, Towers Watson found that the most fulfilling recognition experiences came from within their teams or work groups or at the department level. In other words, from peers.

5.Inclusiveness, communication, and trust are essential.

As a leader who understands that role that employee recognition plays in engagement and business performance, you need to know that it's not just about doling out rewards and praise.

Towers Watson's report on manager-delivered recognition identified three requirements for effective recognition from managers:

  1. Inclusiveness. Recognition is given frequently, and all employees have the opportunity to be recognized.
  2. Communication. The immediate manager communicates openly and is receptive of new ideas.
  3. Trust. Employees trust their immediate managers and feels that management trusts the judgment of their employees.
When these three ingredients come together, the end result is an engaged employee who feels that their organization recognizes and appreciates good work.

6. Money isn't always the answer

TINYPulse published its 2014 TINYPulse Employee Engagement and Organizational Culture Report last year, detailing seven key trends impacting today's workplace.

One of those trends shows us that money isn't the answer to the employee engagement question. The number one reason why employees go the extra mile? Peers and camaraderie.

Luckily, most employees will happily oblige. TINYPulse's study found that most employees give peer-to-peer recognition when they have a tool to do so.

Let's take a moment to sum it up: 

  • Engagement drives performance.
  • Recognition boosts two principal engagement drivers.
  • The most meaningful recognition comes from peers.
  • Effective employee recognition programs are built on inclusiveness, communication, and trust.
  • Employees go the extra mile for peers and camaraderie.

You can use this knowledge to start recognizing the efforts of your peers more effectively right away.

Even better, work to establish a formal peer-to-peer recognition program so that your team have the tools they need to deliver the most meaningful recognition there is — then watch performance and engagement improve.

If you're ready to start building a truly effective recognition program check out our guide to Getting the Most from Peer Recognition:

Getting the Most from Peer Recognition

Written by George Dickson

George Dickson

George manages content and community at Bonusly. He's dedicated to strengthening organizational cultures through thoughtful leadership and frequent recognition.