5 Things HR Execs Need to Know About Employee Recognition

Recognizing employee efforts is an underused and effective way for companies to create engagement, build loyalty, and even save millions of dollars in turnover costs.

Employee Recognition

Everybody likes to be recognized for a job well done.

According to a Gallup study on workplace recognition, employees who say their contributions are recognized are less likely to feel burned out, more likely to thrive in their overall lives, and less likely to look for new job opportunities. And yet, the same report shows that most companies fall short in this area, with just one in five leaders saying that recognition is a major strategic priority for their organization. 

When it comes to employee recognition, many organizations struggle with the “how” – which is where modern technology, such as employee experience platforms, comes into play. But also, many companies struggle with the “why,” as executives don’t always appreciate the power of a few words of praise or a simple thank you.

Here are five things every human resources leader should understand about employee recognition in the workplace.

1. Recognition Has Measurable Benefits – Some people might hear the words “employee recognition” and dismiss them as meaningless fluff. These people are wrong. Taking the time to meaningfully recognize employee efforts benefits both workers and companies – and there are numbers to back this up. According to Gallup, people at organizations with an effective employee recognition strategy are between four and five times as likely as others to be engaged with their work, to feel connected to their company’s culture, to see a path for growth at their organization, and to recommend their employer to friends and family.

These sorts of benefits show up essentially whenever anyone looks at this question. A Shopify survey, for example, found that 82 percent of employees are happier at work when they’re recognized in the workplace. The same study also found that employees who don’t feel recognized are twice as likely to quit their jobs. And in a survey of younger workers conducted by payroll technology firm daVinci Payments, nearly 80 percent said that an increase in recognition rewards would make them more loyal to their employers. 

What does this actually mean for companies, though? Quite a lot, as it turns out. Looking again at the Gallup study, researchers concluded that creating a culture of recognition can save a 10,000-employee company up to $16.1 million per year in turnover costs.

2. Workers Notice A Lack Of Recognition – In the daVinci Payments survey, half of the respondents said their management does not recognize strong job performance, and 76 percent said they are “seldom to never” eligible for employee rewards. According to Gallup, only 23 percent of employees strongly agree their organization has a system in place to recognize work milestones. And an even lower number – 19 percent – strongly agree that recognition is an important part of the culture at their workplace. That’s around the same portion who said their company or manager is “horrible” at recognizing them in a survey conducted by the Achievers Workforce Institute.

In short: People are paying attention to the recognition efforts of their employers and evaluating them against their own expectations. And as of now, the reviews aren’t great.

3. Not All Recognition Is Created Equal – While employee recognition is, at its core, a simple matter, some methods are more effective than others.

Quality beats quantity, personal and specific always beats generic, and it doesn’t do much good to offer praise in a scattershot, perfunctory fashion. In the Achievers Workforce Institute survey, 64 percent of workers said they would prefer to receive more meaningful recognition instead of more frequent recognition.

Gallup lists five “pillars” of employee recognition. Recognition, the researchers say, should be fulfilling, authentic, equitable, embedded in the culture, and personalized. It is essential to understand your employee personas when applying these pillars. The definitions of these terms will vary from employee to employee, but the list provides a good starting point. According to Gallup, more than 40 percent of employees say the “right amount” of recognition is a few times per week or more.

4. Recognition Is Especially Important for Younger Workers – As the Achievers Workforce Institute points out, this is the first time in history that five generations have been in the workforce at the same time. And while employees of all ages want to be recognized for their work, this recognition is especially important for younger workers. That’s not just because Millennials and Gen Zs grew up receiving more feedback from parents and teachers than previous generations (although this is largely true). Younger workers also tend to earn less money and feel less anchored to their current jobs, increasing the importance of recognition. In the Achievers Workforce Institute survey, 43 percent of Gen Zs said they didn’t feel valued by their superiors at work, the most of any generation. 

For relatively little money, employers can reward these workers in ways that build loyalty. In the daVinci Payments survey, 70 percent of younger workers said they would be motivated to stay in their jobs another year if they were rewarded with three $50 prepaid gift cards over a one-year period. This $150 annual expense obviously pales in comparison to the cost of recruiting, onboarding, and training a new employee. 

5. Measuring Is Essential – Without intentional and effective tracking, employee recognition efforts tend to fall by the wayside. Leading employee experience platforms integrate employee recognition tools, which give organizations the ability to track several types of recognition. Achievement promotion functionality allows managers to acknowledge work anniversaries and successes on things like leaderboards. Peer-to-peer recognition features enable workers to recognize their colleagues using badges and awards. And top-down recognition lets leadership recognize employees’ achievements and behavior.

By tracking their employee recognition programs over time, HR and People Ops executives can fine-tune their efforts, ensure that they meet program goals, and ultimately build a more loyal, satisfied, and productive workforce.

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ABOUT THE AUTHOR

Sean Winter

VP of Strategy at LumApps

Sean currently serves as VP of Strategy at LumApps, a leading employee experience platform designed to unify the modern workforce through better communication, engagement, and access to information. Before LumApps, Sean served as VP of Customer Success at Oyster, a distributed HR platform that empowers companies to hire, pay, and care for talented teammates regardless of location. Previously, he held the role of SVP of Presales, Customer Success, Professional Services, and Support at a mobile communications firm, Movius. Sean has also held leadership roles in various HR and Communications technology capacities at Cornerstone OnDemand, Jive Software, and Capital One.

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