happy employee looking at phone

Companies use employee recognition as a strategy to improve morale, increase retention, and reward employees for their hard work. There are a number of employee recognition best practices that may improve the efficacy of your employee recognition strategies. Let’s dive into an exploration of the benefits of employee recognition, and how you can best use your resources to show your employees how much you care.

What is employee recognition?

Employee recognition is any activity or strategy employers use to show appreciation for their employees. Employers devote time and resources to employee recognition because doing so pays dividends in employee retention, well-being, and productivity. 

Employee recognition is worth investing in because of its benefits for employees and companies as a whole. It creates a tangible sense of meritocracy and a belief that financial and career rewards will come with hard work. It allows employers to foster a positive, supportive work culture– something that is notoriously difficult for employers to control in a typical, hierarchical corporate structure. When done well, it can give employees the sense that their employer truly cares about them, not just as a worker, but as an individual. In short, employee recognition may be the key to unlock inaccessible or difficult-to-navigate areas of personnel management.

Types of employee recognition

There are many different types of employee recognition, and in order for your employee recognition programs to be most effective, the right method should ideally be tailored for each individual employee’s needs, interests, and preferences. These types of employee recognition also come at a variety of price points to the organization in both financial cost and labor hours. Employee recognition best practices aren’t limited to those we list below, but here are the most common types.

Praise or shout outs

For many of us, words of affirmation are the primary way we prefer to receive care from others. According to Glassdoor’s Employee Appreciation Survey, 81% of people said that they would work harder if they received recognition for their hard work. Even if we aren’t the ones personally receiving recognition, seeing our peers get shout outs for their hard work is a mood booster. Praise also performs another valuable function in the workplace– it helps employees understand their employers’ expectations and thereby better navigate the workplace. While rules and employee handbooks may be the technical guidelines for employee conduct, in reality, each work culture has its own unstated expectations and idiosyncrasies. Feedback of any kind, particularly praise for certain performance, is helpful for employees navigating this gray area.

Extra vacation days

Even in organizations that offer so-called ‘unlimited’ vacation days, employees tend to treasure and carefully guard their time off. Most of us do spend the majority of our waking hours either commuting or at work, after all. Vacation days, even when spent in the dentists’ chair or simply relaxing at home, are a great benefit and crucial to employee well-being. So why not recognize employees’ hard work by rewarding them with extra vacation time? Unlike some types of employee recognition, such as material gifts, the reward of extra vacation time is overwhelmingly well-received and a powerful tool of employee recognition.

Company perks

If additional vacation time is out of reach financially, there are plenty of other corporate perks that may be lower-cost options. This category includes free and low-cost benefits that an organization can offer, which make an employee’s day-to-day work life more enjoyable. For example, a company perk could be a prime parking spot, free meals in the campus commissary, or an extended lunch break. It could mean time for a one-on-one lunch with the CEO, or an office with a nice view. Perks like these often seem to be distributed hierarchically without care for employees’ effort or hard work. So tying them to specific employee behaviors or achievements may help undo some of this perception of unfairness that sometimes exists when it comes to company perks.

Bonuses or one-time financial gifts

Money, in the form of spot bonuses or one-time financial gifts, can be a profoundly effective method of employee recognition. Unexpected financial rewards feel rare and special, and most people could use a little extra cash once in a while. It’s tough to go wrong with this one, because an employee can choose to spend the money from their bonus however they want or need. The main drawback to cash gifts is the tax requirement that comes along with them (with a few select exceptions).

Material gifts

Material gifts are one of the most common types of employee recognition. This category includes everything from subscription services to nice meals to fancy jackets embroidered with the company logo. It can be challenging to find the right type of gift for an employee, since there is truly no one-size-fits-all when it comes to employees’ interests and personal lives. Selecting the right gift for employee recognition purposes involves forethought, care, and knowledge of an employee’s interests.

Charitable donations

An employer may opt to make a donation to a charitable organization of an employee’s choice as a form of employee recognition. While this is less common because it doesn’t provide an employee with tangible, personal benefits, it’s still a great option for companies to give back to their community. Allowing an employee to choose where the money is donated shows that you recognize and respect their beliefs and the causes that are important to them. You could also make a larger donation on behalf of an entire team that you’d like to recognize, and allow the members of that team to collaborate to decide where they’d like the money to be donated.

Benefits of employee recognition

Employee recognition, especially when implemented broadly and with intention, can have benefits for individuals across an organization. Companies also benefit from their employees feeling more appreciated and satisfied at work. Here are a few of the key benefits of employee recognition.

  • It provides positive reinforcement for culture-building behaviors. Building a healthy, supportive work culture is notoriously difficult. As much as HR professionals and leaders may try to shape workplace culture from the top down, culture is actually an amalgamation of daily interactions and internal messaging. Rewarding behavior that aligns with company values is one great strategy to build a positive culture.
  • It may reduce burnout. Burnout is a highly complex issue with many causes, but strong employee recognition programs may help reduce burnout in the workplace. 
  • It prevents employee turnover. 57% of employees who quit in 2021 listed feeling disrespected at work as one of the reasons they resigned. While there’s no magic bullet for avoiding disagreements in the workplace, creating a culture of support, positivity, and respect through employee recognition can support positive, uplifting interpersonal relationships at work.
  • It may improve employee happiness and well-being. HR professionals see firsthand the effects that programs may have on employee well-being and retention. In a survey conducted by SHRM, 82% of HR professionals said that employee recognition positively impacts employees’ happiness. Still more said that it improves employee relationships (87%) and employee experience (89%).
  • It improves employee engagement and performance. A study by Deloitte found that organizations with employee recognition programs have 14% higher employee engagement and productivity than organizations without such programs.

Best practices for employee recognition

1. Communicate clearly.

Good communication is key to getting the maximum possible benefit out of employee rewards. When granting a reward to an employee, be sure to include a thank-you for their hard work, and a recognition of the behavior that triggered the reward. For example: Thanks for your hard work during the Albany project, Jackson. It would not have been such a success without your leadership and optimistic attitude. We appreciate you!

2. Prioritize the employee experience.

The employee experience should be the focus of employee recognition programs– at the end of the day, their experience is the reason these programs exist at all. Ask yourself: what type of reward would mean the most to this specific employee? What do I know they enjoy? How do I communicate gratitude in a way they can appreciate?

If possible, allow employees to choose what type of reward they receive through the employee recognition program. A feeling of agency, particularly at work where we often feel swept up in outside forces, can be a liberating reward in and of itself.

3. Avoid bias.

A good employee recognition program gives managers of all levels the autonomy to reward performance and behavior by their team members. But doing so does involve some risks; namely, that without training and oversight, some may distribute rewards in a way that is affected by their implicit or explicit biases. Not only is this unjust and potentially a violation of compliance regulations, it undermines the benefits that can come from employee recognition programs. Employees have a keen eye for favoritism and bias in the workplace. Bias in employee recognition programs can’t be tolerated, which is why we also recommend that you…

4. Train managers and leaders.

Training to help managers unlearn unconscious biases is critical to running a fair employee recognition program. So is training managers on the behaviors and values that the company overall would like to see rewarded across the organization. Consistency in employee recognition helps employees better understand which behaviors are rewarded and which are not.

5. Track progress and results.

Any initiative should include benchmarks for success and progress. Many companies use internal surveys to keep track of how employees feel and respond to different corporate initiatives.

Sometimes managers get caught up in day-to-day tasks and overlook opportunities to support and recognize employees. Fond’s rewards and recognition platform allows employers to track rewards given and received in order to promote consistency across an organization. It also provides data on which rewards employees choose most often, so you know which types of rewards are most effective for your people.

6. Think outside the box.

There’s no need to stick with the common conventions of employee recognition and gift-giving. Just because annual bonuses are the norm doesn’t mean that a spot bonus given unexpectedly at another time of year won’t also be effective. Some employees may find more meaning in a charitable donation made in their name than in a gift of material goods. A Deloitte survey found that 75% of people are satisfied with a simple ‘thank you’ as a reward for their hard work, but also that a portion of women prefer to receive a thank you in writing (perhaps as a result of the pervasive discrimination women still face in the workplace). And as always, allowing an employee’s preferences to guide your strategy is key to success.

When thoughtfully implemented, employee recognition programs can improve employee well-being, reduce turnover, and fend off burnout. Use these six key employee recognition best practices to make your employee recognition program consistent, inclusive, and effective. And if you’d like to learn more about how Fond helps our customers track and monitor their employee recognition programs, reach out to us today for a free demo.