The Current State of Employee Recognition

A recent study showed that a stunning 79% of employees surveyed felt undervalued, mainly due to a lack of recognition. So, if your company hasn’t yet taken steps to keep your current employees engaged and happy with a well-constructed recognition program, it’s high time you started. To make matters worse, today’s employees aren’t reluctant to share how they’re treated at work with the public — or on career websites like Glassdoor, which prospects often consult during a job search.

We praise our friends, family and children when they do something well. Why don’t we do the same thing in the workplace? A survey by Glassdoor confirmed the enormous power of recognition: more than 80% of employees said they were motivated to work harder and stay at their jobs longer when they received appreciation for their work.

When it comes to recognition in the form of feedback, kudos, or tangible rewards, no group craves it more (and more often) than those reportedly “hard-to-please” millennials. The truth is, millennials are extremely creative and hardworking but are more likely to work on their own terms. Although older generations adapted to the workplace, millennials expect the workplace to be adapted to them. They expect the workplace to align with their personal vision of what the company stands for: what they feel they need to be productive and engaged at work.

40% percent of millennials say that being a leader is important for their jobs, but only 7% of companies surveyed by Deloitte said they had strong programs to build millennial leaders. Now, couple that statistic with more general findings around recognition: only 17% of employees believe their managers know how to recognize them well, and only 14% of organizations even provide managers with the necessary rewards and recognition tools to do so. Clearly, there’s a lot of work still to be done to bring those percentages up.

There are a few basic reasons why employee recognition — especially for millennial workers — is imperative to employee engagement and business success. Let’s explore that in the upcoming chapter.

Why Employee Recognition Matters for Millennials

If there’s such overwhelming evidence that recognition programs are a huge factor in turning employees into advocates, a valid question would be: “Why haven’t more companies implemented them?”

Surprisingly, three out of four companies actually have recognition programs, but only 58% of employees believe those programs exist. That huge knowledge gap is one of the key things companies need to address if they want to build a dedicated workforce. Recognition programs are actually on the rise. In 2015, 81% of companies have recognition programs compared to 76% of companies in 2013.

So why is recognition so important in the first place? The reasons range from what motivates us as human beings to what makes us decide to work for company X versus company Y. So, before we start talking about millennial recognition specifically, let’s do a general overview of why workplace recognition makes such a difference.

The Need to Be Appreciated Is Human Nature

According to the classic psychology “Theory of Human Motivation” (often referred to as “Maslow’s Hierarchy”), the need to be appreciated and the need to belong are two of the most important human needs. Maslow describes the first as the need to be respected and have self-esteem. The second is the need to be accepted among social groups, including co-workers.

There’s also something called the “trust hormone”— the oxytocin humans create when they feel loved or appreciated. Recent research shows that people who work under the influence of oxytocin actually perform better.¹¹ Recognition programs that appeal to these needs make people feel good; as a result they work harder and are more likely to look after their peers, customers, and the business overall.

Recognition Is Good for Business

There’s mounting evidence that recognition programs can pay off in tangible ways when it comes to a company’s bottom line. For example, one study found that organizations with the most sophisticated recognition practices are 12 times more likely to have strong business outcomes. That type of positive result can extend beyond the walls of the company as well; in organizations where recognition occurs, customer service is reported to be about 14% better than at companies where it doesn’t. And nothing will keep customers happier — and more loyal — than amazing service.

Recognition Inspires Employees to Go Above and Beyond

If you’ve been in the workforce for a while, you’ve probably encountered a few people who just want to do their jobs. They’re the ones who stick to the basics spelled out in their job descriptions. If that sounds familiar, then it’s probably no surprise to learn that 40% of employees who don’t feel meaningfully recognized aren’t willing to go above their formal job responsibilities.

Now contrast that with the more than 85% of employees who said they’d be willing to work harder if they felt recognized. Those findings make the case for building a comprehensive recognition program that can turn all those “it’s-not-my-job” employees into valuable “how-can-I-help” employees who will embrace a flexible, appreciation-rich corporate culture.

Recognition Encourages Employees to Do Great Work

As we mentioned earlier, the need to be appreciated is one of the most basic human motivations. That means tangible recognition has the potential to do much more than simply make people feel happy, although that’s definitely important when it comes to employee satisfaction (more about that later). In fact, 37% of employees in a recent survey said recognition was the most important thing their company could do to cause them to produce great work. Recognition practices can also boost employees’ commitment to a company and its success, which is why those who are the most committed reportedly perform 20% better than those who aren’t.

A Culture of Recognition Creates "Sticky" Employees

Employee retention is the name of the game for companies that want to survive—and ultimately thrive—in today’s competitive marketplace. The best employees are fielding unsolicited recruiting offers every day. That’s why it’s in your best interest to keep employee turnover as low as possible.

Companies with recognition programs report an employee lower turnover rate by 23.4% than those without such programs. Even more valuable, however, may be building an intentional corporate culture built around recognition. According to Forbes, companies that rank in the top 15% of building a “culture of recognition” have 46% lower rates of voluntary attrition. And remember those over-performing committed employees we mentioned earlier? They’re also 87% less likely to leave an organization, proving there’s a strong connection between employee engagement and employee loyalty (or “stickiness”). What company wouldn’t want that?

Recognized Employees Mean Happy Employees

To anyone who still doubts whether employee happiness matters, we offer the following proof from a new workforce report: happy employees are more productive, bring in 37% higher sales, and clock in three times the amount of creative time at work. And making people happy at work is where recognition programs and practices can make a real difference. For example, employees who have been recognized for professional performance in the last 6 months are 16% more likely to be happy at work.

More important, happy employees turn into strong employer brand champions. They’ll be inclined to post positive comments about your company and its culture where it matters most to your recruiting efforts: on social media or on career websites like Glassdoor.

When designing a recognition program, however, make sure it isn’t just a one-way process that works from the top down. Although being appreciated by management and executives is something employees welcome, employees who were able to give recognition to others were reportedly twice as engaged as those who weren’t able to do so.

Setting Your Recognition Program Up for Success

Now that we’ve looked at how recognition can have a huge positive impact on employee productivity and retention, a company’s bottom line, and even recruiting success, it’s time to look at how to craft an effective program. The truth is, there’s no one-size-fits-all when it comes to recognition programs, especially because Generation Y millennials — adults ages 23 to 39 in 2020 — currently make up almost 40% of the U.S. workforce and will comprise an estimated 75% by 2025. In comparison, Gen-Xers account for just over 34% of today’s workforce and Baby Boomers make up only about 29%. As of 2015, millennials surpassed Gen X-ers as the largest working generation in the United States. If you haven’t started creating a plan around millennial engagement and retention, it’s never too late to start.

Although there were 53.5 million millennials in the workforce in early 2015, they haven’t always had it easy when it comes to employment. Millennials bore the brunt of the 2007-2009 U.S. economic recession and its aftermath: only 63% were working in 2012, for example, compared to 70% in 1990. So even if you’re among those who feel “me-me-me” millennials are already too entitled, your company’s future may depend on how well you understand and reward them in ways they value. And contrary to what you may think, millennials actually value recognition — the trick is doing it the right way. Here are a few suggestions to get you started.

Give Feedback Often

For years, employee recognition has centered on tenure or length of service and celebrated with a commemorative pin or the ubiquitous gold watch recognizing a milestone like a 25-year anniversary or retirement. Forbes reports that although 87% of recognition still focuses on tenure, research shows that tenure-based reward systems have “virtually no impact on organizational performance.” That’s an eye-opener. Expecting people to stay at their jobs in the hope they’ll get that 10-year pin is probably a useless strategy.

Make Sure Everyone's Up-to-Speed

Even if your company is among those that already have a recognition program, don’t assume your senior management knows how often employees are actually recognized. In one study, nearly 80% of leaders surveyed believed employees were recognized at least monthly, and 43% said employees were recognized weekly or more often.

Compare this finding with the fact that 40% of managers and only 22% of individual contributors report their peers are recognized monthly or more often. It’s not a question of who’s right in this situation — it’s a question of whether you’re communicating the recognition options that exist so your whole company can be on the same page.

Publicize Your Recognition Program

Remember that knowledge gap we cited earlier between the majority of companies that have recognition programs and the huge number of employees who don’t know they exist? Research by Forbes confirms that only 53% of employees believe their company has any recognition program at all. It’s worth stating the obvious here that – like any program, whether it’s around wellness or recognition – if employees don’t know it exists, there’s no way the company will see ROI around it or any boost in engagement.

So put up posters promoting the program! Celebrate recognition! Companies should host events to educate employees on the new recognition programs and separately train managers on how to use the programs effectively to boost participation. Make sure managers are promoting it and talking about it frequently with their teams.

Think of Recognition as an Investment

According to a recent study by USC, any gesture managers take to show they care about employees can increase employee engagement by 26%. And as we’ve shown, engaged employees tend to perform better and stay at companies longer. To get similar results, design a program that takes a long-term view of recognition and has executive support. In one recent study, 46% of senior managers said they view recognition programs as an investment rather than an expense.

What do millennial employees want?

Millennials not only want to be recognized differently from Baby Boomers and Gen- Xers, they expect more from their employers across the board. Maybe this expectation stems from the fact that most millennials have been encouraged to speak freely. They are used to being asked for their opinions and believe in collaborating on each decision and project. When it comes to the workplace however, these traits are what often what make people believe millennials feel entitled to, well, everything. So, let’s break down millennial values as they stand today.

De-Mystifying Millennials' Values

There are five key things millennials workers value: growth opportunities, purposeful work, lifestyle conveniences, autonomy, and social connectivity. Understanding how and why these values motivate millennials will help you craft a recognition program that will be effective in rewarding their achievements in ways that they — and your other employees — are likely to appreciate. Following are some suggestions on how to build a program based on what millennials value most.

Provide Real Opportunities for Growth

Millennials don’t differentiate between work and personal life the same way other generations do, which may be why nearly two-thirds (65%) of those surveyed cited “personal development” as the most influential factor in choosing their current job. That’s not unusual if you consider that 76% of all employees in another study said the opportunity for growth was the primary reason they stayed at a company. Millennials believe companies should provide faster ways to learn and expect them to invest large amounts in training and development. In fact, millennials estimate they’ve gained two-thirds of the skills required by their organizations while on the job.

They want to work at companies with results-oriented cultures that include a healthy dose of autonomy. Few millennials want to wait around to be promoted and view tenure as a thing of the past. The trick is to make millennials feel empowered to grow instead of expecting it to be the employer’s responsibility. By defining an active, mutual development process, you can reinforce that promotions are based on achievements rather than time and aren’t given to everyone.

Highlight Work that Makes a Difference

Millennials are idealistic, which is why a recent survey revealed that one in three respondents prioritized “meaningful work” over high pay as a key motivating factor when accepting a job offer. This usually means two things:

1. That they believe in the company’s mission
2. That the work they do directly helps the company achieve that mission

They thrive on knowing how what they do relates to the bigger picture (and to business outcomes). This is why it’s also important to unite them around a clear vision that makes your company’s core values really exciting, not just something that’s on a wall poster.

As we mentioned earlier, millennials crave constant feedback, so regular 1:1 meetings that focus on how their work impacts the company’s goals and contributes to its growth are key. Equally valuable is showing you’re willing to do underwhelming but necessary work because it’s important to the business. By setting a tangible example, you’ll help convince “selfie” millennials they can’t avoid boring projects simply because they’re not interested. Remind them that even the most menial tasks and underwhelming projects are important for the company’s bottom line – this will offer the millennial employee purpose.

Offer Conveniences that Make Work and Life Easier

One way to balance the need for millennials to complete even mundane projects is to offer lifestyle conveniences that offload mundane tasks. By providing dry cleaning or day care services or scheduling bring-your-pet-to-work days, your company can demonstrate it cares about employees as individuals and understands everyone leads busy lives.

This approach is effective with millennials who crave work-life balance just like other generations, although they may define it differently. In one survey, 57% of millennials described work-life balance as “enough leisure time for my private life” while 45% called it flexible work hours. Keep in mind that millennials are tech-savvy multitaskers who reportedly switch between media platforms—laptops, smart- phones, tablets, TV, whatever—an average of 27 times per hour. They can — and often do — work wherever they are and whenever they want. So making those hours a little more pleasant is likely to boost their job satisfaction. 

Be sure to explain how the conveniences you offer reflect the company’s culture and are tied to business objectives. Be willing to ditch them if performance declines. The message should be about supporting employees because they’ve earned it, not because they’re special and deserve to be pampered.

Allow for Autonomy

Most of us want the ability to do things our way as long as we meet our goals. Millennials, in particular, value autonomy in the workplace. Perhaps that’s because many are used to being their own boss: in one survey, 30% of millennials reported starting a business while in college, and 35% have started a side business. They tend to be natural entrepreneurs, and an overwhelming 92% feel entrepreneurship education is vital in today’s economy and job market.

To take advantage of this desire, however, you need to define what success will look like in detail and set clear, measurable goals. Millennials often aren’t used to planning or setting goals because they’ve likely grown up thinking there are no wrong answers. That’s why giving them ownership of a project can encourage true trial-by-fire learning — if you’re prepared to accompany it with some consistent guidance along the way.

And above all, be sure to reinforce that yours is a culture of meritocracy that celebrates results, not just effort: 25% of millennials surveyed said they’re motivated by a sense of accomplishment at a job.

Ensure Social Connectivity

As we’ve pointed out, millennials don’t necessarily distinguish between their personal and professional lives. That can work to your company’s advantage if you also keep Maslow’s need to belong and be part of a group of friends or co-workers in mind. Your company should create an environment where it’s easy for millennials to connect in a way that fosters better business results.

Try open office seating to encourage easy collaboration. Celebrate business wins with social activities that include significant others. Implement collaborative tools that make communication easy. Millennials care deeply about social media, which is why nearly two-thirds of those surveyed (64%) said they ask about social media policies during job interviews and 24% said it’s a key factor in accepting a job offer.

Luckily, you can turn their social media expertise and activities into a lead-generation machine that expands your company’s digital reach. Friends of a company’s fans—in this case, your millennial employees—represent a set of consumers 34 times larger than the fans themselves. Enable direct access to social sharing with individual Instagram or Facebook accounts for employees, for example, and watch what happens.

Recognize Millennials the Right Way

By now you’ve discovered that millennials hold different values and are motivated for different reasons than some of your other employees. Here are a few tips on how to tailor your recognition program to your millennial employees.

Recognize Often

We’ve said it before, but it bears repeating: millennials really, really (really) want feedback and acknowledgment. In fact, 42% want to get feedback every week — or twice as often as other generations — and 80% would prefer to receive feedback in real-time. Although recognizing achievements in real time is often unrealistic, try to schedule it as close to the actions you’re rewarding as possible, so it reinforces the behaviors you want to encourage. Just keep in mind that 41% of millennials prefer to be rewarded or recognized at least every month, if not more frequently.

Make It Unexpected

As we discussed earlier, traditional “milestone” recognition that’s tied to big events or tenure does very little to increase millennial motivation and engagement. In fact, 51% of employees in one study said receiving a milestone award had no impact on their view of their jobs. Personalizing such awards by adding career details would make milestone recognition more meaningful, according to 68% of those surveyed. Instead of basing recognition on milestones, however, today’s high-performance programs focus on achievements and are “social,” letting anyone in the company recognize anyone else.

Be Specific

One of the best ways to ensure your company’s recognition program truly motivates employees is to recognize specific behaviors or actions. When you reward a customer service rep for helping a marquee customer solve a particular systems problem, for example, you not only reinforce good behavior, but also help build a culture where doing the right thing becomes the norm. That approach will engage employees more effectively than just rewarding someone for being the employee of the month.

Personalize Recognition

No generation has been more focused on the self than millennials—remember, it’s called the “me, me, me” generation for a reason. This means generic recognition will be meaningless to millennials unless you find a way to personalize your rewards.

One company that’s done a great job of creating a flexible, personalized recognition program is Intuit. There, outstanding employees can choose from thousands of gift card options for popular, local stores, restaurants, entertainment or travel outlets, and even charitable organizations. And because most employees prefer gift cards over cash and want the freedom to choose an award that’s relevant to their personal lives, this type of program shows your company values individuality and freedom of choice as well as the recipients themselves.

Fond Rewards also allows managers to send reward credits using customized email templates with room for a personalized congratulatory message. Rewards credit can be used by the employee to redeem gift cards for diverse brands and organizations like Sephora, Apple, and Amazon. Fond Rewards makes meaningful ad-hoc and milestone recognition easy to give.

Make It a Learning Experience

Although recognizing a job well done is important to millennials, it’s equally important to offer ongoing feedback on how to do even better. Millennials respond well to mentoring from more experienced employees and like to think of their manager as a coach who supports their professional development. Keep in mind that millennials prefer to learn by application than by being told what to do (see how Deloitte does it, below).

Millennials value opportunities for growth, so they also expect ongoing learning in the workplace. In fact, 35% said they were attracted to employers who offer excellent training and development programs for exactly that reason. Companies that emphasize learning why things work — or sometimes don’t work, in the case of failures — are definitely more attractive to millennials who aren’t used to doing things a certain way. Millennials may need training in fundamental workplace behavior and culture, too. They are especially accustomed to instant responses when they chat with friends via text, for example, and may not realize other workers don’t treat messages with the same urgency.

Start the First Day

Deloitte, where millennials make up 50% of the client-facing workforce, has created a comprehensive onboarding program specifically for these recruits, beginning with a year-long Welcome to Deloitte (W2D) program. The program introduces each new hire to the organization, instills the company’s core beliefs, simulates the feel of working on a client team, teaches network-building skills, and eventually focuses on professional development in the specific business unit the millennial joined.

Based mainly on interactive experiences — including simulations, role-plays, small-group teams, and even video games — the W2D program seems to be working: 96% of participants surveyed said they had an understanding of Deloitte’s culture and were satisfied with their decisions to join the organization.

Why Recognizing Your Millennial Employees Is Ultra-Important

With millennials comprising the majority of today’s workforce, it’s more important than ever to recognize and reward their contributions. Doing so can help other employees improve their performance and ultimately strengthen your company’s culture as well. Here are a few ways recognizing millennials can deliver unexpected benefits across your organization.

It Turns Them Into Superstars

You may be surprised to hear that a recognition program can help managers become better at their jobs. For one thing, recognition tactics encourage them to thank employees, when appropriate. And according to a study by USC, any gesture managers take to show they care about their staff can increase employee engagement by a whopping 26%. At the same time, recognizing people regularly can boost communication between managers and their employees by opening a feedback loop.

This practice is particularly important with millennials who seek near-constant feedback, but it’s equally valuable with any new employee. Contrary to popular belief, employees don’t hit their stride in the second year on the job; in fact, new findings show that strong disillusionment typically accompanies a first-year anniversary. When employees are recognized, however, their initial “I love my job” sentiment only drops 2% within the first year, and their “I feel appreciated at my job” sentiment increases 1% during the same period.

It Builds a Culture Based on Trust

Programs that encourage peer-to-peer recognition embrace one of the values millennials hold dear to their hearts: social connectivity. By enabling them (and other employees) to show appreciation for and feel appreciation from colleagues, you’ll establish a solid culture based on trust. Knowing any feedback they receive will include insights and positive comments from peers is a great way to make millennials feel more comfortable when it comes time for formal performance reviews—something with which they’re often unfamiliar.

The effect of peer-to-peer recognition can also be broader and deeper than you might expect. For example, 41% of companies that use peer-to-peer recognition report a marked increase in customer satisfaction. Even more interesting, peer-to- peer recognition is reported to be 35.7% more likely to have a positive impact on a company’s financial results than manager-only recognition.

It Clarifies Your Corporate Vision and Strengthens Your Employer Brand

As we mentioned previously, recognizing employees for reflecting your company’s core values while tying recognition to what employees value is the best strategy.

You’ll know your company’s recognition program is taking hold when its name becomes a verb employees use in everyday conversation. At Amgen, for example, someone might say, “I just Bravo'd a coworker,” and at JetBlue, an employee might announce, “I’ve been Lifted today.” Above all, make sure the recognition or reward matches the effort and results. And for millennials who value purposeful work above cash, money isn’t necessarily the only — or even the most effective — reward. According to Forbes, monetary rewards can skew the notion of value, linking it to cash when it should be linked to appreciation for extra effort.

Recognition: The Key to Millennial Engagement

Still think employee recognition is a nice-to-do when it comes to your corporate priorities?

Not a chance. Recognition matters if you want your millennial employees to be engaged, productive, and happy. And recognition matters even more if you care about reducing turnover, delivering great customer service, watching your revenues soar, and generally attracting and retaining millennials.

Employee recognition is now a multi-billion-dollar industry; organizations are allocating 1-2% of their payroll budget on average to recognition. Recognition programs have established a solid foothold in today’s workplace because employees are simply dying to be recognized, and none more so than millennials.

Luckily, you can turn Generation Y’s self-confidence, addiction to technology, and open-mindedness to your advantage. By doing what it takes to identify millennials’ real values and then rewarding them in ways they’ll appreciate, you can show them the difference between just a good company and an irresistible one.

Which type of company would you rather work for?