Having so many opportunities for customization is one of the best things about designing your company’s employee recognition program, and also one of the most overwhelming. Abundant choices make it possible to implement employee recognition policies that feel perfectly tailored to your company’s unique needs—but they can also make it difficult to know where to begin.
With so many factors to consider, this article is a resource to set you in the right direction. It shares six essential questions for crafting employee recognition policies, as well as insider insight on how other programs answer them. Each of these key considerations will help you establish a solid foundation from which to build a bespoke employee recognition program.
1. Who can recognize whom?
Traditionally, recognition was a top-down practice, with managers delivering it only to subordinates. Today, many companies have evolved beyond that, enabling peer to peer recognition, peer to manager recognition, and even recognition that comes directly from the company.
There’s no right answer to which approach is best. That said, Gallup reports that 28% of employees say the most memorable recognition comes from managers, 9% say it comes from peers, and 36% say it comes from senior leadership (like a manager’s manager or the CEO). While most employees seem to skew towards thinking top-down recognition is most meaningful, it’s clear that preferences vary.
In answering this question, it’s also worth considering which groups tend to recognize most frequently. Across industries, Fond has observed approximately 48% of recognition coming from managers, 39% from peers, and 13% directly from the company. Managers seem to drive usage, but peers follow close behind.
Both memorability and predicted usage can help inform your company’s employee recognition policies. That, combined with your organization’s cultural climate, should help you make the right decision.
2. What behaviors warrant recognition?
After you’ve determined who can recognize whom, you will need to decide what participants should be recognized for. This is perhaps the most important criteria of all within your employee recognition policies. It determines which behaviors you will be reinforcing and influences the evolution of your entire company culture.
We refer to these selected behaviors as recognition occasions. Although most recognition exchanges will also be accompanied by a personalized note, recognition occasions are the broader categories employees will choose from when recognizing colleagues.
Given the impact of these occasions, it makes sense that recognizing core values is paramount. They account for approximately 17% of all recognition occasions across industries. In fact, value-based recognition is exceeded only by service awards, a more traditional practice that accounts for 24% of all recognition occasions. But whereas service awards are standard, and somewhat expected, values-based recognition is ad hoc and unique in its potential to profoundly impact culture.
All this is to say, if you’re unsure where to begin when determining what behaviors warrant recognition, core values are a brilliant place to start. Afterall, these are aspirational ideals meant to guide the operation of your entire company—why wouldn’t you want to use recognition to reinforce them?
3. What is the recommended point value for each occasion?
If you’re implementing a non-monetary recognition program, you can skip this section. If not, recommended points value are an excellent opportunity to distinguish tiers of recognition and drive extra impact in specific categories.
While core values and service awards are the most popular reasons for recognition, they still only account for 41% of all occasions—which means there’s a lot of variety within companies’ programs.
Imagine for a moment that you want to center your program primarily around core values, but also incorporate department-specific occasions, training incentives, and birthday recognition. A highly effective way to differentiate core values as the most central component of your program would be to suggest a higher points value for those occasions (perhaps 50 points) compared to others (maybe birthdays are 25 and the rest are 15).
Across industries, Fond has observed an average value of $20 associated with core value recognition. In contrast, welcome recognition (delivered immediately after onboarding) comes with an average value of $9. Incentives for completing things like training or certification come in much higher, with an average value of $60 across industries. Clearly, there’s lots of room for variation.
By creating different tiers of value within your employee recognition policies, you can apply your program to many use cases, but still maintain a focused emphasis on those occasions that matter most.
4. What will be participants’ monthly giving budget?
When outlining monthly giving allotments in your employee recognition policies, you can think backwards from recommended point values to determine what monthly giving budget will get you to the frequency of recognition you desire.
For example, say that on average each occasion lists a recommended value of 15 points. If you want managers to send 8 recognitions per month (a target on par with the industry average), you’ll need to distribute a minimum of 360 points per manager per quarter. Perhaps you anticipate a lower cadence with peers—for them, maybe the quarterly allotment is closer to 150 points.
If you truly have no idea where to get started, industry averages can provide helpful context. Overall, the average budget per employee per year is $159. That comes down to about $13 to be distributed to each employee each month, or $39 per quarter. Although these figures do provide some guidance, keep in mind that there is significant variation across industries.
Note that some companies choose to implement employee recognition programs that are completely non-monetary—recognition still carries socioemotional value even if there aren’t any points attached to it. Other companies opt to enable both monetary and non-monetary recognition. Among those companies, 26% of recognition sent by peers and 5% of recognition sent by managers is ultimately delivered without points. Including this as an option is a good idea, as it enables team members to recognize one another even if they’ve exceeded their monthly points allotment.
How you choose to fund your employee recognition policies will send your team members a message about how frequently they should be giving recognition. While it’s not advisable to mandate a certain number of recognitions per period, budgets do help establish expectations around frequency.
5. Which recognitions are scheduled? Which are ad hoc?
All recognition exchanges fall into one of two categories—scheduled or ad hoc. Scheduled recognition is expected. You can use it to celebrate things like work anniversaries or birthdays, and it’s an excellent tool for making sure you never miss these important milestones.
66% of companies with recognition programs use them to schedule service awards to acknowledge employees’ work anniversaries, and 38% use them to schedule birthday recognition. Although these recognition occasions are not creative, they’re critically important to acknowledge—imagine if nobody at work remembered to wish you a happy birthday!
In addition to scheduled rewards, most companies also enable spontaneous recognition that can be delivered at a moment’s notice. Recognizing a colleague for living up to company core values would fall under this category, as well as any other exchange that happens ad hoc. While expected recognition still boosts morale, unexpected acknowledgement has been shown to be significantly more motivating.
There are clear benefits to both types of rewards. In some unique cases, it makes sense to exclusively use one or the other but for most companies, a combination of both is ideal.
6. What rewards will be included in your catalog?
If employees are earning points through your recognition program, they’ll face choices on how to use their points. The last major decision you’ll need to make to shape your employee recognition policies is which rewards will be featured in your catalog.
Curating your rewards catalog presents an excellent opportunity to tailor your employee recognition policies to reflect your company culture and support your unique program goals.
For example, say that you have an objective of building team camaraderie. Perhaps you include an option for employees to redeem their points for group activities, like a team dinner or sporting event. Or if you’d like to instill a sense of philanthropy at your company, you could provide charitable giving options in which employees donate their earned points to a cause of their choosing.
Rewards catalogs can incorporate many categories, including experiential rewards, company-branded swag, luxury goods, every day services, career development resources, and much more. It’s best to incorporate a variety of options to ensure there’s something meaningful for everyone.
How: The Final Puzzle Piece of Employee Recognition Policies
Together, your answers to these six questions should help illuminate the “who”, “what”, “when”, “where”, and “why” of employee recognition at your company. The last major decision you’ll need to make to structure your program is the “how”.
Employee recognition programs tend to be more scalable, efficient, and user-friendly when managed through a dedicated employee recognition platform. Be sure to partner with a provider like Fond that offers you plenty of room for customization, that will enable you to implement clear employee recognition policies and execute an impactful program.