Why is employee recognition so important?

By Anthony Wolny | 8th August 2019 | 11 min read

In a world of increasingly demanding and stressful working environments and practices, the adoption and implementation of workplace recognition schemes has never been more important. Indeed, the majority of modern employees now expect their employer to offer some type of recognition for their hard work and achievements.

Research has also shown that businesses that are either ignorant to, or unsure how to implement either a formal or informal recognition scheme, are more likely to damage their employee morale, productivity and overall retention levels. Companies with robust employee recognition programmes are also known to have 31 percent lower voluntary turnover rates than those that don’t.

What is employee recognition?

Employee recognition normally refers to the acknowledgement of a business’s staff for exemplary performance. It helps to reinforce particular behaviours, practices, or activities that result in better performance and an acceleration of positive business results.

Why is employee recognition so important?

A study by the Boston Consulting Group has shown that recognition in the workforce is one of the main ways to ensure that employees remain fulfilled and content at work. Of those employees polled, 78 percent stated that being recognised motivates them within their job role, with a further 69 percent answering that they would work tirelessly if they were better recognised in their position.

Alongside improved retention and productivity figures, recognition schemes; whether they be formal or informal; have been shown to positively impact on employee mental health and wellbeing. With businesses and the media placing such a huge focus on all-round employee wellness in recent years, the introduction of a recognition scheme has been proven to boost health and increase happiness, both within the workplace and out of it.

Are there any trends associated with employee recognition?

Traditionally, employee recognition schemes were tied to private, individual company practices, with any details of rewards and bonuses kept within the walls of the business. However, today’s employees are increasingly looking for forms of more public recognition when it comes to a job well done – for example, social media is now an intrinsic part of many businesses public personas, and publicly recognising employees for great results on such platforms is therefore a natural next step to take. For millennials and Generation X, recognition is often non-existent if it does not appear in the public domain.

Alongside this, the majority of HR functions are becoming increasingly digitised. Whilst functions, such as payroll, have been automated for a while, HR technology is now being increasingly utilised for various aspects of the employee ‘experience’ – for example, to measure employee satisfaction, retention and wellness.

In terms of the ‘reward’ itself, retail merchandise has decreased in popularity as a form of compensation over recent years, as a social shift moves away from material items towards cash-based rewards. Alongside the type of recognition, the role of the reward in itself has also shifted – whilst the satisfaction of ‘going above and beyond’ used to be sufficient motivation, many businesses now tend to view rewards as more of a form of initial motivation for employees – the lure of a reward for job well done can be a great incentive to excel before the task has even begun.

What are the main types of recognition utilised by employers in the UK? 

Whilst recognition schemes are often personal to individual companies, there are several main themes in terms of the type of reward on offer:

  • Cash / voucher bonuses (monetary, branded gifts, free lunches etc)
  • Team-building / experience days
  • Prizes for a job well done
  • Employees of the month / quarter / year for top performers
  • Thank you cards / emails
  • Employee recognition walls
  • Celebration of work anniversaries / birthdays
  • Free lunches for all staff
  • Investment in further accredited training schemes

Do employees prefer financial or non-financial recognition schemes? 

Whilst it would be difficult for any employee to turn down the lure of a cash bonus, most would be equally motivated by recognition and rewards without financial merit if appropriate. For SMEs, the drawback of the introduction of a recognition scheme can often surround the financial injection needed to sustain it – by finding positive and popular forms of employee recognition that don’t break the bank, the prospect of a reward scheme needn’t be so scary.

Whilst cash is often rated as the number one form of workplace recognition within the UK, other measures that are reasonably low-cost and highly rated with SME employees include:

  • Coffee / lunch with the boss – this can allow selected employees to interact with their boss on an individual basis, facilitating both relationship-building and mentorship.
  • Paid time off – by granting extra days off to top performers, companies can ensure that staff are able to improve their work-life balance and mental and physical health.
  • Training investments – whilst training and development should be offered in every business, investing in further accredited training or education for high achievers, such as degrees, diplomas or higher management training, will not only reward staff, but also make it clear that they are valuable to the long-term success of your business.

Are recognition schemes beneficial for SMEs?

Time and time again, employee recognition has been shown to be key to overall satisfaction levels, which in turn affects your staff retention rate. With staff often much harder to replace in an SME environment in comparison to a larger business, any initiative that lowers stress levels, heightens productivity and lowers employee attrition levels should be enthusiastically adopted.

Whilst the idea of investing money into such schemes can seem a little daunting for a small business, the rewards should not be underestimated – for example, research has shown that companies that elect to spend around 1 percent of their payroll on recognition initiatives are estimated to be around 79 percent more likely to see better financial results overall.

Other attractive company benefits can include:

  • Improved engagement levels
  • More motivated employees
  • A more collaborative working environment
  • Lower employee turnover rates
  • An improvement in employee physical and mental health
  • Reduced absence rates
  • Reduced levels of sickness
  • Promotes a positive working culture

Five ways to successfully integrate employee recognition within your business: 

  1. Ensure that all staff are eligible – make sure that employees at all levels and across all teams are eligible for your reward scheme, no matter what their roles and responsibilities may be.
  2. Define your criteria carefully – look carefully at exactly what behaviours and/or actions are being rewarded and recognised. The more clearly this is defined, the better the level of understanding will be amongst your employees.
  3. Provide for equal opportunities – Make sure that no worker is excluded from recognition as long as they meet the specified criteria, for example consider remote workers, those on sickness schemes, or those who may work in different locations to your main office if applicable.
  4. Consider timeline implications – Reward and recognition should occur as close to the defining event as possible. This will help to positively reinforce the actions that the employee has taken, as well as promote the idea that management are alert to and aware of positive employee behaviour.
  5. Set strong standards – Ensure that you do not create a process in which managers or key decision makers are free to select employees based on subjective criteria. Set firm criteria that must be universally applied and is not open to personal interpretation.