Understanding Types of Employee Recognition and Rewards

Recognition and rewards vary from organization to organization, and how you appreciate employees depends on your unique company needs. Your team could be motivated by a company-sponsored outing, a thoughtful email, or a gift card to their favorite store. It’s up to you to understand how to most meaningfully appreciate your team members and with what rewards.

Types of Recognition

Bonuses

There are many types of bonuses, ranging from small to large.

Small bonuses, sometimes called spot bonuses because they’re given “on the spot,” are small monetary rewards given frequently by one colleague to another in recognition of a valuable contribution. Although small bonuses can be given by managers to their direct reports, they can also be given by other colleagues, and even from a direct report to a manager.

Small bonuses provide several unique benefits. Like spot bonuses, staff recognition in the form of bonuses can be given in the very moment that a valuable contribution is made by an employee. Employee recognition given in the moment has the greatest potential for impact, because the action is rewarded almost immediately, when it’s top-of-mind.

Because these bonuses are small by nature, everyone can give them out often, providing multiple positive instances of employee recognition without dramatically altering an employee's compensation.

Their on-the-spot nature dictates that spot bonuses are given at an irregular cadence, in contrast to annual and quarterly bonuses.

Written praise

Writing thank-you notes can not only show appreciation, but is tangible proof of an employee’s contributions. Written praise is a flexible method of recognition and notes of praise are almost universally appreciated, whether written or sent as electronic communication.

Verbal praise

Verbal praise is perhaps the oldest, and longest-standing form of peer-to-peer recognition in the workplace. Verbal praise is given by colleagues, generally in an ad-hoc fashion, in recognition of a staff member's valuable contribution.

Although nearly always informal in nature, verbal praise is occasionally solicited as part of a formal staff recognition program.

When should recognition be given?

We’ll cover the characteristics of effective recognition in a later section, but here’s a sneak peek of one of the main components—timeliness. It’s important to recognize employees at key moments, whether that’s right after a project has been completed, on their work anniversary, or even their birthday.

Events

Employee’s first day

Should you recognize employees before they even start working? We think yes. Besides, we think the stressful process of interviewing, negotiating, and making it through first days or weeks definitely deserves some kudos! The benefits here are twofold: new employees feel welcomed into the fold right away, and existing employees are able to break the ice immediately.

Birthdays

Birthdays are a special occasion for a majority of people. If you’re in a 9-5 job, chances are employees will be spending a good amount of that special day in the office. While everyone has different preferences around the level of attention they’d like to receive, it’s not a bad idea to show them that they are recognized and valued.

Employee Appreciation Day

Employee Appreciation Day is a semi-formal holiday founded by Bob Nelson, a founding board member of Recognition Professional International. Over the past 20 years, other companies have embraced the unofficial holiday, paying homage to their employees on the first Friday of March.

As a low-key “holiday,” Employee Appreciation Day is a great opportunity to recognize employees without the pressure of annual or quarterly reviews. Celebrate Employee Appreciation Day with small company-funded events like barbecues, office parties, or with fun decorations!

Milestones

Work anniversaries

Work anniversaries are one of the most common uses of modern employee recognition, but they're often poorly executed. We consider work anniversaries an epiphany moment, and they should be treated as such. Reaching a work anniversary is a key milestone when employees often reflect on their past, contemplate their future, and assess their well-being at their workplace. So receiving a simple gift card or plaque can feel impersonal, leaving an employee disillusioned about the work they put into the company.

A work anniversary should represent another year of a job well done, and should be meaningfully recognized. It’s a great opportunity to thank the employee for the specific impact they've made over the past 12 months and over the course of their career. But don't just say, "You've made a big impact this year." Explain exactly what the impact was, why it matters, and how crucial their work is to the team, the organization, and the people it serves.

Project completion

It’s always a weight off the shoulders when a project is completed, launched, or published, so this is also a great time to recognize all the work that went into the process. Be sure to recognize team members in a timely manner––recognition has much more impact in the moment than when it’s delayed.

Year end

A year end or annual bonus is financial compensation given to employees in addition to their base pay. Annual bonuses are given once per year, usually at the end of the fourth business quarter. They can be given for a multitude of reasons, but are usually based on goals, either the performance of the organization, the individual, or both. Depending on the organization or industry, annual bonuses are sometimes expected as part of an employee’s total compensation package.

Quarterly review

Quarterly bonuses are similar to annual bonuses, but are metered out more frequently, on a per business quarter basis. Quarterly bonuses are most commonly given as part of a heavily performance-based compensation model. Sales organizations or teams are common users of the quarterly bonus structure.

Building a successful recognition program

Now that you’ve got a solid understanding of what recognition is, why it’s important, and how it looks, you’re probably curious about how to build your own successful employee recognition program! We invite you to read "How Do I Build a Successful Employee Recognition Program?", where we'll teach you how to do just that.

We also invite you to learn more about Bonusly’s employee recognition and rewards platform and join us for a demo to learn more about how you can start building a recognition-rich organizational culture.