Employee recognition is openly-expressed acknowledgment and appreciation for an employee’s contributions to their organization. Years of service awards; annual, quarterly, and performance bonuses; and verbal and written praise all fall under the umbrella of employee recognition. Modern employee recognition is powerful: it makes work visible, supports company values, and boosts morale. It’s also undergoing an exciting sea change.
The employee recognition paradigm, which has traditionally figured executive leaders and managers as the parties responsible for praise, is making room for peer-to-peer, direct-report-to-manager, and 360-degree recognition.
Research shows that employee recognition is most effective when it’s specific and given frequently. When organizations decentralize employee recognition and empower their workers to engage in peer-to-peer and 360-degree recognition (that is, not solely top-down recognition), they increase the frequency with which employees can receive recognition and get a more nuanced understanding of what individuals, teams, and departments consider valuable.
When it’s done right, recognition can improve productivity and boost morale. When productivity and morale go up, employee engagement and employee retention go up, as well.
Imagine that you’ve been working all week on a slide deck for your manager
When you give her the final version, she looks it over and says, “thanks,” giving you no indication that she noticed the detailed speaker’s notes you added to each slide or that you updated the slide template so it was aligned with your new brand guidelines.
While you might be loathe to ask your manager for additional recognition or feedback, your coworkers saw how much time and effort you put into the project. In the right environment, we would hope they’d feel comfortable approaching your manager and saying something like, “hey, I reviewed early drafts of Amir’s slide deck and was really impressed with his attention to detail and commitment to telling our story in an engaging way.”
Would you or your coworkers get to hear those nice things being said about your work? Probably not. Would your manager be in the right headspace to really listen to what your coworker was saying? Maybe not.
In addition to being specific and frequent, recognition needs to be timely and visible in order to be effective. In our experience, it’s hard to consistently give recognition that meets all the necessary criteria when you don’t have a framework or the proper context.
Employee recognition programs can provide that necessary framework but they’re only successful when employees are motivated to engage with them.
If adding new tech tools to your team’s workflow feels tough enough as it is, convincing your employees to actively participate in an optional recognition program can feel impossible.
Impossible? Ha! If you link rewards to recognition, everyone will want to participate.
Understanding the value of employee rewards
When we first launched Bonusly, we gave our customers a choice: they could use the platform to give bonuses with or without real-world monetary value.
In the non-monetary version, users awarded each other bonus points (similar in concept to gold stars or brownie points) and monitored performance with leaderboards. In the version with real-world value, users recognized each other with bonuses worth a small amount of money that could be exchanged for gift cards.
From the jump, we noticed a significant drop-off in user participation with the brownie points configuration. Companies that chose not to connect bonuses to real-world value were experiencing noticeably lower engagement rates than the companies that had chosen to give Bonusly points monetary value. After 18 months, we discontinued the brownie points version of Bonusly because user engagement was so low.
Even with a relatively low exchange rate, bonuses with real-world value were given more frequently and by more people than bonuses with no monetary equivalent. One possible explanation for this correlation is that bonuses with real-world value help users measure the value of recognition, creating meaning for both the giver and the recipient.
If you knew that your teammate could go out to lunch, buy a new video game, or donate to a local animal shelter using a bonus you gave them, you’d probably be more motivated to shout out their great work than you would if the bonus couldn’t be redeemed somehow. With a brownie points recognition platform, neglecting to give someone a bonus doesn’t have an immediate downside. Sure, the person you’d be recognizing won’t get to hear what you have to say about their work, but there’s not a corresponding real-world loss.
In order to enjoy all the benefits of frequent recognition (i.e., increased employee engagement and improved retention), you’ll need to encourage your employees to engage with your recognition program and make recognition a habit. The promise of rewards can be enough to get your employees over the hump that adopting new tech tools so often presents.
The proof is in the pudding: according to Deloitte’s 2018 Global Human Capital Trends report, “employees respond favorably to agile compensation programs that provide raises, bonuses, or other incentives more often than the traditional once-a-year rewards system.” One study even “found that employees who receive regular small rewards, in the form of money, points, or thanks, are a staggering eight times more engaged than those who receive compensation and bonus increases once a year.”
Check out our 2018 year-in-review report to see how many bonuses it took to for 75% of Bonusly users to receive recognition at least once a month.
If you build a recognition program but don’t offer rewards, your field of dreams will be nothing more than a cornfield.
Now, I don’t mean to imply that your employees are solely motivated by money. However, by pairing recognition with rewards, you can actually facilitate more meaningful exchanges.
To help you hit that sweet spot, here are two major tenets of rewards that we’ve learned from six years of experience:
1. Make rewards varied and personalized
2. Don’t make rewards if-then if you want to encourage creative thinking
Let's dive right in.
1. Make rewards varied and personalized
What do I mean by “varied and personalized” rewards? Simply that they’re different for everyone.
The racing fanatic in your department might appreciate a spa day on the company’s dime, but she’d probably be blown away if you covered the cost of a day at the racetrack.
In a recent piece for Monster.com, Peter Vogt writes about Dan Pritchett of Logos Research Systems, who discovered that one of his employees loved fast cars. To reward that employee, Pritchett paid $1,500 on a day at the race track and gave his employee the day of a lifetime. He used what he knew about his employee to reward their hard work and bond with them.
Giving employees the gift of experiences can have a powerful impact. One great thing about Bonusly is how we’re able to redeem our points for things that enable those experiences, like airfare, event admissions, hotel rooms, and more. It makes the work we do and the recognition we receive even more meaningful, knowing that our dedication pays off in the form of a great time.
Do your employees want to share their rewards with the world? Offering creative and personalized rewards can help you win employee advocates. It’s the transitive property of rewards: employees get something they want that they can leave the office with and show to or share with their family and friends. The public recognition they received at work leaves the office in an entirely different, and much cooler, form, giving them (and you!) even more value from your recognition program.
I’ll use myself as an example: I’m always excited to tell people about the recognition and rewards system my company uses (and develops!) because its impact on my personal life is significant. In the past year, I’ve used my Bonusly points to buy new sheets with a Target gift card, donate to Planned Parenthood with a digitally-fulfilled donation, and see Sza perform live in concert thanks to a Ticketmaster gift card. I find it heartening that my employer lets me choose my rewards so I can do the things I love, buy the things I need, and support the causes I care about.
One Bonusly user writes that the “feature that makes everyone happy is that they can choose rewards that they are interested in instead of [our company] choosing something that will never be used.”
You can certainly offer the same gift card to all of your employees, but when you give them the option to pick from any number of providers, they’ll choose what’s best for them. As the old saying goes, one man’s Texas Roadhouse gift card is another woman’s Whole Foods Market gift card.
2. Don’t make rewards “if-then” if you want to encourage creative thinking
“Rewards, by their very nature, narrow our focus, concentrate the mind; that's why they work in so many cases,” remarks Daniel Pink in his TED talk, The puzzle of motivation.
If-then rewards work really well for tasks that require “a narrow focus, where you just see the goal right there, zoom straight ahead to it,” Pink says. But most of the problems we’re trying to solve in the modern workplace aren’t this linear, and because points for points’ sake limit creative thinking and restrict “our possibility,” as Pink calls it, if-then rewards can be counterproductive motivators for knowledge workers.
When you’re working with the possibility, not the promise, of rewards, your mind is free to be creative and expansive. And that's the quality of mind we hope everyone can enjoy at work.
The time and money you invest in your employees is significant, so you want to do everything in your power to make those efforts stick. In a World at Work study on the impact of rewards programs on employee engagement, 42% of respondents “indicated that their organization’s total rewards strategies had a positive effect on employee engagement.” With the key tenets we shared here, we think you’re ready to leverage your rewards program to support your recognition program.
If you already have a system for recognition but not a rewards program to go along with it, check out The Elements of an Effective Reward System, a guide we produced with Namely: