What Is Employee Recognition? The Ultimate Guide

Employee recognition is anything an employer does to communicate appreciation for an employee’s work or length of service. Common approaches include tying recognition to organizational values and goals, as well as the overall talent strategy—the company’s plan of action to boost employee performance.

Key Takeaways

• Employee recognition programs improve recruitment and retention.
• Use a variety of employee recognition programs to increase opportunities to recognize more employees and to allow for differences in culture, generation and experience/responsibility levels.
• Align employee recognition programs to organizational values, talent strategies or specific outcomes for best results.
• Use regular feedback to help employees reach performance levels that will help them with career development and recognition for achievements.

Employee Recognition Defined

What does employee recognition mean? Employee recognition can take many forms, but the desired outcome remains the same: keeping motivation and engagement high. There are different approaches to employee recognition. Some are public, like a luncheon, party, award ceremony or an employee of the month award with a framed picture on the wall. Others are more personal, such as a bonus or raise, additional days off with pay, or use of a company perk like a country club or resort condo. Many companies combine the two approaches in a mix of public and personal recognition.

Why Is Employee Recognition Important?

Employee turnover is costly and a top workforce management challenge. Employee recognition programs play an important role in retention, according to 68% of companies in a survey from the Society for Human Resource Management (SHRM). The same survey found 56% of companies said employee recognition programs improved recruitment.

Who Gives Employee Recognition?

Who gives recognition and how do you show employee recognition? It will vary depending on the circumstances and what kind of recognition you’re planning on sharing. Ideally, co-workers feel comfortable complimenting and recognizing peers in daily interactions. But employee recognition programs should not leave appreciation to chance. The effort is too important for retention and recruitment efforts. The best practice is to define in the policy who is responsible for giving the different forms of recognition.

• Top-down recognition: This is the traditional form of employee recognition. A company executive, manager or team leader spearheads the recognition activity.
• Peer recognition: Co-workers either lead this form of recognition or join with managers to decide who should be recognized and what that should look like.

Employee Recognition & Company Success

Employee recognition programs lead to more company successes through higher employee engagement, improved employee experience, better employee morale, greater employee retention rates, a brand boost and more employee referrals for recruitment. It can also have a positive effect on other important business measures and financial metrics such as productivity, sustaining output and controlling costs. So, what does recognition mean to an employee? It means the company notices and appreciates their contributions in the workplace. It means a more positive relationship and closer ties.

11 Benefits of Employee Recognition

Start with strategy. Think about the goals of the program and how it would relate to challenges and opportunities for your company. Here are a few benefits to consider when designing your plan.

1. Hiring: People are attracted to organizations that value the contributions of employees, and recognition is central to that. It’s an important part of an overall talent strategy that you can share with potential employees.
2. Excellence: Employee recognition programs instill a sense of pride and encourage employees to produce excellent work.
3. Productivity: When employees feel their efforts matter and are worthy of recognition, their productivity increases. Recognition programs also encourage them to sustain those high levels of productivity.
4. Employee Engagement: More than half of today’s workers are not engaged at work and feel no connection to their employer. Even more alarming is that 13% of workers are actively disengaged and are likely to spread their unhappiness. Employee recognition programs are an important step to increasing employee engagement and helping them feel more valued and appreciated.
5. Retention: When good employees leave your company, replacement costs, retraining and recruiting are all major challenges that also carry a significant cost. Two-thirds of HR professionals say that employee recognition programs help lower turnover rates.
6. Values: Think about values important to your company and workforce. Perhaps it’s accountability, diligence or learning. Find examples of employees demonstrating those values for recognition. It’s a way to encourage the growth of those particular attributes among your workers.
7. Trust: Trust is a two-way street. Your employees need to trust the company and need to feel like they’re trusted. When they feel their opinions are valued and they that the company trusts them to do their best work, they’re more likely to be engaged and less likely to leave. Employee recognition programs help build and sustain trust.
8. Morale: Recognition and morale are closely intertwined. Employees feel appreciated for their work when they and their peers are recognized for a job well done.
9. Team culture: Employee recognition programs are a good way to reinforce a team culture by making it a team event, or even recognizing an entire team. Fostering an environment where people appreciate the contributions of others improves morale and raises the bar on performance.
10. Customer experiences: Employee recognition can foster better customer experiences if you tie employee rewards and recognition to specific customer experience benchmarks. Customer satisfaction surveys, anecdotal feedback and sales performance can all be indicators of a positive customer experience with measurable outcomes you can use for employee recognition programs.
11. Performance & innovation: Connect employee recognition and rewards with specific performance benchmarks to build employee engagement. This may vary by industry or team. For some it might be sales goals, and for others it might be improving efficiencies in production. Whatever the case may be, allow employees to provide input on the improvement and innovation process to reach the goals. By listening to input and trusting employees, they’ll feel more engaged and dedicated to reaching goals. And recognition for their work helps them stay motivated and engaged in the process.