How to Start an Employee Recognition Program - Toggl Blog
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Why You Should Have an Employee Recognition Program (and How to Start One)

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How to start your own employee recognition program

Employee Appreciation Day will fall on March 5th this year, marking the 26th occasion of this holiday created in 1995 by author and consultant Dr. Bob Nelson. Though the day was created with employees in mind, you likely only know about it if you’re in human resources or management–indicating a serious problem: employee recognition simply isn’t happening enough.

This deficit in recognition isn’t the result of poor productivity or a lack of appreciative leaders. Rather, employees are missing out on this key to greater productivity, workplace satisfaction, and even psychological well-being simply because many companies lack a structured, intentional approach to recognizing their staff.

And that’s too bad for a number of reasons. When employees go unrecognized, they miss out on a more satisfying and fulfilling professional experience. And organizations miss out on building a thriving, productive company culture. 

In the following article, we’ll take a look at a) why employee recognition is beneficial for both the employed and the employer, and b) how companies can build an effective employee recognition program to advance recognition in the workplace. 

The benefits of employee recognition

As mentioned above, recognition isn’t just about creating a better experience for employees, although that’s certainly important. 

When a company actively seeks to recognize, appreciate, and reward employees, it creates a stronger, healthier company culture–which, in turn, creates a more successful company. 

“When every employee feels empowered and emotionally connected to not only the business, but each other, we find that they strive harder to ensure that they’re positively representing and protecting our business when interacting with customers, vendors, partners, and the community,” explains Maritza Lewis, Employee Engagement Manager of the famously service-forward shoe retailer Zappos.

“What we’ve learned at Zappos is that when we get the culture right, everything else about the brand just kind of falls into place.”

The opposite side of the coin, of course, is a company that not only fails to satisfy its employees, but fails to build a good reputation. 

“Although companies strive for a healthy company culture, many organizations fall short, resulting in disgruntled employees, high turnover, and an overall poor reputation,” according to Elizabeth Grace Becker, principal tech recruiter at Capital One. 

The bottom line? Recognizing your employees isn’t only about building a kinder workplace; it’s also about contributing to the health of your overall business. 

Higher employee satisfaction and happiness

Employees that feel acknowledged and “seen” are far more likely to experience high rates of satisfaction and happiness at work. Even small gestures of recognition–such as a simple “thank you” or acknowledgment of a specific achievement at a meeting–can help employees feel valued.

The reality, however, is that most employees don’t feel appreciated. One study found that 30% of all employees surveyed feel undervalued at work. And while that may be the result of poor treatment in some cases, underappreciation is too often the outcome of a simple lack of intentionality. 

Higher employee productivity

Everyone can relate to the deflating experience of working diligently on a project–or even going “above and beyond” what is expected–and then feeling as if their commitment went unnoticed. 

On the other hand, employees that receive ongoing, positive feedback are more likely to be committed to their work…and ultimately, likely to be more innovative and productive. In fact, a study published by the University of Oxford found that happy employees are up to 13% more productive than their less-contented colleagues.

“Recognition, rewards and reinforcement are linked to higher levels of motivation, engagement and productivity,” according to Dr. David Ballard, assistant executive director for organizational excellence at the American Psychological Association. 

The bottom line? Employees that receive recognition are happier, more engaged, and work harder. 

Higher retention

Employee turnover is not only damaging to company morale; it’s expensive. 

According to Gallup, replacing an employee can cost a company “one-half to two times the employee’s annual salary.” Factoring in costs of recruitment and onboarding, as well as loss of knowledge and innovation, replacing just one $50k per year staff member can cost up to $100,000. 

Building a culture of recognition discourages churn, however, by creating a space where employees know they are valued and their efforts are appreciated. In fact, “recognition, rewards and reinforcement” have not only been linked to higher productivity and engagement, but to higher retention.

Stronger recruiting

Finally, employee recognition can help organizations become more attractive to potential recruits. 

In industries hungry for talent–tech, for example–focusing on strategic recruitment is not only wise; it’s critical. And companies that actively appreciate their employees ultimately make stronger prospective employers for hires, especially with high demand for healthy working environments.

6 steps to building an employee recognition program

Of course, employee recognition is easy to talk about, less easy to actually implement. Too often, great ideas (like driving up employee appreciation) start with an enthusiastic bang at a scrum meeting, and then fizzle out without strategy.

To be successful, employee recognition has to be driven by a combination of company culture, tech-driven programming, and enthusiastic leadership. It has to be intentional, thoughtful, and strategic. And it has to follow a program designed for long-term success. 

That being said, here are six steps to building an employee recognition program that gets buy-in, builds satisfaction, and lasts for the long haul. 

1. Empower a leader

For any initiative to work–whether that’s a new PM tool or a culture shift–leaders need buy-in from the whole organization. That includes everyone from C-suite execs to entry level employees. The best way to get everyone on board? Assign a leader to create awareness, build anticipation, and get the whole team excited about employee recognition. 

An employee recognition leader can also help ensure that any specific initiatives (such as tools and technology) are implemented, and that your organization continues to follow through on goals or objectives for recognition. 

2. Give your team the right tools. 

Recognizing the successes of peers or colleagues might feel awkward at first, especially in an organization that hasn’t traditionally done employee recognition. Using a communication or survey platform can help normalize the process and make it habitual to acknowledge employees for their positive contributions. 

For example, employees might have an opportunity to recognize their peers at the end of each week; specific acknowledgments are then communicated at the beginning of the following week. This also ensures that recognition is timely and specific, and that positive feedback isn’t only top-down, but peer-to-peer.

3. Create a culture of recognition

A culture of recognition begins with healthy leadership. Leaders who are transparent, encouraging, and empowering help create an atmosphere where employees feel comfortable giving and receiving recognition. 

That being said, healthy recognition can start in day-to-day communications–including team meetings, emails, and even casual conversation. 

“Great job on yesterday’s PowerPoint presentation. It was clear and well-designed.” 

“I appreciate your thoughtful input during scrum meetings.” 

“Way to go on getting that new account!”

Recognition doesn’t always have to be complicated or overly formal; it can be as simple as giving as a compliment or encouragement. 

4. Offer rewards and incentives (but be careful!)

Awarding specific titles (e.g. “Employee of the Month”) communicates your value for employees and investment in recognizing them. Incentives in the form of cash or PTO can also help motivate employees and contribute to a culture where good work is honored. 

That being said, be careful with this component of your employee recognition program. Research has shown that all-cash rewards can actually demotivate employees. According to a 2017 study cited by Forbes, “600 salespeople found that when a mixed cash and prize reward program was replaced with an equivalent value all-cash package, employee effort dropped dramatically.”

Titles like “Employee of the Month” can also create a competitiveness that discourages a healthy culture of recognition. 

Though you can still take a more traditional approach to recognition with rewards and incentives, make an effort to be creative with titles and prizes. Create industry-specific alternatives to “Employee of the Month” (e.g. “Coder of the Week”) and think about prizes that combine cash and tangible gifts (e.g. $100 + gift card to a local coffee shop) to keep motivation high. 

Or think of ways you can help your employee reward each other. Zappos, for example, has a Co-worker Bonus program that allows all employees to gift either two $25 or one $50 cash bonus to any other employee or employees of their choice, once per month. “Zapponians” are asked to gift their co-workers who have demonstrated at least one of their 10 Core Values–reinforcing a positive company culture through internal rewards. 

5. Have fun with it

Your employee recognition program should be fun for everyone. To kick it off, hold an in-person or online event to explain employee recognition, ask for feedback, and pitch rewards and incentives. Think about gifts you can give to your employees, special perks, and additional events (such as Employee Appreciation Happy Hour) to show your employees you value them. 

6. Measure your progress

Finally, consider strategic ways to measure the success of your employee recognition program. That might include collecting regular open-ended feedback from employees, measuring employee satisfaction-related KPI’s (such as eNPS), and analyzing how your program is impacting productivity and retention.

In any case, attaching feedback and metrics to employee recognition can help you to make improvements over time–and help make sure your program is impactful, important, and long-lasting. 

What employees really want

Your employees want to feel valued and appreciated at work. Making that happen doesn’t have to feel overblown or complicated. Employee recognition is about taking the time and making the effort to acknowledge the accomplishments and efforts of your team, and making sure they know they are valued. 

At the end of the day, everyone benefits: Your employees feel happier and more satisfied at work, and your leaders benefit from managing a more productive, motivated team. 

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