How to Choose the Best Employee Recognition Program for Your Company

As humans, we need recognition.

According to Maslow’s Hierarchy of Needs, psychological needs, like self-esteem and a sense of belonging, are required for us to operate at our most successful levels. Recognition is a key aspect of these psychological needs. 

The workplace isn’t any different. Employee recognition is the open acknowledgment and expressed appreciation for employees’ contributions to their organization; it’s a way of letting your team know how much you appreciate the impact of their work.

Whether you’re considering sending simple thank you cards or presenting elaborate awards, the fact remains that recognition makes employees feel valued and inspires them to perform better at work. When those real, human needs are met, recognition can have real business value and impact on your bottom line.

But where do you start? What kind of recognition program should you implement? First, you should take a look at what your recognition program goals are. Next, we have a list of considerations you should be thinking about as you build a recognition-rich company culture.

What are your organization’s recognition needs?

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What do you hope to accomplish with your new recognition program? If you have a current program in place, what do you like and dislike about it? By keeping a specific goal in mind, you may find that certain recognition programs will be a better fit for your organization than others.

You need to increase employee engagement

Did you recently send out an employee engagement survey only to receive feedback your team members weren’t feeling appreciated? You’re not alone—about 65% of employees haven’t received any meaningful recognition for their work in the past year.

If your organization needs an employee engagement boost, recognition is an excellent way to get started. Willis Towers Watson found that recognition increases employee engagement up to 60%.

In our survey of how employees prefer to be appreciated, we found a nearly equal split in preference between Gifts (33%) and Words of Affirmation (32%). With this in mind, ask your team: How would you like to be appreciated? By understanding your team’s recognition needs, you get a better sense of how to best engage them.

You need to change or improve your company culture

If you have a rigid, hierarchical company structure, easing your team into a peer recognition program might take more education and leadership buy-in. But it has the benefit of amplifying everyone’s feedback, not just managers’.

If your employees feel that they’re not listened to or that your culture is dictated by higher ups, carefully implementing a peer recognition program might be the way to go.

Plus, those company values you always talk about? If your company culture is really based on a shared set of values, reinforcing those values through praise should be a deep-rooted habit.

You need to improve retention

Employees want to work for companies that value them. An analysis conducted by Gallup shows that “employees who do not feel adequately recognized are twice as likely to say they’ll quit in the next year.”

Plus, a study conducted by Deloitte shows that “high-recognition companies have 31% lower voluntary turnover than companies with poor recognition cultures.” Both findings show that when you recognize your employees, they are more likely to stay at your company.

You need to boost employee morale

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According to a Harvard Business Review article, “82% of employed Americans don’t feel that their supervisors recognize them enough for their contributions. That lack of recognition takes a terrible toll on morale, productivity, and, ultimately, profitability.”

When organizations recognize employees and make them feel like their contributions matter, employee morale will increase. If you’re hearing this type of feedback from your survey or around the water cooler, make sure to keep in mind that your program should nudge managers in the right direction.

You need to drive better performance

Research shows that happiness raises business productivity by 31%.

After all, when you’re applauded for doing something great, you’re more likely to do that great thing again!

Now, imagine the collective impact of employees who go above and beyond on a regular basis and routinely live out your company’s core values!

There’s a correlation between recognition and how committed your employees are to your company’s mission. By specifically tying in performance with recognition, you can reinforce the actions you find value in.

Understanding the types of recognition programs

There isn’t just one type of recognition program! Some take more administrative time while others rely on automated tools. Also, think about who is giving and receiving recognition—these are all considerations that may affect whether you reach your recognition program goals.

Top-down recognition

“Top-down recognition” is a common approach used by many companies. It’s a more traditional system, where a supervisor or manager appraises and recognizes the contributions of a direct report.

Typically, you will find supervisors using the annual performance review as the time to evaluate and recognize their employees’ performance. Supervisors also use this time to determine the employees’ pay raise, promotions, or other rewards.

However, the issue with waiting for annual reviews is that managers may overlook some achievements and focus on the more recent ones—they can’t see everything, after all! Employees, in turn, find the annual review process untimely and full of biases.

In the traditional recognition program, it is also common to see a management team select who to recognize, without the input of other employees. Obviously, this doesn’t paint a full picture of an employees’ contributions. As a result, other employees may feel unfairly treated and bypassed for the recognition that they deserve.

The top-down approach can be a less-effective recognition program. It can be difficult for managers to dedicate the time and energy to giving meaningful feedback. On the other hand, peer-to-peer recognition is powerful—it’s nearly 36% more likely to have a positive impact on financial results than manager-only recognition. Keep on reading for alternatives!

Peer recognition

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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.

The move toward peer recognition programs became more popular as work became more collaborative. The term “peer,” in this context, refers to anyone working directly with an employee, flattening the traditional hierarchical team structure.

Supervisors are sometimes less capable of evaluating and recognizing employees’ contributions, since employees spend more time with peers than they do with their managers.

Plus, direct reports also have meaningful and impactful feedback for their managers! Peers can see the day-to-day impact of their team members’ work and can provide more timely feedback. Instead of waiting for the end of the year to receive recognition from a supervisor, peers can offer more accurate and real-time recognition.

By implementing a peer recognition program, you’re communicating that everyone’s feedback is valued—not just managers’.

Milestone recognition programs

This type of recognition is great for welcoming new hires, celebrating employee birthdays, and commemorating tenure milestones and work anniversaries!

These special days are the perfect time to express to a team member how much you appreciate their work.

However, keeping track of these dates for everyone in your organization takes a lot of admin time, and we recommend utilizing an automated tool to make your life easier. Without some level of automation, milestone programs can become hard to scale—you don’t want your program to come undone if your admin needs a sick day.

Ultimately, while milestone recognition programs make sense, we would caution against using this model as your primary recognition program. Like annual reviews, once or twice-a-year recognition just isn’t enough to keep your program competitive.

Nomination programs

You’ve definitely heard of this type of recognition—these are your “Employee of the Month” awards! Nomination programs typically allow a group of individuals to nominate an employee or coworker for their contributions or good attitude at a regular interval, usually monthly or annually. These programs are typically thought of as peer recognition, but it’s worth it to think about who is ultimately choosing the winner.

In our opinion, nomination programs alone are not a good way to recognize your employees. It’s inherently biased, favors the most visible or popular employees, and can be demotivating to all the other employees doing great work.

Employee shout-outs

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Using shout-outs as a type of employee recognition program is an easy and cost-free way to appreciate your employees, especially for small companies.

Shout-outs can occur during all-hands meetings or through company-wide interactive platforms. You can also celebrate your employees’ contributions through your company’s social media accounts like Twitter, Facebook, or Instagram.

Shout-outs help to motivate other employees to do better when they see that you value the impact of their work. However, keep in mind that while some employees are motivated by shout outs, they can also lose their value over time and become demotivating.

Recognition and rewards

In the early days of Bonusly, we offered two types of recognition programs. Customers could use our platform to give bonuses with or without real-world monetary value.

Right away, we noticed a significant drop-off in user participation when points held no monetary value. Companies that chose not to connect bonuses to real-world value were experiencing noticeably lower engagement rates than the companies that had chosen to apply monetary value to their points.

Our takeaway is that bonuses with real-world value help users measure the value of recognition, creating meaning for both the giver and the recipient.

This idea is backed by research: 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.”

According to the same report “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.”

Integrating rewards can be the factor that makes your recognition program successful.

With this concept in mind, the promise of rewards can also be enough to get your employees over the hump that adopting new tech tools so often presents. We've found that recognition is more impactful when it works with your existing tools, but also can be a powerful driver for change management or new tool adoption.

Integrating recognition into your existing workflows

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Complicated tracking and ongoing program maintenance isn’t for everyone. If you’re groaning at the idea of having yet another tool to manage, we get you.

Employee recognition should be frictionless, and that means any tools or apps you implement need to integrate into your employees’ routines seamlessly.

When evaluating recognition programs, these are the questions you should be asking:

  • How much administrative time is required?
  • Can this tool include all of my employees regardless of where they’re located, the type of work they do, and how they communicate?
  • Does it integrate with the tools we’re already using, like HRIS and chat systems?
  • Is it intuitive enough that launching a new program doesn’t interrupt or cause a strain on employees’ routines?
  • Does it allow for timely recognition, given soon after the action took place?
  • Does it reinforce your company’s core values?
  • Is there a mobile app or kiosk for non-desk workers? What are its mobile app ratings?
  • If you’re looking into a third-party tool, does it have good reviews on Capterra and G2?
  • Are there case studies, independent reviews and success metrics (such as consistent participation and adoption) for the program?
  • Can the tool scale with your company as you grow or expand to different locations?
  • Does it offer rewards that will be of value to all employees?
  • Is processing any taxes associated with the program going to be easy for our finance department?
  • Does the program offer analytical insights to track how well the program is going and also indicate areas of opportunity or risk within your employee base?
  • What are the security and compliance standards for the program?

If you prefer using one login to track and issue rewards, send and store program-related communications, amplify employee accomplishments, then look for platforms that support single sign-on (SSO) like Bonusly. You’ll save valuable time that can be reallocated towards making your recognition program successful.

What’s next?

Let’s get your recognition program started! If you’re still looking for more information, check out these 12 Unique Examples of Employee Recognition in Action to see what other companies are doing, or you can chat with one of your recognition experts to understand what solution is best for your company, and how Bonusly can be customized to fit your unique business needs.

Ready for next steps? Check out How to Build and Maintain a Successful Employee Recognition Program.

Originally published on June 19, 2020 → Last updated June 23, 2020

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Osasumwen Arigbe, PHR

Osasu is an HR professional and blogger. She has a Master’s degree in Human Resources Management from Georgetown University. She is an active member of SHRM and a contributor to The SHRM Blog, where she writes about important HR topics or blogs about SHRM’s conferences. For fun, Osasu enjoys traveling, reading, or spending time in nature. You can follow her on LinkedIn, Twitter, or her blog.

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