The nine rules of great employee recognition

The talent marketplace is still a challenging place for HR and talent leaders. It means many organizations are having to pull out all the stops to ensure they attract, engage, and retain the talent they need to navigate them through the next economically uncertain period.

One way they’re doing this is by looking to boost and invest in employee recognition programs, with many understanding that having a great strategy here is linked to better employee engagement, lower voluntary turnover, and is more likely to drive better business outcomes.

This doubling down on recognition can be seen in how much the market for employee recognition technology market is expected to grow. Coherent Market Insights (CMI) expects to see the global social employee recognition systems market (the tools and software employers use to help employees and managers to celebrate each other’s successes) expand from $10.6 billion in 2021 to $23.4 billion in 2028.

To understand more about making a successful employee recognition strategy, read the nine rules of great employee recognition below.

Employee recognition benefits key HR metrics

Before investing in employee recognition, it’s important to understand the business benefits.

Bonusly figures show highly engaged employees are more likely to be recognized for their work — and most organizations want better engagement. This is because, according to 2022 Gallup figures, organizations with the best engagement scores have less turnover, better productivity, and greater sales. A clear recognition-engagement-bottom line link — and a good reason to invest.

Recognition needs peer involvement

Bonusly research also shows that whilst having a recognition program, in any case, is good, having a peer recognition program is even better.

At peer-recognizing organizations, 76% say employees are highly engaged. In fact, a Gartner report from 2022 found that peer recognition programs made 90% of staff more satisfied with their work and led to more collaborative atmospheres. The Institute for Corporate Productivity found it is collaboration that is then five times more likely to drive high performance.

Social media could be part of a low-cost recognition answer

The majority of employees already use social media in their day-to-day lives — from Facebook to Twitter to TikTok. Already many employers use them, too: utilizing YouTube and LinkedIn to access MOOCs for learning and development, increasing the number of learning materials available to them and lowering costs.

CMI has also found that the same employers are also using social networks to drive interaction among employees and reward and recognize those who contribute and achieve in a consumer-style manner that doesn’t cost the earth. And platforms can be crucial: a 2022 Achievers survey found the right one is key as employees don’t want to log onto a new platform every time they say thanks.

What you spend is still important, though

Yet low-cost options don’t mean recognition should be without investment. Findings from an SHRM-Workhuman study found that when companies spend 1% or more of payroll on recognition, 85% of these organizations noticed a positive impact on engagement.

Those that spend more than one percent of payroll on recognition are more likely to say it helps retain employees with almost eight in 10 saying it works to attract new candidates. For those that spend less than one percent? Only two in 10 say it works to attract the talent they need.

Reward is key

However, any investment in employee recognition is likely to fall flat if it doesn’t deliver what employees want. As such, reward is important As Daniel Pink said in his TED talk about motivation: “Rewards, by their very nature, narrow our focus, concentrate the mind; that’s why they work.”

Here, further data from Bonusly found that cash rules: with 55% of employees saying their first choice would be a monetary reward for their efforts and 12% saying travel experiences. In addition, Achievers data found that employees want regular feedback, too. Their 2022 survey found those who are recognized weekly are almost 50% less likely to job hunt.

Make sure recognition isn’t impacted by bias

Whilst many organizations already have great recognition programs, any gratitude or recognition must be aware of implicit and unconscious bias.

Workhuman findings  show that even in positive work cultures, where recognition is practiced regularly, bias creeps into this communication up to 30% of the time. It could take the form of ageism — “You performed so well, despite your age” — or gender bias as well as other forms.

In this manner, recognition can actually become a micro-aggression and make employees feel psychologically unsafe, undermine performance, and undermine belonging. Not outcomes HR leaders want to foster.

Recognition should be paired with appreciation

Whilst reward is key, London School of Economics research found that financial reward, as a form of recognition, can sometimes harm an employee’s joy in, and desire for, work. This isn’t to say reward incentives have no place but that appreciation, as distinct from recognition, can build trust and foster workplace connection.

Mike Robbins, a workplace expert who advises Google and LinkedIn, advises that appreciation is about telling colleagues what you value about them regardless of achievement. “When we show appreciation to our colleagues, customers, managers, and partners, we’re more likely to build trust and connect,” he said.

Glassdoor data support this with employees saying more managerial appreciation would make them want to stay at their employer longer.

Recognition strategy must link to organizational values

Further findings from SHRM and Workhuman highlighted that effective recognition programs are more likely to be linked to overarching organizational values and talent strategies. In fact, HR is more likely to rate its recognition program as good or excellent if it is tied to values. Separately, 16% of HR rates its recognition strategy as excellent if it’s tied to the talent strategy. 

Patrick Crane, CEO of Love Sew said this can reflexively benefit the company: “When employees feel valued and recognized, they are more committed to the company mission and are intrinsically driven to do their part in making sure the company achieves its goals.”

The role of leadership is crucial

Finally, the role of leaders cannot be understated in fostering a culture of recognition. This is especially true in modeling as the same Achievers’ study found that when individual managers recognize others, employees are more like to emulate that behavior. And, if employees are regularly recognized by managers they are more likely to say the company is a great place to work, be more productive, and be more enthusiastic.

As Natalie Baumgartner, chief workforce scientist at Achievers, said: “An optimized program is critical to building a culture of recognition that starts at the top with people leaders and is supported and reinforced at every level.”

Want to find out more great employee recognition tips? Apply for our upcoming roundtable here.