11 Benefits of Employee Recognition (told by CEO's and HR Leaders)

Imagine you have two employees—let’s call them John and Jane. After the end of each workday, you go the extra mile to praise the work Jane does while showing John a complete lack of recognition. 

After two years, who among your employees do you think would say they have an excellent employee experience with your organization? The answer’s most likely Jane. 

Many HR leaders and executives like to think they treat their employees like Jane, but the stats say otherwise as more than half of employees (52.5%) want to receive more public recognition from their managers.

‍

Over the years — and especially because of the COVID pandemic — employee recognition has become increasingly important for executives and HR leaders who want to meet their business objectives and improve team performance with engaged employees. There are many types of recognition and it's important to take a deliberate approach that makes sense for your specific needs.

To create this article, we reached out to over 20 CEO's and HR leaders to get their take on employee recognition, its benefits, and how to be more effective at it. We hope you find it useful :)

What is Employee Recognition?

Employee recognition can come in many forms, but at its core, employee recognition is what you do to show your appreciation for the work that your employees do daily. Employees need that appreciation to feel valued at work.

Going through your days at work without proper recognition can feel isolating and discouraging. However, even the smallest amount of recognition—like a pat on the back or a nice comment—can make all the difference to your employees.

Most employers understand the value of acknowledging employees for great work. A SHRM study on the effect recognition has on employees shows that “68 percent of HR professionals agreed that employee recognition has a positive impact on retention, and 56 percent said such programs also help with recruitment.”

Employee recognition has a profound impact on employees. It’s the job of companies and managers to nurture this and make it easy to give feedback at work.

‍

‍

Benefits of Employee Recognition

If you are new to thinking about employee recognition from a strategic perspective, you might be wondering why it’s essential. Employee recognition has several positive benefits that you can enjoy once you start thinking about how it can help build your business.

Your employees will naturally give recognition here and there to their peers when someone knocks it out of the park at work. However, if you don’t cultivate recognition at work, it might only happen every blue moon. As a leader, it’s your job to create an environment where your employees can feel free to share positive words of encouragement regularly.

You may or may not have a vehicle to do that currently. However, if you are trying to create a culture of recognition at work, stay tuned for some stats and benefits you can share with your colleagues.

1. Build a Positive Work Environment

Negativity at work can be expensive. Sources like the Bureau of Labor Statistics state that negativity can cost companies in the United States upwards of $3 billion every year. Yep, billion with a B.

Building a positive work environment impacts the money you put into your organization and the people who work there.

According to Officevibe, “feeling valued and appreciated at work is directly tied to employee happiness and engagement.”

Taking just a few minutes out of your day to tell someone about the fantastic job they are doing can radiate a positive atmosphere throughout the workplace. After all, when you feel good, you want to make sure that other people feel the same way.

Gerrid Smith, Founder of Corporate Investigation Consulting, confirms the positive impact of recognition in a work environment by saying, “When employees are recognized for their contributions, it goes a long way toward making the workplace a place where they want to work.” 

“As their effort is recognized, they begin to consider the company to be a part of their lives. It contributes to the creation of a healthy and joyful environment. Employees are more inclined to put extra effort into important tasks when they recognize a favorable corporate culture. They are delighted to be affiliated with a healthy workplace rather than just working for a wage.”

Start a wave of positivity at your organization by being the first one to give recognition and letting your colleagues know how much you value them. 

Whether you use software like Nectar to facilitate shout-outs or have a Slack or Teams channel dedicated to sending kudos, it’s vital to have a formal recognition program that lets you consistently praise people who deserve it.

2. Reduce Employee Turnover and Improve Retention

Employee turnover is costly, and retention is key to cutting down costs and being able to grow as an organization. If you are always hiring for the same positions, you can never make real progress on the number of employees on your roster.

Recognition can have a significant impact on employee retention and reduce voluntary turnover. For example, research from Josh Bersin found that “companies that scored in the top 20 percent for building a ‘recognition-rich culture’ actually had 31 percent lower voluntary turnover rates!”

It’s impressive how appreciating employee performance can have such an overwhelmingly positive impact on turnover. 

Tehsin Bhayani, CEO and Founder at AirMason, thinks, “An employee wants to know that they’re valued at more than just another hire that can be measured by analytics.” And then advises organizations to “Invest time into your employees to invest time in themselves.”

You don’t get to be recognition-rich by letting your workforce run its course, though. Instead, recognition-rich cultures need to be cultivated and built by you and your team.

You may need to invest money and time into building this culture. There are many numbers on the costs of employee turnover. For example, one study shared that the cost of employee turnover is $15,000 per employee. If that is the cost of employee turnover, imagine how much you could accomplish by just putting a fraction of that into software that improves employee retention.

It’s important to understand that recognition programs can’t prevent all turnover. Some people will naturally want to move on to different companies and job positions. 

However, “Employees who feel valued are more likely to stay with a company during good and bad times. Even companies that provide benefits and perks that employees are likely to stick around for are prone to losing employees because they don”t go out of their way to recognize hard work.” according to Gergo Vari, CEO at Lensa.

Proper employee recognition (and not just handing out some gift cards) should cut down on the amount of negative turnover where your employees leave abruptly, leave bad reviews on sites like Glassdoor, and cause more disruption at work.

3. Foster Company Loyalty

Similar to retention, showing recognition to your employees helps improve their loyalty towards your organization. 

Tina Hawk, Senior Vice President of HR at GoodHire, says, “There are innumerable benefits to making sure your employees feel valued in the workplace. Not least of all is company loyalty.” 

“When employees are welcomed and included as part of the team, they’re more likely to feel content about where they’re working. In turn, this increases their productivity and engagement.”

You don’t want to have your employees second-guess their decision to join your company. 

“As customers of the workplace, employees want to feel their decision to join was a good one. When they feel like their contributions are valued, they will be more inclined to stay with the welcoming and supportive team they’ve joined.”

“They’ll also be fans of their manager, who they feel knows and understands them and is supportive of their growth,” says Laura Sukorokoff, Founder of C-Change Learning and Development.

4. Improve Employee Engagement

When your employees go to work, do they feel engaged with your company and your employees? If you’re like most companies in the United States, you are dealing with some engagement issues as only 30-35% of the American workforce is engaged.

Although this doesn’t mean that the remaining 65-70% of employees are trying to sabotage morale at work, it shows there’s still a lot of room for improvement regarding employee engagement. And this is where an employee recognition program can help. 

According to research reported by ProofHub, “58 percent of employees say employee recognition is how leaders could do more to improve employee engagement.”

Nick Chernets, CEO of Data for SEO, comments, “Staff that is recognized frequently tend to be much more engaged with work and thereby show more initiative. They are likely to suggest ideas for improvement, provide valuable feedback and step up and take more responsibility. This is the first step towards creating a close and vibrant community of employees which are precious assets to every company.”

If you want to improve employee engagement, start by more frequently and consistently celebrating employee accomplishments and expressing appreciation within your workforce.

What results does a more engaged workforce produce? 

“An optimistic workforce with employees who feel empowered and enjoy coming to work. This means more collaboration, creativity, productivity, and of course, profitability. The happier people are at work, the better their performance will be. And the better the culture, the greater your company’s reputation and recognition. Everybody wins,” says Robert Banks, Founder at MrStocks.

5. Boost Productivity

Recognition begets great work. Taking just a few minutes out of your day to congratulate and reward outstanding work will make it easier for your employees to produce more of it.

You might be surprised to know that 69 percent of employees would work harder if they felt appreciated at work. Simple activities like sharing praise and feedback make all the difference—employees who feel appreciated for their work want to do even more work to earn more approval.

Olivia Tan, Co-Founder at CocoFax, believes “The biggest benefit of employee recognition is improved performance.” 

She continues, “Your employees work hard, and it is this effort that drives the success of the organization. Companies that spend 1–2 percent of their payroll on employee recognition tend to outperform those that don’t.” 

“It is essential to acknowledge the part that your employees and coworkers play in the company’s success. Be sure that their efforts are recognized and celebrated and that they’re rewarded for excellent work.”

Employee recognition acts as a form of positive reinforcement for your employees. And by taking the time to praise associates for specific tasks, you increase the likelihood of that task happening again.

According to a journal article written by Fred Luthans and Alexander D. Stajkovic, recognition is more than just a larger paycheck. While financial benefits and compensation can be a powerful performance driver, other activities can help just as much. Furthermore, Luthans and Stajkovic found that performance feedback and social recognition could be powerful drivers of increased productivity.

Along with increased productivity, Tia Graham, CHO at Arrive at Happy, thinks, “If employees feel valued and recognized, they will want to pour their heart and soul into their work, and everyone will work with energy and conviction. In turn, this creates a more productive, and likely more profitable, business.”

“Human connection is the number one predictor of happiness, so when company leaders prioritize recognizing their employees and showing appreciation regularly, this creates stronger personal relationships and loyalty. Top talent will turn down a higher-level position and more money elsewhere if they feel deeply connected to people in the company. In addition, they will want to grow professionally and personally with these people.”

6. Improve Morale and Employee Happiness

Up until recently, the thought of being happy at work was laughable at best. Companies didn’t consider their employees’ morale, happiness, or mental health; they considered a paycheck enough.

Employees spend 40+ hours at work each week. As a result, it’s not uncommon for them to spend more time with colleagues than with their families—even though many are still working from home. 

“Employee morale improves on an individual level when leaders grasp the genuine purpose of appreciation. Employees leave work with a strong sense of worth. Workers, in general, have a higher sense of well-being and job satisfaction. As a result, group morale rises, and a sense of respect and positivism pervades the workplace.” says Ryan Dalal, CEO & Founder Lua.

As an employer, you should strive to make the work experience as enjoyable as possible. Unfortunately, unhappiness at work is rampant, and depending on the workforce section you are looking at, these numbers could worsen.

If you are looking for a way to boost morale and improve workplace happiness, sharing your gratitude and appreciation through recognition will help. Even giving people an outlet to express their appreciation can make them happier. 

7. Helps with Recruiting Top Talent

Hiring becomes a bit easier when job seekers notice you have a recognition or appreciation culture within your organization. It’s not enough to offer huge compensations, but you also need to show these top talents you’re about to recruit that a great relationship exists between manager and fellow colleagues.

John Marsano, CEO at Inheritance Advanced, believes “that appreciation programs aid in the recruitment of new employees. A regular incentives program isn’t just good for motivating people at work. It also represents the company’s optimistic future.”

He continues, “Employees who are happy work in a productive and healthy environment, which attracts additional people to the company. It also allows you to collaborate with highly qualified individuals who will provide value to the organization.”  

A good recognition program can also help you turn current employees into raving fans.

Brian Snedvig, CEO of Jofibo, says, “When you have employees who feel valued and recognized, they spread the word, and you are better positioned to attract top talent.” 

“A lot of companies underestimate how much stock job seekers put in the comments and opinions they read on places like Glassdoor, but they really shouldn’t. Top talent with plenty of options will avoid employers with reputations for employee neglect or who don’t fairly recognize people for their hard work. By valuing and recognizing your people, you convert them into a powerful recruitment tool.”

8. Alignment Through Core Values

Let’s face it—most companies tout that they have core values. You’ll find them in bold letters painted around the office, but few employees have them etched in their hearts and minds. 

The tricky part is figuring out how to operationalize these values and embed them into your organizational DNA. How do you put actionable steps behind the values you share so widely?

If you’re like many companies, your values might be little more than just a list of things on your website. If this is the case, you probably struggle to create consistency around them in the office.

“When employees feel valued and recognized, they are more committed to the company mission and are intrinsically driven to do their part in making sure the company achieves its goals,” Patrick Crane, CEO of Love Sew. “They appreciate having their efforts recognized, and as such, they are more willing to go the extra mile for the company. The cost of motivating employees in such work environment also reduces when employees feel valued and appreciated.”

To help your employees have a higher commitment to the company’s mission, you need a social recognition program that lets you actively connect with and share your company values. Recognizing people when they embody a core value is an excellent way to keep these values at the top of employees’ minds. That way, you get to drive the values deeper into your company culture. 

This makes them easier to remember and brings them to life by giving everyone examples of how to live them. With the data you glean from a peer-to-peer recognition software like Nectar, you can begin to understand how your employees embody the values you set. What do those values mean to each employee? From that data, you can start to understand how to live out your company’s values yourself adequately.

If you struggle with taking values from concept to reality, you need to invest in employee recognition.

9. Better Customer Experience

The management team cannot be everywhere. As such, your employees are often the face of your company, and most customers get their first impression from their interaction with your staff. 

Having a recognition-rich culture is a sure way to ensure your employees put their best foot forward when dealing with customers.

“When employees feel valued they deliver great customer service. Employees who are recognized, well-compensated, respected, and generally well-taken care of will be more invested in the business and feel greater ownership, comments Paul French, Managing Director at Intrinsic Search. “They will go the extra mile to prioritize the needs of the most important stakeholder, the customer. Good customer service is a powerful competitive edge on its own and can be a game-changer for your business’s bottom line.”

Happy and recognized employees often results in improved customer loyalty.  

“When you appreciate employees and refuse to treat them like they are a means to an end, they start caring about how they treat your clients. They are more willing to go out of their way to ensure that the client is satisfied and resolve any issues that may arise. In turn, happy customers are more willing to come back again and tell others about their great experience.” says Zac Houghton, CEO at Loftera

10. Helps Avoid Burnout

It’s easy for employees to feel burnout especially when working from home. In addition, the absence of social interaction often makes it look like their work is going unnoticed or that they’re not doing enough.

However, even with remote teams, employee recognition works wonders to help prevent burnout and increase productivity and engagement. 

Nate Tsang, Founder & CEO at WallStreetZen, mentions what works for his team. He says, “When the work you do is praised publicly on Slack or in video calls, you realize that what you do matters. That means you can keep working hard without losing your professional stamina.” 

‍

‍

11. Improves Well-being and Mental Health

Your employees are not mindless or tireless robots. As such, they get tired from time to time. What happens when your employees start showing signs of tiredness or mental strain?

Here’s what Ewelina Melon, Head of People at Tidio, recommends, “Frequent recognition increases happiness and well-being. Employees are the greatest asset of every company, and it should be a priority to ensure that they are happy and healthy. 

“The lack of well-being leads to many mental health issues, including burnout, depression, anxiety, and more. Of course, people who experience such problems because they do not feel valued at work will not contribute to your business growth but only to employee turnover.”

James Leversha, Director at Top Notch IT, also adds, “The feeling of being valued at work was connected to happiness and well-being. Employees who felt valued on the job were more likely to report a range of good outcomes, such as feeling more engaged and pleased, being more driven, and having better mental and physical health than those who did not.”

So, along with recognizing employees for their work, take time to invest in wellness programs to help your employees get back their best selves. 

Final Thoughts

If you want to improve retention, increase profitability, attract top talents, improve your customer experience, then you simply cannot do without an employee recognition program. If you'd like more ideas, check out our article on 30+ recognition examples & ideas.

While it might not be a walk in the park, building a recognition program is worth it and becomes more accessible when using a platform like Nectar.