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    Employee Engagement and Retention

    The Definitive Guide to Building a Successful Employee Recognition Program

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    Ethan Israel
    April 10, 2022
    16 min read
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    Learn about employee recognition, why it is important, and the best methods for successful employee recognition in your organization.

    Employee recognition programs are one of the most vital parts of upkeeping a positive workplace culture. Over the past two years, companies have realized that employee recognition has become more important than ever (due to the COVID-19 pandemic and people working remotely).

    Isolation meant a lot of change for the majority of workers out there. More so, managers had to adapt to find ways to keep employees engaged and enticed by their work (while having to work from a dining table or desk in a bedroom). This sudden change caused a burst in employee turnover. Leaders are still working out the best ways to keep their teams’ content – and this is where employee recognition comes in.

    According to Gallup’s research, the core reason employees leave their jobs is a lack of recognition.

    So, in this guide, we’ll show you the ins and outs of what exactly employee recognition means, its benefits, and what methods you can use to create successful employee recognition in your business.

    Here are all the topics that we’ll cover:

    • What is employee recognition?
    • How can employees be recognized?
    • Who recognizes an employee’s contribution?
    • Why is employee recognition important?
    • How does employee recognition impact your bottom line?
    • How to build a successful employee recognition program.
    • Types of employee recognition, rewards and ideas
    • Employee recognition: In Summary.

    What is Employee Recognition?

    Definition: Employee recognition is where a company openly acknowledges an employee’s contributions and expresses appreciation for these contributions in different ways.

    How Can Employees be Recognized?

    This is the most misconceived part of employee recognition. Often managers think that recognition is drastically expensive and, therefore, tend to ignore it. But the truth is, recognition could be a manager walking up to an employee’s desk and high-fiving them for a job well done. It could also be a shout-out to the employee at the next department-wide meeting or Town Hall meeting. This doesn’t necessarily cost the company anything, but it does boost morale and confidence for that employee.

    From a financial perspective, if the manager is willing and able, they can also give an employee a bonus for winning a prospective client or meeting a specified goal.

    Who Recognizes an Employee’s Contribution?

    Everyone! Yes, you read that right.

    Anyone in your company can give recognition to others that deserve it. But recognition is most commonly given by specific people within the organization (depending on a particular scenario).

    Manager recognition

    In most cases, recognition comes from the top-down. This means a supervisor or leader recognizes and appreciates their employees’ efforts. This model has been around for many years and still works for a few reasons:

    1. Employees see their managers as role models. So, when appreciation comes from their role models, it gives employees a boost of confidence as they inch closer to their career goals.
    2. Managers are the link between the team on the ground and upper management. This means good efforts by an employee will probably be shared with leaders higher up.
    3. Managers could possibly show appreciation with a monetary value, like a bonus, raise, or promotion.

    But the reality is that managers don’t always have the time to build effective recognition programs and run them. This is where peer recognition comes into play.

    Peer recognition

    This is a somewhat different approach where leaders and co-workers are both empowered to recognize and appreciate an employee’s work. When recognition comes from a co-worker, it often holds much value – these are the people that work beside each other day by day. They work together, eat together, and discuss good and difficult days. So, when appreciation comes from colleagues – it means a lot.

    Bottom line?

    Having a blend of recognition from leaders as well as peers is a good practice to put in place.

    Employee Recognition: Why is it important?

    Let’s start with this question: ‘Why do humans want to feel appreciated?’

    Because when we feel genuinely appreciated by others, it lifts us. Looking at it from its most basic form – appreciation makes us feel safe. It makes us feel able to do our best work.

    This feeling of being energized to do more and consistently improve is vital in the workplace. So, let’s take this simple appreciation model and apply it to employees in the workplace.

    Here are five reasons why employee recognition is important:

    1. Purpose
    2. Attraction
    3. Culture
    4. Engagement
    5. Retention

    Our ‘PACER’ model above helps break down the most prevalent benefits of having an employee recognition program in your company. Let’s look at them in a bit more detail now:

    #1 Purpose

    Let’s say you had a hobby like woodworking and decided to sell your products. Once a few customers bought your pieces and gave you a good review, you would feel like your woodworking hobby had a purpose.

    It works much the same in a working environment. Once employees are recognized, they feel like they have a purpose in your company and that their job really matters. This transparency from managers helps workers understand how their job and daily tasks tie directly into the bigger organizational goals and picture. People want to be a part of something successful and enjoyable – so make sure they are.

    #2 Attraction

    In today’s working world, attracting top talent is quite a trying task. It gives your company a competitive advantage and helps you grow from strength to strength with a desired and driven team.

    Employee recognition can help you attract such talent. How, you ask? When prospective candidates research companies, their culture and processes – they want the cream of the crop. As much as you want the best talent out there – that same talent wants the best workplace too. If candidates know that your employee recognition ideas are solid – there’s a much higher chance that they’ll be intrigued to apply.

    #3 Culture

    Every company has its own culture and values. In order for employees to know – and more importantly – live the culture, they have to feel engaged. Recognition helps employees find a sense of opportunity, success, and leadership.

    Once this sense of positivity and drive is established with an employee, you’ll start to notice the upward trend amongst surrounding employees too. How others feel about work and their contribution to the bigger goal has a major impact on others around them.

    #4 Engagement

    Recognition also makes people feel more engaged with their daily tasks, co-workers, and customers. People often feel disengaged because their managers don’t recognize them. In fact, according to Forbes, disengaged employees cost companies up to $550 billion per year in the U.S.

    This significant number shows that people want to feel heard, recognized and appreciated by their leaders. If they feel this way, the chances are that they would give you a higher discretionary effort because they’re inspired to do more.

    #5 Retention

    Retention – the golden word in organizational strategies. There’s no sense in hiding it – high employee turnover is unpleasant and expensive for any company. You have to spend time and money on advertising, interviewing, hardware, software, workspaces, and more.

    Fortunately, appreciation and recognition are there to help you out. It’s a critical part of reducing your employee turnover numbers and keeping top talent enticed. We’ll discuss a few methods to help you boost your employee recognition program this year.

    How Does Employee Recognition Impact the Bottom Line?

    We’ve just talked a bit about turnover its cost to your business. Let’s take it a step further.

    Gallup did a study that shows the cost of replacing an employee can range from between one and a half to two times the worker’s annual salary. They also mention that this estimate is a conservative one. So, if your employee earns $100,000 per annum, the cost to replace them could be between $150,000 and $200,000 conservatively. What’s even more daunting is that if your employee is in a senior or executive role, the cost of replacing them can be even more than that.

    Costs are one thing. But once you start factoring in things like lower productivity, lack of experience, time to onboard, and intellectual loss, you can see that turnover can get expensive (in more than monetary ways) very quickly.

    Where does employee recognition come in?

    Many studies have shown that recognition directly impacts an employee’s tendency to stay or leave a company. The WorkTrends survey from IBM shows that 51% of employees intended to leave as they didn’t receive recognition in their jobs. This is double the number of employees that said they would stay, even without recognition (25%).

    What does it mean?

    Employees want to be acknowledged for the work they are doing and the effort they put into achieving their results.

    How to Build a Successful Employee Recognition Program: The Best Strategies

    Now that we’ve discussed what employee recognition is and how it affects the bottom line, it’s plain to see that recognition is crucial to your company’s success.

    So, you may be asking, ‘Where do I begin?’

    No stress, we’re about to dive into the best methods for building a successful employee recognition program for you and your team. We’ve broken down the build into four phases:

    1. Phase 1: Discover and develop
    2. Phase 2: Include and entice
    3. Phase 3: Practice and promote
    4. Phase 4: Manage and monitor

    Phase 1: Discover and develop

    Start your process by building up a case for recognition. You should spend a decent amount of time researching some success stories from other companies and see which strategies suit your business. Remember, this is not a one-size-fits-all type of program. Each company needs a varied solution based on their team and culture.

    Start to familiarize yourself with the purpose of employee recognition (section four of this guide) and how it can be implemented into your company on a daily basis in bite-sized chunks. Once you have the purpose and goals of employee recognition written down, it’s time to crunch the numbers! Yes, there’s math in this too. But it’s worth it!

    Calculate your reward spend

    Calculate how much you can afford to spend on employee rewards and how often you’ll be able to spend them. Remember that rewards don’t have to be expensive, but they should be valuable to the employees. Later on (section seven), we’ll discuss some employee appreciation gifts that are affordable and scalable.

    Calculate employee turnover

    Calculate how much an employee turnover would cost the company. You can use online calculators to complete this step if need be. When discussing it with upper management, these figures are influential as justification for a building recognition program. Employee turnover costs can be directly compared with the contributions you receive from your current employees. This benchmark is a great way to measure if your business is getting more contributions from existing employees or paying more for new staff in a given year.

    Plan with scalability

    Start to plan rewards that are easily scalable. For example, gift cards purchased online could be done easily for one person, or fifty people, if need be. But a trip to Cuba may not be as scalable as that gift card. Remember that you won’t always please everyone with your chosen rewards – we all have personal preferences. But as they say, it’s the thought that counts. So keep it simple but impactful.


    Phase 2: Include and entice

    Once you have a plan in place and receive buy-in from your management team, it’s time to implement your program! But this can’t be done by just you. So, here’s how you get the program started effectively:

    Create a committee

    Build out a committee that will help you handle the formation of the program. Have a mix of both managers and employees on the committee. This way, you’ll receive the most valuable information from both sides of the coin. Try to make the committee as diverse as possible in terms of age, race, gender, job title, and background. This way, you’ll have more well-rounded suggestions and discussion points from your team.

    Divide the responsibilities

    Now that you have your committee start looking at each of the member’s strengths and play to them. For example, one employee may have excellent people skills. You may want to ask that employee to be in charge of spreading the word about your new recognition program. People are more inclined to be excited about doing a task (over and above their daily tasks) when they are in their comfort zone.

    Define a duration

    As much as committees are fun to be a part of, remember that sometimes people don’t want to be stuck with a responsibility forever, with no end in sight. The best way to tackle this is to put a line in the sand for how long this committee will be implementing the program. Try to break the program into phases, where the committee is in charge of phase one, which has six months. After that, readjust and realign based on your employee’s feedback.


    Phase 3: Practice and promote

    Colleagues are starting to talk about this amazing new recognition program! It’s time to get excited! Here are a few things to keep in mind during the launch and promotional phase:

    Advertise your program

    Ask your committee to create a few materials that will be shared company-wide about the recognition program. Try to think out of the box when it comes to promotions and advertising. For example, instead of sending only an email, rather share it over a social meeting or place an invitation card on each desk.

    Communicate it effectively

    Communicate the program to the entire organization and explain how it will work. This way, everyone gets one unified message about how rewards will work and what to expect. Include some key points in your next company newsletter, and promote the program on your intranet. Hold meetings about the program and host a Q&A session to answer any staff queries.

    Start rewarding

    People get excited about new programs and sometimes expect rewards quickly. It may be a good idea to let employees know, from the get-go, that not everyone will be rewarded at the same time. Have a plan in place for what criteria you’re looking at when rewarding and how this criterion will change as time goes by.

    Phase 4: Manage and monitor

    Don’t forget this step. It seems tedious – but it’s the most crucial phase. Once you’ve launched, you must speak to colleagues to find out what’s working and what isn’t. Here’s how:

    Monitor reactions

    When you go through the process of rewarding someone, analyze their reaction to the reward. Pay attention to how they feel about the reward. Find out if they feel their contribution was recognized in a timely manner or if it was a little delayed. This will help you understand if you’re on the right track with the rewards for their contributions.

    Ask for feedback

    Send out a feedback survey to understand what you’re doing right and what could change. Then take the results from employees and divide them into three parts:

    1. What was successful?
    2. What needs improvement?
    3. What needs a drastic change?

    Once you answer these questions, you will have a structure for the next phase of your recognition program.

    Adjust and re-launch

    Look at the program in terms of employee experience, employee feedback, logistics, and costs. Adjust any elements that aren’t working as well as you thought. For example, you may need to reduce the size of your recognition program due to insufficient funding available for the next quarter. You may also need to implement an effective employee engagement software that collates all data into one place and generates reports for you.

    Types of Employee Recognition, Rewards and Ideas

    A lot of leaders see this as one of the most complicated parts of a recognition program. But don’t worry – it really isn’t.

    You need to start by looking at what your organization needs for your team and your company goals. Everyone is different – so no plan should really be the same. All you have to do to get this right is to look at a few employee recognition ideas and best practices and choose which ones you think would be right for you.

    There are two types of recognition: structured and unstructured.

    Structured recognition:

    Employee of the month idea

    This is the most common recognition type and is often used within sales teams. Each month, leaders or peers select one employee as the top worker. They get to keep this title for the month, and every month, someone is selected. This creates healthy competition and motivation among colleagues.

    National employee appreciation day

    Every year, the first Friday in March is known as National Employee Appreciation Day (in the U.S. and Canada). This is a good opportunity for managers to recognize multiple employees and show their appreciation for their team. Share a gift card, or buy the team lunch on this Friday.

    Performance reviews

    Quarterly or yearly reviews are generally associated with a salary increase based on performance. Employee evaluation techniques help workers understand that their managers care about their performance and are happy to guide them through any hurdles they may have run into. It’s an opportunity for leaders to offer help and show appreciation to their team members in a one-on-one environment.

    Years of service awards

    Formal work anniversaries are generally recognized and rewarded by means of the manager sharing a certificate or gifts like money or jewelry (depending on how many years of service it is for). If you do use this as a type of recognition, make sure your years of service brackets aren’t too long. Five years is a long time to wait for an award.

    The bottom line? Structured recognition is where managers take action every few months.

    Unstructured recognition:

    Peer recognition

    This recognition is favored for its flexibility and frequency. Co-workers are able to show their appreciation at any time, using internal communication tools online. This type of recognition is quick, instant, and builds rapport amongst peers.

    Recognition on life events

    Small monetary values, gift cards, or lunch dates are shared during various life events. This could be anything from birthdays to a child’s birth or a housewarming gift. Employees love when companies recognize their professional and personal achievements, no matter what the celebration.

    The bottom line? Unstructured recognition is something that everyone in your company takes part in regularly.

    In Summary: What Successful Employee Recognition Means for You

    In the past, recognizing and rewarding employees was scarce. Now, employee appreciation ideas are on the rise, and you must jump on the bandwagon before losing your top talent.

    Modern employee development software solutions like Juno Journey are here to help you recognize staff frequently, cost-effectively, and fuss-free.

    So, continue to say thank you, give that high five, and take them out to lunch. But if you want to give them something more valuable in the long-run, take a look at our Learning Experience offering and get in touch if you want to hear more.

    We hope that this guide will help you take your first steps to an innovative and effective employee recognition program.

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