You know your team is exceptional. After all, you see them working hard for your company every day. But when you’re managing a small staff or running a business, there are a lot of things that demand your attention. Sometimes, that means employee recognition efforts fall by the wayside.
No matter how intentional you are, a simple thank you isn’t always enough to let your employees know you appreciate them.
However, many small businesses have no idea where to start when it comes to making employee recognition part of their culture.
If you’re eager to acknowledge your employees, but you don’t know how, then read on. You’ll discover the purpose of employee recognition, how to do it right, and the benefits it can have for your company.
What is employee recognition?
Employee recognition is when an employee is formally or informally acknowledged. This may be for effort, behavior, or results that align with company values or goals. Impactful recognition comes in many types and from many sources. It goes way beyond just a pat on the back from your boss.
The purpose of employee recognition is to make employees feel valued and appreciated. It provides extrinsic motivation. This sends a signal to the employee and the rest of the organization about what type of behavior is needed and valued.
Doing employee recognition wrong can leave your team feeling sour.
Stale, disconnected recognition programs and outdated recognition technology have led to a 37% decrease in how appreciated employees feel, according to a survey by OC Tanner.
Who gives recognition?
Many people believe that employee appreciation or recognition can only come from a manager or happen after something major happens. But contrary to popular belief, not all acknowledgement has to come from a higher-up.
Traditionally, managers offer formal recognition. However, anyone within an organization can also give meaningful formal or informal feedback.
Creating an environment of employee recognition empowers everyone in your organization. Team members acknowledge good work and feel appreciated for what they do. Peer-to-peer recognition can play a big role in helping employees feel appreciated for their work.
How employee recognition functions
Establishing a culture of employee recognition boasts benefits including increased engagement and performance and decreased turnover. According to Gallup, employees who do not feel adequately recognized are twice as likely to say they’ll quit in the next year.
But how does this retention strategy work and what makes it so effective?
1. It builds confidence
People like to feel valued and know that their efforts are noticed. This is particularly true when they’ve taking on an extra challenging task or gone the extra mile on a project. Recognition can help stave off imposter syndrome by assuring employees that their work is on-point. It also develops confidence and reassurance that they can stretch themselves when the next opportunity comes around.
2. It feeds a motivated company culture
Positive reinforcement is a powerful tool, and employee recognition leverages it in a highly effective way. When people feel seen for the work that they do, and appreciated for certain strategies or benchmarks, they are more likely to continue in that way. They understand what is expected of them and what their peers, managers, and leadership value. This all drives an organizational shift to build a culture of motivation, fueled by recognition.
3. It builds trust
Knowing where your boss and leadership stands is crucial in building trust between individuals at different levels of the company. Employee recognition keeps lines of communication open and paves the way for positive and constructive feedback. This enhanced communication helps build trust between peers and leaders.
Employee recognition vs. employee rewards
Though there can be some overlap between employee recognition and rewards, they are different and serve different purposes. Employee rewards are the physical perks an employee receives for good work. Examples include a gift card, company lunch, or time off in addition to what is already offered as company policy.
Employee recognition can be in the form of one of these rewards. But it focuses on offering a sense of appreciation and instilling a sense of purpose in the employee. Some ways to do so include a public thank you in a team meeting, a private thank you in a 1-1 meeting, a team lunch that specifically addresses the hard work of each employee.
What are the benefits of employee recognition?
Effective employee recognition doesn’t just feel good, it can also help your business thrive.
For small businesses, appreciation shown through an employee recognition strategy pays for itself.
Employees who are recognized regularly have a better view of their organization. This often leads to:
In fact, workers recognized within the last week are 103% more likely to feel supported in their role, according to the OC Tanner report. They’re also 67% more likely to think their organization cares about their well-being more than profits.
Those numbers don’t lie. Recognition makes a big difference to your team members. Part of being a great team leader is acknowledging good work in real-time.
Here are some of the top benefits of employee recognition.
1. Increases employee happiness
Encouraging regular recognition across your company keeps your team happy and productive. There’s a clear connection between happiness and recognition. In fact, 82% of people report feeling happier when they’re recognized at work.
Frequent, meaningful recognition keeps your team happier on and off the job. Plus, happy employees make the workplace a better place to be, which can boost employee motivation throughout the office.
2. Improves employee retention
Satisfied employees stay at their companies longer. It’s that simple.
Recognition keeps your staff engaged and connected to your company’s goals and values.
When employees feel valued, they’re more likely to continue working with your company.
Case in point: OC Tanner found that in 2020, recognition led to a 47% increase in employee satisfaction and engagement.
3. Cultivates a culture of self-improvement
Regular recognition can have a massive impact on company culture. It encourages employees to grow, experiment, and learn new things.
When employees are acknowledged, they feel a sense of purpose at work. This sense of purpose can encourage workers to become even better at their jobs.
4. Boosts morale
Even a simple compliment can be the morale booster that inspires your team to do their best work.
When you notice the small things, your team feels appreciated and seen. Recognition can drive your team to feel better about their job and feel motivated to perform better moving forward.
5. Increases employee motivation
It’s no secret that individuals like to know that their work is valued. This affirmative behavior can be incredibly motivating. Tis is particularly true for teams that have had to put in extra hours or embrace substantial growth to meet their goals. At the end of the day, they want to feel like the sacrifices were noticed and appreciated.
6. Strengthens employer branding
It is a competitive market for employers. It is beneficial for organizations to set themselves apart from one another with strong employer branding. One way of doing this is by creating a culture of employee recognition. This improves engagement and satisfaction for current employees. Whether those employees are sharing their experiences on LinkedIn, with a friend who is looking for a job, or in their exit interview, their views matter. This will play large part in attracting (and retaining) top talent.
7. Establishes a culture of recognition
As we’ve touched on, it can be advantageous to build employee recognition into your company culture. When it comes more naturally to individuals, it is going to be a more genuine experience. You can also start a flywheel effect where recognition becomes contagious. Employees and managers develop the awareness and emotional intelligence to see opportunities for recognition –– both big and small –– more often when it is part of the culture.
8. Builds trust and stronger working relationships
Imagine that you have a manager who seems completely unaware of the effort you put in. Be it weeks of intense work or a few hours of light work, your manager’s acknowledgement stays the same. By default, most specific feedback you usually receive is constructive.
This does very little to build rapport or trust in the manager-managee relationship. There should be a healthy balance of positive and constructive feeback, plus recognition.
This also builds trust as leadership is more engaged in their direct reports’ work, and direct reports understand what leadership truly values.
4 types of employee recognition to know
When it comes to recognizing employees, it cal feel overwhelming. There are so many options and it’s difficult to decide which method is the most appropriate for which situation. We will get to that, but first let’s make the topic more digestible and define the four most common types of employee recognition.
1. Formal recognition
As the name suggests, these are opportunities for recognition that are build into a set structure. They can be highlighting an employee of the month or someone who embodies company values. This is a public and recurring event, so the team knows they have the opportunity to receive the recognition by fulfilling certain criteria and generally comes from a manager or leadership.
2. Informal recognition
Unlike formal recognition, informal recognition can happen at any time and come from any individual. Peers might share thank you notes via messenger, or a manager might make an announcement in a team meeting. They can be made publicly or privately, and are often timely –– occurring soon after a project is complete or a goal is met.
3. Social or peer-to-peer recognition
This is where a culture of employee recognition grows in importance. Social recognition generally occurs between employees who are working together either in short sprints or long-term. They can share high-fives across teams or within their own departments. For this type of recognition system to flourish, leadership should ensure employees have access to tools and resources available to do so. If they have an employee experience platform, for instance, employees should be aware of it and encouraged to use it for this purpose.
4. Monetary recognition
Montetary recognition can be awarded to individuals or teams. It can be in the form of a team lunch, a bonus, a small gift, or a team building excursion. It is important to relay the value of the employees’ contributions when offering them monetary recognition. Doing so will further clarify expectations in the future.
8 examples of employee recognition to try
Showing your team that you notice their hard work doesn’t have to be difficult. There are many ways to recognize your employees, and switching it up is a great way to show appreciation.
But, there are a few guidelines to offering impactful recognition. The best employee recognition follows the RISE formula. RISE stands for Regular, Immediate, Specific, and Encouraging.
Offer recognition as often as you see great work. When you see someone going above and beyond, offer recognition immediately. Look for ways to connect that exceptional employee performance specifically to the person doing it. Then, encourage your staff member to also acknowledge one of their peers today.
Here are some employee recognition ideas that you can incorporate into your management style to thank your team for a job well done.
1. Ask your employees how they prefer to be recognized
There are different types of recognition. The most appropriate way to thank someone depends on their core values.
Some people love public recognition, while others shy away from the spotlight. Always ask your team what form of recognition they prefer, so they feel respected and understood.
2. Create a peer recognition program
A culture of appreciation grows. An employee recognition platform like Kazoo can encourage employees to show appreciation for their colleagues through incentives.
3. Have a team activity day
Teamwork makes the dream work! Celebrate your team and acknowledge a job well done with a fun off-site activity.
Bonding outside the office can help strengthen your team and make the business even stronger.
4. Write a detailed, handwritten note
Some employees want to see that compliment in writing. For example, 36% of women prefer a written thank you note over verbal acknowledgment.
5. Offer spontaneous treats
No one says no to donuts in the break room. Surprise your team with some sweet treats, or offer to buy lunch to acknowledge employees.
6. Use a rewards system
Rewarding employees with something like a gift card is common. But if you’re not sure what your employee wants, a reward system can be a huge asset.
With systems like Bonusly, employees can acknowledge each other, earn points, and redeem rewards like gift cards.
7. Sponsor professional development or other opportunities
Creating a culture of self-improvement makes professional development a big priority for employees.
Sponsor a relevant class or certification of their choice to help develop their craft. Or give an employee a stretch assignment, not necessarily a formal promotion, but an opportunity to lead a project or drive an initiative.
8. Feature employees on social media
Many employees thrive on social recognition. A shout-out on the company’s social media pages lets an employee show off their work accomplishments to their friends and family, too.
5 essential criteria for employee recognition programs
If you’re ready to launch or update a successful employee recognition program, make sure that it meets the following criteria.
1. Organizational commitment
Managers and directors need to show their commitment to employee recognition. They can do this by ensuring that the program has enough resources, as well as actively participating in it.
2. Alignment with organizational goals
If your recognition program doesn’t align with your organization’s core mission and values, it will fall flat.
The rewards you offer your employees in recognition of their work should reflect their achievements. They must also be meaningful to the people who receive them. Rewards that trivialize employee efforts will undermine your recognition program.
The most effective employee recognition programs are those that can offer rewards in real-time. One of the best ways to do this is through an app or platform, such as Bonusly or Kazoo.
Some companies prefer to set a specific day for employee recognition. However, it’s important to make sure these happen regularly, as waiting too long can reduce employee motivation.
5. Regular evaluation
Carry out regular evaluations of your employee recognition program. This will help you make sure it remains relevant and meaningful to employees. It will also show you areas for improvement.
Examples highlighting the impact of employee recognition
Many large businesses see success from employee recognition. However, you might be surprised to see the huge impact recognition also has on small businesses.
No matter what size your business is, identifying how your employees feel most appreciated is essential. It can greatly impact your workplace culture and business success.
Here are two powerful examples of how employee recognition can have a positive impact on small businesses.
Design agency Ideas Collide boosted employee morale by implementing a peer-recognition program.
Even as a small business, individual employee contributions got lost on large projects. Ideas Collide added a recognition and rewards program. This allowed them to showcase daily contributions and nominate employees for a larger award each quarter.
After starting a peer recognition and reward program, Ideas Collide saw a 65% increase in employee recognition. In fact, 92% of employees reported feeling acknowledged by their peers and 84% reported feeling recognized by their boss.
Through the new system, Ideas Collide employees were recognized and rewarded in a meaningful way. This created a company culture of recognition.
UK accounting services company Sherwoods has a workforce spread across five locations.
While employees work together, they often don’t get face time, which makes workers feel isolated and disengaged. Sherwoods achieved 100% employee engagement with their peer recognition and employee discount program.
Sherwoods turned employee recognition into an opportunity for remote team members to connect. As a result, the team sent each other 947 encouraging eCards over 18 months.
Employees enjoyed discounts on tech products, theater tickets, and groceries. In the same 18 months, employees spent over $78,000 through the discount platform and saved $7,800.
Sherwoods successfully identified recognition that made a difference to their employees. At the same time, they offered a solution to help them feel more united and appreciated.
Is it time to amp up employee recognition?
We all know that acknowledgment feels good. But, employee recognition goes far beyond giving one-off compliments.
The right recognition methods can make your team stronger, make your company a better place to work, and even increase your bottom line.
Building a better workplace doesn’t have to be complicated. Reward your employees with personal development through BetterUp.
Our professional coaching is a great way to show your employees that you’re committed to their success. Get started with BetterUp coaching today.