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How to Make Employee Incentive Programs Work for Your Company
Regular paychecks, a comfortable office space, and a few choice office snacks are important motivators for your employees to show up to work every day and do their jobs. (And free coffee never hurts, either!)
But what about when you want to encourage your employees to go above and beyond, and reward those who choose to do just that?
This is where a well-designed employee incentive program comes in. When you set up one (or a few) programs the right way, you’ll see an increase in productivity, engagement, and overall satisfaction with work, especially for your high performers.
How can you get your employee incentive program rolling? Find out in this guide.
What is an employee incentive program?
There are a few different ways to define an employee incentive program—which can get pretty confusing. How can you differentiate incentives from perks and benefits?
Employee incentive programs are designed to reward employees for going above and beyond in their performance with bonuses, prizes, or other incentives. Incentive programs can reward individual employees, a team, or department for their performance. These programs can reward employees on a regularly scheduled basis, like a year-end bonus, or be given on an ad-hoc basis when needed... or both!
And they’re not limited to encouraging productivity—incentive programs can be used to increase recruitment efforts, raise employee engagement rates, boost retention, promote company branding, and more. We’ve got plenty of employee incentive program examples coming up below, so check those out for more details.
It’s easy to confuse perks with incentives, because they both provide rewards to employees on the job. However, the big difference between the two is that perks go to every employee—there’s no performance requirement for the free coffee or the on-site wellness center.
But incentive programs are meant to reward performance, and so by definition they go only to a select group of high performers. Perks are certainly valuable in the workplace—they can help with recruitment and the overall employee experience. However, they’re not an incentive for performance.
How does an employee incentive program provide value?
Employee incentive programs are valuable for businesses large and small. They provide recognition and rewards for your employees who choose to excel in their work on an occasional or regular basis.
Things like paychecks and basic benefits are designed to compensate your employees for their regular work efforts, but they typically don’t create an incentive for excellent performance. And if your most valuable employees don’t feel that they’re being rewarded for their top-notch performance, or that they’re being rewarded the same way as someone putting in the bare minimum, they’re likely to put in less effort and become increasingly disengaged.
Best practices for creating a good program
Employee incentive programs can provide a lot of value for your business if you set them up correctly. That means sticking to a few key principles:
Begin with business goals
Your incentive program design should begin not by picking a type of program, but with some strategic thinking about what business goals you’re looking to achieve first with incentives. Do you want to increase engagement, raise retention rates, build your brand, or another goal? Your incentive program will be most effective if you align it clearly to the goals of your business.
Keep it simple, but challenging
Your incentive programs should not require a PhD in math for employees to determine what rewards they’re eligible to receive if you want them to be effective. However, that doesn’t mean you should lower the performance bar. Incentive goals should challenge employees in order to see real gains for your business and keep the program competitive.
Link pay to performance, not profit
Many organizations link employee pay and rewards to company profits. This might make sense on the surface—shouldn’t it encourage employees to contribute to the success of the company? But research shows that pay for performance is actually more effective at motivating employees because it’s much more within their control.
Keep it fair
Incentive programs and other rewards aren’t always a completely positive experience. If your employees sense that rewards and incentives are often going to those who don’t deserve them, or they’re being distributed unfairly, that can be actively demotivating.
Ensure you build in objective guidelines for reward frequency and amounts to avoid favoritism and unfairness as much as possible.
Reward employees with what they truly want
Incentives aren’t motivating if they’re not desirable. This might seem like an obvious point, but you’d be surprised how many companies miss the mark.
For example, in a previous role, one of my retention incentives was a giant frog-shaped lamp. It was... not very incentivizing. 🐸
Ensure your incentive program focuses on rewards employees really want, whether that’s a bonus, a flexible catalog of rewards, or time off.
Build in flexibility
As the last two decades have made very clear, sometimes tough economic times hit even when your employees are performing at their best. It’s important to create a program that allows for flexibility in rewards when times are temporarily tough, but you also don’t want to stop rewarding high performers entirely—or you might see productivity and engagement suffer, too.
10 examples of employee incentive programs
Incentive programs can take so many different forms—and that flexibility is what makes them so useful for every type of business. But with so many options, how do you know where to start?
These examples should give you some inspiration for starting your own programs.
Rewards and recognition
Having a strong rewards and recognition program in your workplace is absolutely vital for employee engagement and motivation. Programs that reward employees frequently and effectively for doing well on tasks small and large help employees feel seen and recognized for their hard work.
Bonusly is all about enabling frequent, real-time, 360-peer recognition and the results are amazing. Companies that use Bonusly see improvements to company culture, employee engagement, and even morale.
Profit-sharing
Allowing your employees to share in the good times when profits are high helps them feel connected to the success of the company, which is important for employee engagement. You can choose to disburse profit-sharing rewards in retirement plan contributions, and these contributions can be lowered when the economy or your business is having a lean year.
Professional development reimbursement
Encouraging and rewarding your employees for learning and growing in their careers can increase retention rates and help your employee grow professionally. Partial or full tuition reimbursement or a budget for professional development activities is a popular incentive program at many companies.
Recruitment and referrals
If you’re struggling to find and hire great candidates, you’re not alone right in this competitive labor market! Why not reward employees for referring strong candidates to boost your recruitment efforts? You can offer an incentive program that provides a bonus for successful referrals.
Retention
Encouraging your employees to stick around for years to come is a great idea—turnover is very expensive, as is losing your top performers. You can use Bonusly to set up automated anniversary awards for employees to thank them for another successful year with your business.
Annual incentives
Popular mostly among large corporations (but small businesses can make it happen too!), annual incentives typically refer to bonus opportunities and merit raises tied to performance.
Bonuses are more effective when they’re tied to performance, so this is a great chance to reward employees at the end of the year for their hard work.
Extra time off
Your highest performers are likely working very hard every day—why not incentivize them with some extra time off where possible? This could be in the form of flexible scheduling for your top team members, some extra PTO after completing a project where long hours were required, or a summer Friday off at the end of a busy summer.
Project bonus
When a group of your employees spends weeks or months working hard on a big project, they can feel exhausted by the end. Rewarding their hard work with an incentive like a one-time bonus or thoughtful gift makes them feel appreciated, and encourages them to work just as hard on the next big project that comes their way.
Charitable contributions
This is an especially compelling incentive for younger, socially-conscious employees—offering a contribution to the charity of their choice as an incentive for a job well done. For example, Bonusly allows users to donate to a charity of their choice through our app!
Employer branding
You don’t always need to incentivize employees with cash and bonuses—you can also incentivize them with some cool company swag. Not only will they feel appreciated, but when they wear their gear around town or post it on social media, you’ll also increase your brand awareness. Two benefits from one incentive!
Ready to start building your own employee incentive program? There’s a great toolkit from SHRM that can get you started on the right path.
Key Takeaways
Creating an employee incentive program has significant benefits, for both your business and your employees. Your company gets to reap the rewards of increased engagement and productivity, while your employees feel recognized and rewarded for the hard work they put in and the excellent results they achieve.
Looking for a recognition and rewards platform that offers fun, personal, effective rewards that employees actually want for your incentive program? Check out Bonusly today!
Read Next
Bonusly maintained its #1 overall ranking in the Employee Recognition category and earned 'Leader' and 'Momentum Leader' badges for both Employee Recognition and Employee Engagement categories.
Summer came and went and the Fall G2 report is here. (Though for our summer fans out there, don’t fret. We still have 11 more days until the solstice! 😎)
We’re proud to report that Bonusly has earned 69 awards as we head toward the end of the year. 🍂
The G2 Fall Report—what it is and why it matters
Every quarter, G2, the leading business product review and ranking platform, releases a comprehensive report rating companies in the recognition and engagement industry. The report is based on reviews from verified users that showcase an unbiased view of the world’s best software companies.
G2 uses a complex algorithm to evaluate platforms and tools, taking into account in-depth, authentic reviews and data collected from various online sources. In fact, G2 recently updated its algorithm to double-down on its efforts to rank software that business can truly trust.
→ Ready to see for yourself? Request a free and fast demo of Bonusly.
Bonusly #1 in employee recognition…again :)
G2 has recognized Bonusly as the leader in the Employee Recognition category for the 7th consecutive season! This means the world to us.
We’ve been working hard since 2013—yes, we were the first recognition and rewards solution to enter the market—to help companies amplify daily wins and foster authentic connections.
Why do we care so much? Because companies that prioritize effective recognition are more successful and their employees are more fulfilled. Meaningful employee recognition enables high-performance, drives collaboration, increases retention, while saving time for everyone across the organization. We call that a huge win.
But don’t take it from us. Hear from some of our amazing customers:
“Employee recognition is something every company talks about; but doing it in a way that makes it easy and available to all employees can be really hard. Bonusly has allowed every employee at Headspace to feel empowered and energized to recognize their peers and allow others to share that recognition. During these times of remote work and the global pandemic, the Bonusly platform has shown to be an invaluable asset."
- Rick Jensen, Chief People and Places Officer, Headspace
"I wish I invented Bonusly. Seriously. This is the best way to give peer recognition and immediate positive reinforcement across an organization and within a team. It's so much more effective than yearly/quarterly 360 reviews.” - Tim Myer, VP of Engineering, Discuss.io
Bonusly continues to lead in employee engagement
We’re also honored to be named a leader in G2’s Employee Engagement category. Why does this matter? Companies with highly engaged teams outperform their competitors by 147%; meanwhile, low-engagement teams experience turnover rates that are 18% to 43% higher than highly engaged teams.
Effective recognition directly impacts employee engagement, and nearly 80% of our customers recently shared that using Bonusly improved employee engagement on their teams.
Said another way: investing in your employees is an investment in business success.
"In the six months since adopting Bonusly, our eNPS score jumped from 72.2 to 82.1." - Daniel McAdams, President, Andiamo
Bonusly remains strong in implementation and usability
Best-in-class employee engagement solutions are intuitive and easy to use, and automate time-intensive processes—reducing admin overhead and saving significant hours each week.
Bonusly is easy to use and accessible to all users. This matters. Our goal is to make recognition a habit on teams, and this can’t be possible if Bonusly is not an intuitive and inclusive solution for everyone.
Our recent customer survey revealed that the average company using Bonusly is up and running within one month, and the average Bonusly admins spends less than 1.5 per month administering Bonusly! Best yet, users who switched to Bonusly from a manual recognition solution decreased time spent administering recognition and rewards by 36%.
"I used to spend up to five hours a week managing points and rewards manually. Today, I spend next to no time on the process, apart from the time I spend recognizing others myself. Bonusly has lifted an enormous burden from my shoulders." - Daniel McAdams, president at Andiamo
A note of gratitude to our customers
We are grateful for every Bonusly customer who’s taken the time to share their experience on G2. Writing a review takes time and effort and we appreciate each and every person who writes one. Check out our 2,400 + reviews!
We’re continuously releasing new and exciting updates, and would love for you to discover how Bonusly can help your team. Request a free and fast demo of Bonusly with a Bonusly specialist today.
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Everyone has weeks where you check off everything on your to-do list with ease—and weeks where you’d really rather be anywhere but at work. 🌴🍹
It’s normal for employees to face dips in motivation, but it becomes a problem when your colleagues are consistently disengaged. In fact, Gallup recently reported that employees who are not engaged cost the world $7.8 trillion in lost productivity.
Employees who are not engaged or who are actively disengaged cost the world $7.8 trillion in lost productivity, according to Gallup's State of the Global Workplace: 2022 Report. That's equal to 11% of global GDP.
If that's not enough, the most recent report from Gallup found that a majority of the world's workers are currently disengaged, and half are looking to leave.
That's why we gathered some helpful tips from experts on how to motivate your employees to help increase employee engagement and experience productivity and retention gains.
These tips aren't specific to any industry, and most of them are either low or no cost. They can be applied in small establishments, franchises, startups, and Fortune 500 companies.
Looking to build stronger, more engaged, and motivated teams this year and beyond?
-> Download the Free Guide: 3 Steps to Building Engaged, Resilient Teams
Let's get started with one that has the potential to change everything: recognition.
1. Recognize great work
One of the most important factors that contribute to employee motivation is how often their hard work gets recognized. 70% of employees say that motivation and morale would improve massively with increased recognition from managers. After all, if an employee produces exceptional results but their hard work isn't recognized, why would they continue to be a high-performing employee?
Bonus points: there are other surprising benefits of employee recognition including improved working relationships, employee engagement, retention, and even empathy. 💚
It's not just important to recognize great work. How you recognize your team's contributions has a significant impact. Employee recognition shouldn’t just be an annual bonus at the end of the year—it should be meaningfully and frequently given.
Meghan M. Biro shared excellent advice on effective recognition. Here's one of our favorite tips:
Money is appropriate much of the time, but it’s not the only—or even the most effective—motivator. Treat employees as valued team members, not as numbers.
2. Set small, measurable goals
We've all had projects that just drag on and on, and seem to never end. It can be demoralizing to be stuck in a rut, which is why seeing how you've made visible progress feels so good. It's also a clear indicator that our work is making a difference.
We met with Walter Chen, co-founder of iDoneThis, who shared some great insights into the importance of clear goal-setting and tracking progress. You can check out full the interview here.
Setting clear, achievable goals provides a real boost of motivation each time one is conquered—and it keeps teams on the right track. You can magnify these effects by taking the next step and celebrating those achievements.
3. Celebrate results
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Part of what makes setting small and measurable goals so important is that it provides plenty of opportunities to celebrate your team’s hard work.
This doesn't mean you need to give a standing ovation to every employee who made it to work on time—but it is crucial to let everyone know exactly how (and how much) each of their contributions moves the organization forward.
Be specific in your applause. Don't just tell Marie "good job." Don't even stop at "great job on the new email campaign!" Applaud her success and when you do, tie her to the greater picture. For example: "Great job on that new email campaign—it’s going to really grow our community and nurture our customer pipeline."
4. Encourage teamwork
Teamwork is one of the greatest motivators out there. Knowing that your colleagues have your back and are your cheerleaders is an amazing feeling. When your motivation dips, your teammates are right there with you, rooting for you as you complete your next project. 🎊
In fact, 54% of employees say a strong sense of community (think: awesome coworkers, celebrating milestones, working toward a common mission) was a big reason they have stayed at an organization. Plus, organizations that communicate effectively are 4.5x more likely to retain the best employees.
One of the best ways to encourage teamwork is to start at the foundation with a working agreement. Working agreements are guidelines created by a team to set group expectations, provide ways to collaborate, and establish a positive team atmosphere.
5. Stay positive
Let’s be real—we’re a little suspicious of people who are happy all the time. 🤖
Negative emotions have their place, and some really good organizational changes can stem from having tough conversations. However, it's important to find ways to inject positive experiences into your team's interactions to create a net positive workplace.
Why? Because it’s actually a competitive advantage to have happy employees. Research shows that happy employees outperform their competition by 20% and generate 37% greater sales. 🤑
It turns out that happiness and positivity play a greater role in the success of your business than you'd ever imagine. If you're not fully convinced yet, take a moment to view this hilarious and fascinating presentation by psychologist Shawn Achor, explaining why:
A simple shift in bias toward positivity and happiness can have an immediate impact on your work experience and relationships, which are major factors in success, motivation, engagement, and productivity.
Go ahead and Tweet this! A simple shift in bias toward positivity and happiness can have an immediate impact on your work experience and relationships, which are major factors in success, motivation, engagement, and productivity.
Looking to build stronger, more engaged, and motivated teams this year and beyond?
-> Download the Free Guide: 3 Steps to Building Engaged, Resilient Teams
6. Stay fueled
It's hard to stay focused and driven when you're hangry. That's why it's so important for everyone to stay fed, hydrated, and in some cases, caffeinated. ☕️
Unfortunately, it's common for employees to become so busy that they can barely squeeze in time for lunch. That's not great for their health and even worse for their productivity. Not convinced? Read more on food's crucial role in employee well-being and engagement.
Keeping healthy snacks around the workplace—or providing a food stipend for remote employees— is an easy way to help your team maintain energy levels throughout the day. The cost of providing them will likely be offset by your team's increased productivity.
If you don't have the time or resources to manage this on your own, there are some great services that can help you keep your office stocked with healthy snacks. Our friends at Caroo will even drop a curated box of healthy snacks right at your company's or your employees' front door. When the Bonusly team was working in an office, we'd get a Fruit Guys delivery every week. It was a godsend at 3 p.m. or whenever we needed some fuel to power through the rest of the day!
Tip! If you want to motivate remote employees, Caroo offers custom care packages that you can curate with company swag, home office gifts, and healthy snacks to send a little love their way!
7. Take regular breaks
Banging your head against a problem for three hours is rarely productive. Stepping back and taking a moment to recalibrate isn't just helpful in staying motivated—it's also important to your health.
Go ahead and Tweet this! Stepping back and taking a moment to refresh and recalibrate isn't just helpful in staying motivated, it's also important to your health.
Sitting all day isn't good for you, and neither is working nonstop. Especially for remote workers, taking a short break every hour or two can have a positive effect on both your mind and body (work-from-home burnout is real!). Don't forget to get up from your desk and grab some fresh air!
Get up, stretch your legs, rest your eyes, and come back to work with a refreshed mind and body.
8. Stay healthy
This brings us to our next topic: staying healthy. As we learned in our interview with Button's Stephen Milbank, sharing is caring, but not if what you’re sharing is germs. 😷
When you’re ill, take a sick day! It's unlikely that you'll be getting any of your best work done when you can hardly hold your head up, and not taking the time to rest will only prolong your sickness and prevent your body from recovering.
Make sure the policies you're instituting aren't keeping people from taking the time they need to stay healthy. Think about the way you approach time off, medical benefits, and employee wellness. The stress and frustration from worrying about taking sick time can lead to disengagement and cost companies across the world billions of dollars each year.
A generous time-off policy or options for more flexible schedules or remote work might seem expensive at face value, but it can actually save your company quite a lot of money in lost productivity, poor attendance, and suboptimal engagement.
9. See and share the big picture
A large part of understanding the purpose behind your work is seeing how it fits into the larger picture. You can help boost motivation in the workplace by ensuring your team understands how each of their efforts impacts the organization, customers, and the community.
Completing a task usually provides a small sense of accomplishment, but knowing how that work helped others is the real antidote to disengagement.
Need more proof? Check out Zach Mercurio's talk on meaningful work:
10. Be transparent
Every relationship, including work relationships, is built on trust. Defaulting to transparency is one of the best ways to encourage an atmosphere of trust between you and your team and a team that trusts you will be more motivated and engaged with their work.
Transparency also helps ensure that everyone is working with the same information. That in itself can benefit the team.
11. Provide clarity
In order to be motivated about your work, it’s crucial that you actually understand what your goals and objectives are. For many employees, that understanding starts with transparency in the workplace and ends with clarity. Without clarity, transparency begins to lose its effectiveness and motivational power.
Make sure you're giving everyone a clear and concise mission they can get motivated about in the first place because it's nearly impossible to invest genuine motivation into something you're unaware of, or confused about.
12. Envision and share positive outcomes
It's easier to achieve success when you can envision it. Professionals of all types, from athletes to musicians and CEOs, all practice this technique to improve their motivation. Luckily, if you're providing a clear objective, you're already more than halfway there.
Help the team understand what it would mean to achieve that objective. When someone makes real progress toward that objective or outcome, share that progress as a source of motivation for everyone.
13. Find purpose
Although it's commonly stated that millennial employees are motivated by purposeful work, that's really true of most employees. Purpose is a vital factor in employee motivation and it starts with finding meaning in the work they do every day.
Erica Dhawan explains in an article about motivation she wrote for The Muse. She describes why it's so important to take time to explain the purpose behind the work you do:
Another key to staying motivated is knowing that the work you’re doing makes a difference in some way—recognizing the impact you’re making on your clients, company, or the world.
Looking to build stronger, more engaged, and motivated teams this year and beyond?
-> Download the Free Guide: 3 Steps to Building Engaged, Resilient Teams
14. Loosen the reins
Autonomy and flexible work schedules are incredibly effective motivators. Giving employees more agency around when and how they get their work done can actually improve their efficiency, and help keep them motivated.
In her article for Monster.com, Roberta Matuson provides a great framework for getting started on the path of employee autonomy:
Tell your employees what needs to be done by what deadline; allow them to decide when they will do the actual work. For some, that may mean coming in early; for others that might involve working on the weekend.
The key here is that you're giving employees the freedom to work on their projects when their motivation is strongest, not just when they're in the workplace.
Giving employees more control over their work also helps eliminate one of the worst enemies of motivation in the workplace: micromanagement. It can also help employees build resilience.
15. Provide a sense of security
We're not talking about hiring a bouncer for your office (although you should make sure your employees feel safe at your workplace!). We’re talking about employees feeling secure enough to show their full selves at work.
Psychological theory suggests that there is a hierarchy of basic needs that people require before they can be motivated to reach their full potential. Security falls right beneath physiological needs like food and water.
Once employees feel secure, they're more likely to be motivated to reach and further stretch their potential.
16. Power pose
Your posture not only says a lot about your motivation levels—it can actually impact them. Amy Cuddy gave an outstanding TED presentation about what your own body language can tell you, and how it affects your mood, your work, and your interactions with others.
Take a moment to think about your own posture, and the postures you're seeing around the workplace. What are they saying? If what they're saying isn't positive, try experimenting with different postures, and see how they impact your overall motivation.
17. Offer small, consistent rewards
Rewarding employees for their hard work is a motivational rule that nearly goes without saying. However, there are several ways to go about doing that, and some are more effective than others.
Annual bonuses are a common way many employers reward employees for their hard work. Unfortunately, they don't often provide the motivation they're designed to. An annual bonus perceived as routine, disappointing, or unfair can even damage motivation in the workplace.
Providing smaller, more consistent rewards is a great way to boost motivation consistently over time.
Looking to build stronger, more engaged, and motivated teams this year and beyond?
-> Download the Free Guide: 3 Steps to Building Engaged, Resilient Teams
18. Change the scenery
Sometimes a small shift in scenery can provide a big shift in motivation. If it's possible, think about how the environment your team works in impacts motivation. If there aren't many sources of natural light coming in, it might be valuable to step outside together from time to time.
Spending even a few moments in different surroundings can provide a new perspective, and often a noticeable boost in motivation. Consider taking your team on an offsite or retreat, and notice how their spirits could lighten after a day working outside of the office. ☀️
19. Practice and promote mindfulness
Taking time out of your day to slow down and practice mindfulness might sound like it would negatively impact productivity, but in many cases, the opposite is true.
Many of us work in jobs where stress is a matter of course, but as the Harvard Business Review staff explains in their article Mindfulness in the Age of Complexity, "Stress is not a function of events; it’s a function of the view you take of events."
Embracing mindfulness at work can improve productivity and motivation by providing the perspective we need to see that.
20. Have fun!
Not every task at work is going to feel like a day at Six Flags. That's okay. What's not okay is having a team that feels like every day is a slog. You don't need a ping pong table or a kegerator in your office to make work fun. Find little bits of fun in everyday activities, and focus on what it is that makes working in your organization great.
You and your team will be amazed at how motivating a little bit of fun can be.
Bravo, you made it through the list! 👏
It seems like you’re really motivated to improve motivation at your workplace. Your team is lucky to have someone who cares about them and wants to help them be more meaningfully engaged with their work. 😍
If you want a more in-depth look into how HR teams, managers, and leaders can inspire employees to be motivated, stronger, and more flexible—especially in times of ongoing change, read our latest guide.👇
Originally published on October 26, 2022 → Last updated March 1, 2023
Recognition gets a whole lot of airtime these days when we’re talking about employee experience, engagement, retention, and everything else that makes businesses succeed and people perform at their best. (Bonusly included—we’ve got a whole section on our blog dedicated to the topic!)
But with all the much-deserved love given to recognition, another equally important element of the employee—and human—experience is often overlooked: appreciation. Let’s dive into why appreciation is not the same as recognition, why they’re more powerful together, and why your business should embrace appreciation to succeed.
Recognition vs. appreciation
Too often, recognition and appreciation are used interchangeably. And while they’re certainly connected, there’s a vital difference in the two concepts that matters if you’re trying to create a workplace where everyone feels seen, supported, and engaged.
Here’s the breakdown: recognition is about what someone does—the results they get, the milestones they hit, and the progress they achieve. Appreciation, on the other hand, is about who someone is—the work they put in, the way they collaborate with others, and the way they make your team and your company a better place to work.
Appreciation is a way to show gratitude for a person's value, and recognition is a way to show gratitude for their actions. Recognition is conditional upon achievements and results, while appreciation celebrates peoples’ intrinsic selves.
While recognition and appreciation differ, you need both elements to create a company where employees enjoy working, and where they’re motivated to perform at their best. In fact, they work better when paired. But since appreciation gets a lot less buzz than recognition right now, let’s cover why it deserves to be a higher priority for every business.
Why appreciation matters at work
Recognition is, of course, critical to the success of any company (just check out all the data on the ROI of recognition for proof). But there’s a natural limit to how much recognition you can give people, not everyone can get the maximum bonus, an annual promotion, or an award. Plus, your employees can work hard and work well and still not achieve the desired result, and recognition would feel inauthentic.
Appreciation, however, can go to everyone, all the time, just for being themselves. Let’s take the example of an employee who led a team to get an innovative new project off the ground. It took months of hard work, strategic thinking, and leadership, but due to external market conditions, the project didn't succeed. The employee’s dedication to the task and the team merits plenty of appreciation, even if the results don’t warrant recognition.
And imagine you’re that employee, feeling discouraged and down after putting in those months of work. Even a small gesture of appreciation—a handwritten note, a kind email—can mean the world, because it shows that the company, and their managers and peers, value them as a person, not just for what they achieve.
How to balance recognition and appreciation
All this talk about how amazing appreciation might seem like it’s more important than recognition, and that’s not true. They both play an absolutely vital role in employee engagement and retention, and generally in creating a company that people love to work for.
Recognition is critical because, of course, you’re running a business and you do want to reward outcomes and results. You have targets to hit, and recognition helps you celebrate the people who take your business across that finish line. Plus, employees also want to be recognized for the results they produce when they’re successful—it feels great to hit those milestones and reap the rewards.
But unfortunately, appreciation is missing in many workplaces, and so the balance is tilted towards rewarding results and accomplishments only. This can leave many hard-working employees feeling lonely and discouraged more than they should when something doesn’t pan out as they hoped.
Finding a way to encourage managers, leaders, and colleagues to both recognize and appreciate employees begins with effective communication about why both elements are essential. Let people know what you expect of them, and why it matters from both a human and a business perspective, and you’ll begin to build a better workplace culture.
The business case for appreciation
Appreciation is not about giving participation trophies for simply showing up—that would be inauthentic, and that’s the opposite of effective appreciation. Plus, accountability and standards still matter when giving appreciation. It’s really about ensuring that everyone in your workplace feels like they’re valued for their whole selves, not just their contributions to the quarterly quotas you’ve set.
And this feeling has more benefits than giving everyone a warm, fuzzy glow (although that’s lovely!). Psychological safety is a term that’s used a lot because more and more organizations understand that it’s a key component in creating innovative cultures, and it can sound complex. But at its core, it’s about creating group trust—knowing that you can make a mistake or fail and still be a valued member of your team.
Without that feeling of safety, taking risks is frightening for employees at all levels. Appreciation can foster a culture of continuous learning and trying new things because your people know that they don’t need to fear failure; they’ll still be welcomed and celebrated and secure even if the risk they took doesn’t pan out.
When we work in a place filled with people at all levels who we know care about us, we not only want to work harder—we want to push the envelope (intelligently) and see what we can do for the company, our colleagues, and our leaders.
And that combination of recognition and appreciation gets better results than recognition alone. According to a study by the Haas School of Business at UC Berkeley, when people were recognized for work they did well, they were 23% more effective and productive than those who weren’t recognized. Yet, when people felt valued and cared for by the team—appreciated, in other words—they were 43% more effective and productive than people who weren’t valued.
Speaking of leaders, appreciation isn’t any less valuable for them. In fact, managers and leaders often get the least amount of genuine appreciation (not recognition or compensation based on their position and power, but pure appreciation for who they are). It can be extra meaningful to deliver some well-deserved appreciation to those above you, as long as it’s done without an ulterior motive.
The takeaway
While appreciation is not a brand-new or groundbreaking idea, it’s often sorely missing in our workplaces, and that makes them a less pleasant place to be. Adding appreciation into your recognition strategy can make a big difference in your employee experience and your retention rates too—people tend to stay in workplaces that reward both results and everything else they contribute to the team.
Looking for a way to make recognizing your employees’ accomplishments and appreciating everything else they do easier and more instinctive? That’s the key to making both elements more frequent so they become an integral part of your company culture. Bonusly is here to help—see for yourself.