How often should you reward employees? How do you decide who gets recognized? What kind of rewards should you offer? Employee recognition programs are a great way to show appreciation for your team members' contributions. They also encourage them to continue working hard and stay motivated. "A well-designed employee recognition program can boost morale, increase productivity, and improve retention," says Dr. David C. Meyer, author of The Power of Praise.
First, let's go over the benefits of employee recognition and why it's important, then we'll walk you through the 10 actionable steps to create an effective staff recognition program.
What is an Employee Recognition Program?
Before we dive into this topic, let's start broadly: What is an employee recognition program?
An employee recognition program is a well-defined process or system for what you and your company will do to recognize your employees’ achievements and success.
These programs can include various types of recognition: public/private, peer-to-peer/top-down, and expensive/inexpensive options, to name a few. Throughout this article, we will help you to determine what should go into your specific staff recognition program.
Why Having a Recognition Program is Important
Workers who receive frequent, meaningful praise from their bosses and peers are more likely to be engaged and perform better. This has been proven true across all industries, including retail, healthcare, manufacturing, finance, and even government. The best way to ensure that staff are feeling valued and appreciated on a consistent basis is by implementing a company-wide employee recognition program. There are many benefits to having one but here are the most important ones:
Increase employee engagement
A recent study by Gallup found that employees who feel appreciated are more engaged and productive. This is why companies often implement employee recognition programs. But how exactly does it benefit employees? Here are some ways they can improve employee engagement.
1. Employees Feel Appreciated
When employees feel appreciated, they tend to perform better and stay longer. In fact, a recent study by Gallup found employees who felt appreciated were more engaged and productive.
2. Employees Are Motivated To Perform
Employees who feel appreciated are motivated to perform well. They want to impress their boss and colleagues, so they put forth their best effort every day.
3. Employees Feel Like Their Work Matters
Employees who feel valued also feel like their work matters. They know their efforts contribute to the success of the company.
But what exactly does employee engagement mean? It’s defined as “the degree to which individuals feel emotionally attached to their jobs and engaged in their work.” In other words, it’s about feeling connected to the job you’re currently working in.
So, how can employee recognition programs help? Well, according to the same study, “employees who receive frequent recognition from their managers are more likely to report high levels of engagement."
Turnover costs employers millions of dollars every year. It’s expensive to replace employees, and it’s even more expensive to train new hires. Did you know recognition programs can improve retention by up to 50%? This is especially true for younger workers. In fact, a study conducted by the Society for Human Resource Management (SHRM) found that “employees under age 30 were most likely to leave their jobs without notice if they did not receive some form of recognition from their employer.”
In today’s competitive job market, companies of all sizes need to find new ways to keep employees happy, engaged and avoid burnout. Here’s why employee recognition programs work so well for businesses of all sizes.
1. They Help Employees Feel Important
When employees feel appreciated, it makes them feel important. This is especially true for entry level workers who often don’t feel valued by their employers. By recognizing employees for their contributions, you show them that they matter and encourage them to put forth even more effort.
2. They Create A Sense Of Community
Recognizing employees helps create a sense of community within your organization. It shows everyone that you care about them and want to see them succeed. In turn, this creates a positive environment where employees feel comfortable sharing ideas and helping each other grow.
3. They Keep Employees Motivated
Employees appreciate being recognized for their efforts. This motivates them to work harder and stay focused on the task at hand. As a result, they’re more likely to stick around longer and contribute more effectively.
Top performers are often looking for new opportunities. Recognizing them for their achievements shows them that you care about their contributions. It gives them confidence that they can perform well at your company.
Create a unified company culture
Recognizing employees for their contributions to the organization is an important part of building a strong workplace culture. Liza Farm, an HR Manager at Master Builder Solutions, said “Peer-to-peer programs are great for eliciting culture and the right behaviors at work. Recognition programs should be a strategic value— [they should] add to what the company is trying to achieve in regards to engagement, behaviors, culture, and values.”
A well-designed employee recognition program creates an atmosphere where employees feel appreciated and valued. It also helps build loyalty among staff members, encourages them to perform better, and reinforces positive behaviors.
10 Actionable Steps to Creating an Employee Recognition Program
Now that we know the benefits of a recognition program, let’s walk through a step-by-step process that will help you create your program from start to finish.
Step 1: Determine Your “Why”
First, you’ll want to determine your “why.” Why are you putting effort and energy into building an employee recognition program? Your program won’t take off overnight. There will be some bumps in the road. You need to hang onto your “why” when you are trying to implement this new initiative at your company if you want it to succeed.
Take a few moments to write down why you think your team members would benefit from this program. Let those words be your guide as you build out a successful employee recognition initiative.
Step 2: Include Best Practices for Giving Recognition
When building your staff recognition experience, you’ll want to focus on the best practices for this program. Building your program on best practices can improve your productivity and get this program built more quickly.
At Nectar, we follow the principles of neuroscientist Paul Zak detailed in his book Trust Factor. Like Zak, we believe that recognition should be unexpected, personal, tangible, prompt, consistent/frequent, public/visible, peer-to-peer, and values-based.
When Zak talks about recognition, he often refers to a concept he calls “Ovation.” According to the work he’s done with companies globally, Ovation releases the neurotransmitter dopamine within your employees.
Dopamine is important because it improves people’s moods while increasing their focus and energy on projects that matter to them (and the bottom line of the company.)
Dopamine is released when your employees anticipate rewards. If you use the anticipation of rewards positively, you can build a workforce that’s excited and focused on creating stellar work. According to Zak's research, recognition will have an optimal effect when it is:
- Public or visible
- Values-based (we added this one)
When is the last time you surprised your team with something they didn’t expect?
"The brain loves surprises because it means something new has happened, and this focuses our attention on it." - Paul Zak, Trust Factor
Now, this doesn’t mean you should stop giving out more stable awards like those recognizing years of service. You need some amount of consistency for your rewards program to be stable. Adding in small, unexpected awards to supplement bigger, consistent ones is key. You can find small moments to delight and encourage your team. Zak also recommends that you schedule out unexpected rewards.
As you work with someone, you get to know their quirks, likes, and dislikes. Incorporating their personal tastes into your employee recognition program is the best way to make it flourish.
"The personal part is important. If a team member receiving Ovation is a chocolate lover, purchase a fancy box of chocolates as a gift. Then, present the Ovation at your next all-hands meeting, or the day the project finishes." - Paul Zak, Trust Factor
Some organizations create forms during onboarding to see what their staff members like or dislike. Another option would be to share a document with managers asking them to fill in their employees’ likes and dislikes. If there are some gaps, you can learn more about your employees and their tastes with some focused energy on building out the document with all the best answers for the company’s workers. At Nectar, we are big proponents of letting people choose from a buffet of reward options. Rather than giving them a specific reward or incentive you think they’ll like, give them points or a credit that allows them to pick for themselves.
Creating tangible rewards is easier than you think. It’s not about giving out a trophy or certificate for everything. Creating some tangible experience is great, though.
"When the reward is tangible, seeing it after the initial Ovation and showing it to colleagues or one’s spouse strengthens the neural pathways linking the achievement to the reward."
Here are a few examples of tangible rewards.
- Gift cards
- Company swag (like a t-shirt or backpack)
- Products on Amazon
- Trophies & award certificates
- Experiences (concert tickets)
These rewards come in all shapes and sizes. You can create expensive, tangible recognition, but there are also inexpensive options. As long as you show your appreciation in a way that can easily be shared with others, your rewards are tangible. If you need more inspiration check out our blog post on reward employee examples and ideas.
Awards like “Employee of the Year” are great for recognizing general employee awesomeness, but they’re not very prompt or consistent. These large awards have a place in your company, but they don't help your coworkers associate awards with a particular action.
Rewards need to be prompt so that employees recognize that a particular action leads to specific rewards. If you want your recognition to have an impact, you can't leave recognition to the end of the year.
Employees need frequent recognition on a regular basis, even if it's just a high-five and a job well done. Make sure that you are keeping up with how often staff members are receiving feedback and praise. If it's been a while, remind managers and peers about the importance of giving frequent feedback.
Many of your workers may not be used to giving praise for the small things that employees do every day. These are worth recognizing too. You shouldn't have to jump through hoops to get a high five from a coworker.
"Ovation for small things is very important; it should become a constant practice in your organization." Paul Zak, Trust Factor
Public or Visible
Praise needs to be public or visible to other coworkers and company stakeholders. Public recognition serves a few purposes:
- Builds attachment to other team members
- Makes work more enjoyable
- Improves the performance of people not being recognized (they will want to get in on the action too!)
Last, you’ll want to build a values-based program. Most companies have a list of core values at their organization, but it’s often hard to determine how those values play out at the individual level. Using core values in your rewards program is the best way to track and operationalize them so that they become an integral part of your culture.
Pro Tip: Consider setting up a system to allow peers to recognize each other. For example, you could allow employees to award points to their colleagues, who can use these to get rewards of their choice. Zappos.com uses Zappos dollars or “Zollars” to thank peers for going above and beyond, like answering questions or volunteering to help. Zollars can be redeemed for gifts, given to another peer, or donated to charity at their dollar value. On top of that, Zollars includes a personalized note from the sender that states why they're giving it to the individual, making it even more impactful. Peer recognition encourages everyone to celebrate accomplishments.
Step 3: Carve Out a Budget
If you want to get serious about creating an appreciation program, you’ll need to carve out a budget (even if it’s small.) Great recognition costs money, but you’ll earn that back with improved productivity and better peer engagement.
Often, we’ve found that most of the recognition given out across companies is ad hoc or random. Many companies don’t have a recognition program in place across the company, but they are spending hundreds or thousands of dollars on gift cards that aren’t moving the needle. If you did a deep dive into your expenses, you’d likely be surprised at all the money spent on recognition across different departments.
So what’s the alternative? A great solution is implementing an employee engagement program with a budget for peer-to-peer, manager-to-employee, and company-to-employee recognition. You’ll want to set a budget for each type of recognition you intend to use at your organization.
What Costs Should I Expect to Incur?
Now that you plan to look at your expenses, what costs should you expect to incur? Here are some costs that you and your management team should expect.
Cost of Rewards
Rewards cost money. Whether you are giving out gift cards, donations to a charity, or a trophy, you will have to spend some money. The cost of rewards depends on the following things:
- The number of employees you have
- How many points you and your team members can give out
- The points-to-dollar ratio your system uses
- Any discounts or special deals you have with retailers
You should also expect a boost in the cost of rewards around holidays and birthdays when people are most likely to want to treat themselves.
If you are building a rewards program, someone needs to manage that experience. The time and energy you or a team member spends on managing the system, rolling it out to staff members, and making sure things are getting redeemed are part of the administrative costs.
Employee Recognition Software
If you're like many teams, you’ll probably want to rely on an employee recognition software program like Nectar. This software helps you administer all the rewards and manage all the analytics about your program and its effectiveness. You can run an engagement program without software, but investing in software helps you see the bigger picture and analyze your strategy’s effectiveness.
If investing the time and resources to create this program from scratch seems daunting, you can always look at a cost-effective tool like Nectar to streamline everything. Most of the time, the cost of the subscription offsets the costs of managing the program internally. There’s also a perpetually free option that gives you the core functionality with an unlimited amount of users.
Step 4: Define Clear Recognition Program Objectives and Criteria
Once your budget is set, you’ll want to define your parameters, objectives, and criteria. If you look back on this experience at the end of the year, what would constitute success for you and your team? Set those objectives and look back on them from time to time during implementation. Are you hitting the benchmarks you set?
When Should Employees Receive Praise?
Praise and positive feedback should be happening all the time.
There are some particular times like birthdays and work anniversaries that create special times for giving rewards. You’ll want to set some automation around these periods for your employees so you don’t miss anyone’s special day.
How Often Should Praise Happen?
Earlier, we talked about the importance of frequent praise. How will you choose to bring that into your program, so it has the most impact on your team? Do you want to do a check-in every week to make sure that praise is happening across departments at a certain rate? What will you do if certain departments aren’t meeting those expectations?
Are You Offering Rewards? If So, What Kind?
You can have an engagement program without rewards, but you’ll probably want to include more tangible items with your program. Think about what kind of rewards you will offer your team. Will you offer gift cards, swag, or experiences? The possibilities are endless. Here are some thoughtful ways to celebrate work anniversaries to get your juices flowing on the type of rewards you want to offer.
Step 5: Involve Managers
The management at your company plays a gigantic role in the success of your program. If you want your program to have a positive impact, start by involving managers right away.
The Importance of Getting Manager Buy-In
Managers lead your organization. If your staff see their managers enjoying the program and using it to give feedback, they’ll do the same. Go the extra mile and get manager buy-in before rolling this out to your company. You won’t regret the time you spend doing this.
When trying to get management buy-in, start small. Find a select group of managers to buy into your program and help you roll it out to managers as a whole. Starting with one or two managers who become champions of the program can help you get it done more quickly.
Pick influential managers who are already rewarding their team frequently (go back to the research you did when carving out a budget for the program.) Chat with those managers about the importance of frequent feedback and how you plan to create a more systemized, budget-friendly approach. Make sure you let them know that you appreciate them for all the work they are doing currently to build a culture of recognition at your company.
Think about Consequences
No one likes to think about the consequences of failing to follow protocols, but this is essential. Managers have access to a lot of company funds. Imagine a scenario where your goal is to have all feedback going through appreciation software, but managers are paying for Starbucks gift cards on their company credit cards. That’s not helpful, and you likely won’t be able to see those expenses right away. Getting manager buy-in early on removes the likelihood that these scenarios happen later.
Step 6: Keep It at the Top of Everyone’s Minds
Now that you're ready to roll out your program, you need to focus on how to keep it at the top of everyone’s minds. Here are a few ways that companies have kept their program visible.
Bake It into Your Workflows (Slack, Teams)
As you start the culture of recognition at your company, build it into your current workflow. Whether you use Slack or Microsoft Teams, you’ll want a program that can use those workflows. For example, create a Slack channel that your team can use to provide feedback to each other. If people need to download a new application or go to a new website, they may not be as likely to use your program. Using an application you already have, like Slack or Teams, will make it easier for your employees to integrate your program into their daily routines.
Make It Visible
Where will all this positive feedback live at your organization? You’ll want to make all of this great information visible to your team and managers. Here are a few ideas of how you can do this:
- Stream it on monitors/TVs around the office.
- Use a Slack channel to host your recognition as it comes in.
- Include recognition in public and internal newsletters.
Remind People Often
It’s easy to slip back into old habits when you’ve been using those methods for years. Make sure that you remind people about how you’d like them to recognize each other in your organization.
Step 7: Make It Extremely Easy
One of the most important parts of building a program for team recognition is making it simple. Giving praise to a colleague should be simpler than writing an average email. You’ll also want to ensure that your employees can do it from a variety of devices.
Any friction that causes people to stop and think about giving recognition is deadly to your program. You want this to become a regular part of their daily routine. Train staff to give praise and use a simple process that anyone can follow (even the tech-averse!).
Step 8: Trust Your People
Trust is essential for workplace growth. We often talk about workplace issues like productivity and engagement, but trust gets discussed far less frequently.
Why Trust is Important in the Workplace
According to SHRM, trust impacts a ton of our workplace experiences
"If employees don’t trust their leaders, they won’t operate efficiently."
Employees who aren’t given trust will seek more approvals (which can be a mess to manage), and they'll struggle to share bad news (which leads to expensive problems that could have been addressed earlier). You want to be trustworthy and show your staff that you’ll back them up. It's the only way to build a workplace community that grows together. So how do you show this trust?
Show Trust by Removing Approvals
Approving every single reward or recognition that happens is the single best way to create a program that’ll never work. You may want to have more control over your program and how things are shared with the team, but you can’t be a micromanager. Let your employees have freedom over how they use their points and awards budget for the best results.
Step 9: Kick Off Your Program
Program kick-off is essential to a well-oiled employee recognition program. If your staff members aren’t used to praising one another, you can’t just unleash the program without any fanfare.
Make an Announcement
You’ll want to announce the program in a way that the whole company can hear it. Consider using multiple communication modes: meeting announcements, emails, internal newsletters, Slack/Teams messages—the whole nine yards. You want people to start using this program ASAP.
Film a Quick Video (or Send Employees to Help Documentation)
All software has a learning curve even if it’s simple. Take a few minutes to film a quick screen-recorded video showing your employees how to use the software. Your software might have some training information already included with it, so you could also send employees there. Videos are great because they’re more personable, and you can show them exactly how you’ll be using the software in your company’s ecosystem.
Use Your Own Program to Praise Others
You should be the first one to use the program that you want others to adopt. Make sure that you are the biggest champion of this new process by praising your colleagues. Also make sure that your managers are on board with using the program from the beginning. Doing so will make sure all other employees follow suit.
Step 10: Measure Program Effectiveness and Make Adjustments
Last, you’ll want to measure program effectiveness. There are a few different ways you can do this:
Send a Survey Before and After You Implement Your Program
Send out a survey to your employees about company culture and engagement before implementing your program. Let them share areas of improvement and consider that feedback. Once you’ve launched your program, review its effectiveness with a follow-up survey after a few months. Did you notice a big change in your employees? If not, use the data you glean from the survey to make any needed changes to your program.
Look at the Analytics
If you are using software like Nectar, you should see data from your first few months. Analyze that data to answer the following questions:
- Are employees using the application?
- What are they saying about each other?
- Who is getting recognized most often?
- Are employees using it enough for low-level staff?
- Does anything stand out about usage numbers between and inside of different departments?
Hopefully, you’ll begin to see some data trends that you can use to address larger cultural issues.
YOU Can Build an Employee Recognition Program
Creating a successful recognition program might seem daunting initially, but it’s not as complicated as you think. By following our ten-step process, you will be well on your way to recognizing the employees you manage for all the work they do. Take your time, recognize your team, and create a culture of recognition that your organization can be proud of. There is no better way to improve the employee experience, increase engagement and boost employee morale.