Employee Recognition 101: Why, When & How

This article is the fifth and final piece in our 5-part Employee Engagement and Culture Checklist for 2021 Series:

• Part 1: How to Build Your Employee Engagement and Culture Checklist: 4 Must-Haves in 2021
• Part 2: Reassessing, Refocusing, and Reinforcing Culture in 2021
• Part 3: 6 Ways to Live by Your Organization’s Core Values in 2021
• Part 4: Communication & Remote Work in 2021: Assess Your Skills

Employee recognition is a continuously evolving space that has come a long way. Back when, most employees spent their entire careers working for one company and annual bonuses seemed to meet employees' recognition needs. Today, employee expectations have changed, and the organizations that want to remain successful are actively working to address these new expectations.

In today’s HR departments, you’ll find culture specialists, total rewards managers, employee experience architects, and even chief happiness officers all dedicated to improving employee experience. What’s more, today’s c-suite is discussing employer brand, employee engagement, and stakeholder capitalism regularly.

Employee recognition is an essential piece of today’s HR puzzle - especially if your employees have recently reported a desire for more or better recognition in a survey or if you are experiencing high levels of turnover, poor performance, and employee burnout.

Here’s a simple overview to help you get to know the recognition space today and how you can make your employees and colleagues feel proud of their contributions at work.

Why is Recognition Important?

Recognition is vital to today’s workforce. Recent data collected by Gallup found that praising and recognizing employees can positively affect employee well-being and your organization’s bottom line. The report found that 66% of respondents trusted their colleagues more when they felt sufficiently praised. Adequately praised employees also produced better results and were more productive. A study on the importance of recognition found that today’s most progressive organizations use their recognition programs to consistently reinforce key behaviors and outcomes necessary to drive business success.

According to Forbes, recognized employees are “more satisfied, perform better, are more productive, and they’re more likely to engage with the rest of the team.” The Forbes piece explained that acknowledging employees for individual contributions reduces stress, absenteeism, and attrition. The previously quoted Gallup study found that employees who receive recognition also demonstrate increased collaboration through reduced self-protecting behaviors, such as information hoarding.

What we see at Kudos is that a good frequency and quantity of recognition, when all team members are sending between 3 to 5 messages per person per month, creates a culture of appreciation that leads to higher engagement.

Deloitte has identified five market factors that make recognition especially important and relevant today:

1. Unstable economy: recognition is typically more cost-effective and has a longer-term impact than expensive salary increases and bonuses.
2. Need for greater agility: through recognition, organizations can retain employees and attract top talent.
3. Flattening organizational cultures: recognition serves as appreciation for strong performance when promotions aren’t possible or the norm.
4. Technology: Technology facilitates transparency, collaboration, and knowledge sharing, and that has become the expectation for today’s employees. Organizational recognition programs should fit that mold.
5. Millennial Workforce: Millenials are the largest generation in the workforce, and they expect and demand more feedback than previous generations.

The ROI of recognition and employee engagement runs deep, but one of the most noticeable benefits to organizational culture and the bottom line is improved employee retention.

Employees who feel that they’re not adequately recognized at work are 3x more likely to quit in the next year, according to Gallup. Deloitte also reported that companies with cultures of recognition have 31 percent lower voluntary turnover. Another Deloitte report (The Talent 2020 Survey) found that recognition is among the top three most effective non-financial factors for retention.

When is Recognition Appropriate?

The timing of recognition matters. For recognition to appear authentic, it should be shared as close to the event or activity being recognized as possible, which means recognition should be given frequently. According to Gallup, fewer than a third of workers have received praise from a supervisor in the last seven days. In fact, Gallup's Chief Scientist Jim Carter has stated, "Recognition is a short-term need that has to be satisfied on an ongoing basis - weekly, maybe daily."

In organizations with cultures of recognition, significant accomplishments and small favors are recognized often and freely. Praise and gratitude are both critical components of recognition and should be shared equally. Beyond that, inclusivity is key. Everyone's contributions, regardless of their role, should be acknowledged if the impact is meaningful; this fosters belonging and improved employee morale.

Both individuals and groups should be recognized to maximize the benefits. When interviewed by Gallup, David Grazian, the Director of Corporate Taxation at Granite Construction, Inc., shared that publicly recognizing entire departments can improve the department's reputation within the organization while also helping you "get more resources" when you need them.

At Kudos, we have found that while group recognition is important, one-to-one recognition has more impact on affecting an individual's performance, sense of belonging, and engagement.

Finally, recognition doesn't just need to come from the top-down, i.e., manager-to-employee; recognition should flow to-and-from employees at all levels, which is what's known as peer-to-peer recognition. In fact, in some cases, the Society for Human Resource Management found that employees prefer to be recognized by their peers over their managers or superiors because their recognition feels more genuine.

How to Give Meaningful Recognition

How you deliver your recognition can make a difference in the impact it will have.

Here are a few things to keep in mind:

1. Be specific: Avoid dropping a generic, "Great job!" Instead, focus on what specifically the person did to earn the recognition and, when possible, how it advanced the individual or team towards a goal, and or demonstrated how to live a core value, and or advanced a company goal.
2. Be transparent: If someone contributed to a team effort, make sure you specify exactly what they did in order to give them the credit they deserve. Also, include why you are recognizing an individual to show your sincerity.
3. Recognize the effort, not the outcome: The goal of sending recognition is to encourage and reinforce positive behavior in your organization. By recognizing the work and thought that went into an accomplishment, you are not only providing meaningful recognition to the individual but also signaling to the broader organization what type of effort gets recognized.
4. Make it meaningful: Recognize when it truly is warranted, using the two points above as a guide (specificity and transparency). Gallup explains that “if everyone wins, no one wins” and that a recognition approach where everyone gets a turn regardless of the quality of their work can breed “resentment and, ultimately, cynicism.”
5. Organizational values and mission: Tying recognition back to organization’s goals can make an employee feel like their contributions matter to the organization’s success. In fact, Human Resources Today’s definition of Employee Recognition mentions this exact point “Employee Recognition is nothing but the acknowledgment of an individual or team for their hard work, efforts, and accomplishments that go with the organization's goals and values.”

Here are some templates to help you get started:

Finally, it's all in the delivery. To enjoy all the benefits of recognition discussed above, like increased productivity, employee engagement, and reduced turnover, the delivery method must be effective. Luckily, as employee expectations have changed, so has technology. Where recognition used to be more at the individual manager’s discretion and generally hidden from the rest of the company, organizations who want to build a culture of recognition have implemented employee recognition platforms to streamline the process and create more transparency and accountability surrounding who is receiving recognition and how often. The recognition platform leaders provide a system that facilitates peer-to-peer recognition driven by values and visible to the entire organization – and robust analytics to track and measure success.

Points are not the point. Today, recognition is often confused with rewards, specifically points that employees can use toward gift cards or other perks. While rewards are a fantastic tool to reinforce performance and contribution, they are not interchangeable with recognition and certainly don’t have the same long-lasting impact on employee engagement. In a Gallup study, money or financial reward ranked fifth as the most memorable form of recognition, after public and private praise, positive reviews, and added responsibilities. Simply put, if points are the central element of a recognition moment, that is a reward program, not a recognition program.

In 2021, recognition is a critical component of any organization's human resources strategy. The ROI of recognition is undeniable. With hybrid workforces as the new normal, having a plan for employee engagement regardless of geography should be top of mind for every c-suite. And if it isn’t, we challenge you to add it to your next management team meeting agenda to start the conversation.

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Originally published April 2021. Last updated November 2023.