Why Employee Recognition Programs Matter - Human Resources Hero

Six Benefits of Employee Recognition Programs

Benefits of Employee Recognition Programs | Human Resources Hero

You’re happy to be a part of your team. And you have every reason to. It’s been a gratifying experience to work alongside such talented, dedicated, and hardworking personnel. Every member of your team knows their job and tries their best to deliver it with perfection. But even the most hardworking teams can falter, and even motivated employees can feel alienated.

That is why companies need the benefits of employee recognition programs – to help their workforce feel valued and stay motivated. These programs are inexpensive to adopt and cause little to no disruption to your day-to-day operations. Yet, they can generate serious benefits for businesses and their workforce by reducing employee turnover, improving business outcomes, and driving profits.

Research suggests most businesses are oblivious to these facts. Almost 40% of employees think their organization doesn’t prioritize making its workforce feel valued. These companies stand to lose their most talented employees if they refuse to correct course, which would be a shame considering how simple these programs are to implement.

What is Employee Recognition?

Employee recognition is an effort by the employer to acknowledge, praise, and reward its employees for their conduct, achievements, and milestones. Organizations use these programs to motivate their workers, make them feel valued, and reinforce desired behavior.

Initially, employee recognition programs were formal and limited to employee of the month awards and thank you programs. Today, most companies have made them informal, giving workers the chance to nominate or be nominated using a point-based system.

This new approach has made these programs more purposeful.

Employers now count on employee recognition programs to provide meaningful appreciations to their best-performing employees, drive workforce engagement, and garner other benefits mentioned below.

What are the Types of Employee Recognition?

There are several different types of employee recognition programs. Some organizations settle for pinning notes of encouragement to the office bulletin board. Others opt for Hollywood-style award ceremonies to give bonuses to their best-performing employees.

Still, others go for a handwritten (or an electronic) note from a manager to an employee, showing the latter that their hard work didn’t go unnoticed. Ensuring employees feel valued can be as easy as highlighting an individual’s or team’s accomplishments at staff meetings.

For simplicity, we’ll divide employee recognition programs into two types:

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  • Structured employee recognition programs: Structured programs mostly follow a top-down approach. They are therefore more traditional. An employee of the month/year awards, yearly or quarterly performance reviews, and years of service awards are examples of these programs.
  • Unstructured employee recognition programs: Peer-to-peer recognition, appreciation on a work chat group, recognition as the top performer, and celebration of important life milestones are examples of unstructured employee recognition programs.

Keep in mind that recognition programs are not one-size-fits-all. The same method that does wonders for one company may not yield the same results for yours. Businesses should incorporate multiple recognition methods to meet employee needs and achieve HR goals.

What are the Benefits of Employee Recognition Programs?

There are multiple reasons why employee recognition programs have become so popular as of late. Research shows businesses can reap many benefits from recognizing and appreciating their employees. That’s not the only reason, though.

Results from a Gallup Poll show almost seven out of ten employees haven’t received any form of praise for the good work they have done for their employer in the past year. To keep them from getting alienated from their jobs, or worse, businesses have to show they value their work.

Here are several benefits of employee recognition programs:

1) Employee Recognition Drives Engagement

Almost six out of ten employees feel that their bosses could drive more engagement by recognizing them for their work. Here’s why they feel that way.

Employees who feel valued by their leaders have an incentive to put in the extra effort. They also seem to trust their managers better and take greater pride in their jobs. And research (as well as common sense) tells us that your business becomes more profitable when your employees are engaged.


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2) Employee Recognition Creates a Positive Company Culture

Your company culture affects every aspect of your business, from productivity to employee turnover and recruitment efforts to employee engagement ratings. And there are few better ways to build a positive workplace culture than recognizing your employees.

When your employees feel neglected at work, that feeling permeates your business. After all, one great payday every month doesn’t make up for a toxic work environment daily. In contrast, when employees feel valued, they help create a company culture you can be proud of.

3) Employee Recognition Increases Job Satisfaction

Employers have every reason to be concerned about how satisfied their employees are with their jobs, not the least because it influences their bottom line. Several studies connect the dots between employee satisfaction and profitability.

Acknowledging that the employee’s efforts are crucial to the business’s success tells them that their job is meaningful. It also sends a message that their hard work isn’t invisible to those above them in the pay grade. This, in turn, helps them feel more satisfied with their job.

4) Employee Recognition Lowers Turnover

The benefits of employee recognition programs aren’t limited to better staff engagement, positive company culture, and enhanced job satisfaction. Companies that make their staff feel valued also enjoy a marked decrease in voluntary turnover.

Reports show that employee turnover costs range between 20% to 30% of the employee’s annual salary. This number goes even higher when you consider lost productivity and the cost of training a new employee. 

The cost settlement of employee benefits (i.e., gratuity) can hit your business’s bottom lines hard. A high turnover rate can also harm other staff members’ productivity as they shoulder more responsibilities or wonder why no one sticks around.  

5) Employee Recognition Improves Hiring Efforts

Employee referrals remain the top source for hires for businesses, with one out of every two new hires currently referred to companies by their staff. This statistic is another reason to invest time and money in your employee recognition programs.

If your employees act as your business’s brand ambassadors, would top talent consider working for you? We assume you already know the answer to this question.

6) Employee Recognition Boosts Trust in the Workplace

Multiple studies show employees who receive regular appreciation from their higher-ups have a higher level of confidence in that relationship than their counterparts whose boss didn’t acknowledge or appreciate their hard work–but that’s not all.

Workplaces with a higher level of trust between employees and employers enjoy higher employee productivity and use fewer sick days. Little wonder, then, that companies with high trust levels perform 186% better than those with low trust levels.

How Do You Build a Successful Employee Recognition Program?

  1. Set objectives: Why do you want to set up an employee recognition program? Answer this question at the outset. Make sure the goals you want to achieve align with your company’s values.
  2. Allocate budget: You’ll need to allocate funds for monetary rewards and effective recognition software. SHRM advises HR departments to set aside at least 1% of their payroll for employee recognition and reward programs.
  3. Outline policies: These policies help your employees understand the whens and hows of recognition. Policies should also show what “good recognition” is and the relationship between “points of recognition” and different tiers of awards.
  4. Train your staff: Every member of your organization, from line managers to executives, should understand why the recognition program is important and how to use the program. Once they have that information, launch the program.

The best employee recognition programs are thoughtfully designed, documented, and implemented in a way that captures your company vision and culture, as well as the unique needs and contributions of your employees. Luckily, you can find HR services to help you setup the perfect program for your business from one of our top-rated providers. 


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Do employee recognition programs work? Businesses that implement these programs already know the answer to this question. They see how making their employees feel valued helps them hire and retain top talent, improve their bottom line, and create a positive work culture. That’s why every organization, no matter how small or big, should consider implementing a program that works for their company and their culture. 

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