Why You Need an Employee Reward and Recognition Program That Works

Companies that pay their employees well, offer competitive benefits packages, and have employee recognition initiatives in place, like Employee of the Month awards or annual bonuses, can still struggle to retain talent and improve productivity.

If you or your employer is facing retention and productivity issues, implementing an employee recognition and rewards program might not be your first idea, or even your seventh. But with ample research showing that a lack of on-the-job praise and recognition is a leading cause of employee dissatisfaction around the world, it's time to circle back.

The proof is in the pudding recognition

Study after study shows that meaningful employee recognition leads to increased productivity, better employee retention, and greater business success.

In early 2022, Bonusly and OnePoll surveyed 2,000 Americans, all of whom had either been employed in some capacity over the last five years or were currently searching for a new job. Almost half (46%) of respondents had left a job because they felt unappreciated and another 65% admitted that they would work harder if they felt like their contributions would be noticed by management.

In February 2021, Gallup reported that only one in three workers in the U.S. and Germany strongly agreed that they had received recognition or praise in the past seven days for doing good work. Workers who disagreed, or had not received recognition in the past seven days for doing good work, were twice as likely to say they'd quit in the next year. 

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In April 2021, Gartner found that only 9% of Australian workers were considered ‘engaged’, meaning that they showed high discretionary effort and expressed high intent to stay with their current employer.

“Many [Australians] have been waiting for recognition for their efforts or a change of pace from their employer that simply has not materialized," said Aaron McEwan, a VP in Gartner's HR practice. Work-life balance, manager quality, and respect were the top three reasons workers gave for leaving an organization.

The findings of these studies are powerful, but they don't tell us how much recognition and what kind of recognition is enough to move the needle on retention and productivity.

What is meaningful employee recognition, anyway?

📗 Check out our Guide to Modern Employee Recognition for the full scoop

Have you ever received praise for your work that didn’t really feel like praise at all? Maybe it was delivered in the form of a backhanded compliment, or maybe the person recognizing you waited so long to say something that you couldn't even remember doing the thing they said you did! 

In many ways, bad praise can be worse than no praise at all. Employee recognition is meaningful and impactful when it's timely, frequent, specific, visible, inclusive, and values-based.

• Timely — The best time to recognize someone for a job well done is now, not at their annual review five months from now. Recognize your coworkers in the moment or as close to the moment as you can, ideally within 48 hours.
• Frequent — Remember those Gallup stats about workers in the US and Germany who had received praise in the past seven days for their work? Try recognizing your peers at least once every week.
• Specific — “You’re doing a great job” is such a vague compliment that it's practically meaningless. Choose a specific action or work product that you want to praise in order to show that you're paying close attention to your colleagues' contributions.
• Visible — The rule of thumb is “praise in public and reprimand in private.” When public praise is the norm in a workplace, it contributes to a culture of recognition for all employees.
• Inclusive — Employee of the Month programs are inherently exclusive and can be demotivating, as a result. Instead of celebrating one person's work, inclusive recognition helps everyone gets credit and praise for their contributions.
• Values-based — When you share positive feedback, consider how a person's contribution lines up with your company values. If your company culture is truly based on a shared set of values, reinforcing those values through praise should be a deep-rooted habit.

Giving recognition that hits all these points isn't too difficult, especially with a bit of practice. But helping others follow the same guidelines can be challenging without some kind of structure.

Operationalizing meaningful recognition

Employee recognition and reward programs need not be manager-driven. In many cases, peer-to-peer recognition is far more meaningful than top-down recognition. In that survey conducted by Bonusly and OnePoll in early 2022, 65% of the people we polled believe they’d be likely to stay at a job with an unappreciative manager if their coworkers and peers still recognized their work.

For our recommendations on operationalizing meaningful recognition, check out Chapter 4 of the Guide to Modern Employee Recognition.