The Ultimate Guide to Building an Employee Reward and Recognition Culture

‘People may take a job for more money, but they often leave it for more recognition.’

Dr Bob Nelson, author of 1501 Ways to Reward Employees. 

Employee reward and recognition will differ in each organisation and depend on your organisational values, mission, strategy, and culture. Unfortunately, if your people don’t feel appreciated, valued and engaged, you can’t expect them to perform at their best or stay at your organisation. If successful employee reward and recognition leads to higher engagement, then this could also improve performance, as a Gallup poll showed that engagement led to improved productivity and a 21% increase in profitability. 

But how can you ensure you’re creating a culture of genuine and consistent employee reward and recognition, and what example can you use?

This blog will include;

• What is Employee Recognition and Rewards?
• Why Are Employee Rewards and Recognition Important?
• What is HR’s Role in Employee Reward and Recognition?
• Different Types of Employee Recognition
• How to Give Employee Recognition Verbally

Who is Responsible for Employee Reward and Recognition?

While the culture of rewarding and recognising your people may be influenced from the top, recognition doesn’t have to be limited to management as the stakeholders. Social recognition or peer-to-peer recognition forms an integral part of your employee reward and recognition strategy and encourages everyone to recognise effort and success at any time. HR is also a key stakeholder in creating and communicating reward and recognition programmes and assessing their success.

Why Some Organisations Don’t Have Employee Reward and Recognition Programmes

While you might think that all organisations have employee reward and recognition programmes, according to Forbes there are five reasons why they don't. They believe that some organisations still don't understand what employee reward and recognition programmes are and as a result, don't understand the positive impact of having them and the negative impact of not.

Furthermore, some organisations may think that formal employee reward and recognition programmes are too expensive and time-consuming and lack a significant return on investment.

Finally, they said that many organisations may not know how to recognise and reward their people and their managers are not equipped with the knowledge and skills to do so

What is Employee Recognition?

Even though employees are paid to do their jobs, organisations can do a lot more to show their appreciation and acknowledgement of an individual’s contribution by giving employee recognition. Employee recognition can be a simple untimely thank you from a manager, but there are also many other ways that organisations can show their appreciation.

Why is Employee Recognition Important?

There are several reasons why employee recognition is essential in the workplace. Even before the Great Resignation was a concept occurring in the workplace, employers needed to do more than simply pay their people to encourage engagement and retention.

In one survey, 70% of employees said that recognition makes them feel more emotionally connected to their peers. And it’s reported that when individuals feel appreciated, they release Oxytocin (a hormone that makes you feel trust and love) which can only be a good thing!

Therefore, it seems that appreciation is an essential workplace component, and employers should be doing everything they can to make their people feel appreciated.

What are Employee Rewards?

Employee rewards are tangible and linked to achievements or goals. They will usually have some financial value as opposed to recognition which tends to have an emotional value. Recognition doesn't need to be linked to a goal as it could be spontaneous, more frequent than rewards and intangible.

Why Are Employee Rewards and Recognition Important?

Together, recognition and reward programmes can:

Improve productivity and performance – it's human nature that if an individual feels valued and appreciated, they may want to perform better or contribute more to their organisation. In fact, 78% of employees say that recognition makes them more productive, and 79% report that recognition makes them work harder.

Reduce turnover – salary alone is unlikely to be enough reward incentive to retain employees. However, the combination of employee recognition and reward may create a culture that employees enjoy and thrive in, and the rewards they receive or are available in the organisation may be more important to them than just the salary alone.

A Glassdoor Employee Appreciation Survey showed that 53% of employees would stay longer at their organisation if their manager gave them more appreciation. If individuals feel valued and rewarded, it's highly likely that they will be more engaged and may feel more loyalty to their workplace.

Manage change – with significant change occurring across workplaces over the last few years, recognition may help employees adapt to change. For those employees who were recognised in the previous month, 69% said they were confident or excited about change, compared to 41% who had never been recognised.

Build relationships – if you work in a culture where employer recognition and peer to peer recognition are the norms, it should encourage stronger and more honest relationships and build trust and engagement.

Give a sense of purpose – if employees understand how their performance contributes to the organisation and company values, then they may feel a sense of purpose, and recognition is a way of giving them this understanding. If they are given regular recognition from managers and peers, it may serve as a reminder that they are working towards shared goals and organisational performance.

Give a sense of belonging – those who feel a sense of belonging to their workplace are over five times more likely to be empowered to perform at their best. In addition, this may also boost morale as if an organisation has a culture of recognition and reward; then it could boost morale which can lead to improved productivity and work satisfaction.

Before You Start Introducing Employee Reward or Recognition Programmes

There are some considerations to bear in mind before you start trying to recognise your people and spending money on rewards!

Firstly, create a recognition and reward strategy that focuses on your organisational values and vision and set objectives. Consider your culture, what you want it to look and feel like, and how employee reward and recognition approaches could drive this. Ensure that this comes from the top and establish a committee to commit to it and implement the initiatives.

Next, research what others are doing in the employee reward and recognition spaces and brainstorm achievable ideas in your culture and budget. HR should also be involved as some of the rewards will overlap with employee benefits, and there may already be suppliers or benefits partners who can help.

You also need to gain feedback from your people. Ask them what recognition means to them, how and where the organisation is doing it well, what they would like more of etc. You could organise focus groups or surveys to gain the information which will give you a feel of how you’re currently performing in this area of employee engagement.

Finally, don’t forget to measure how effective your employee reward and recognition programmes are. Use surveys to include questions on employee recognition and reward to gain feedback.

What is HR’s Role in Employee Reward and Recognition?

Employee reward and recognition programmes will usually fall under HR's remit. It will be their role to create the formal programmes and work with senior management to form a culture of recognition. 

However, while it is usually free to give recognition to employees, rewards come with a monetary value, and it will be HR’s role to convince senior leadership that they need to invest in employee rewards. In addition, all employee reward and recognition programmes or schemes must also fit with the organisational culture.

HR must influence senior management and convince them of the benefits of employee investment through rewards and persuade them that there will be a return on investment for the money spent. 

How Should Managers Give Recognition?

As mentioned previously, manager to employee recognition should be practised regularly within the workplace. In fact, to create a recognition culture, it should be included in a manager’s objectives so that it becomes a habit rather than something they must force themselves to remember to do. Recognition for managers must also be authentic as they should be genuine in what they're saying rather than doing it as a tick box exercise. 

Different Types of Employee Recognition

There are several different types of recognition. While you as an employer can't be responsible for all recognition and appreciation to your people, you can create a culture where recognition is the norm, and everybody regularly gives it. Types of recognition include:

• Peer-to-peer recognition - if employees work in a culture where it's encouraged and normal to give each other recognition, then it is more likely to become embedded in the culture. For example, peer-to-peer recognition could come in the form of a formal feedback programme or an informal encouragement to give peers feedback and recognition regularly, whether face-to-face or via email etc. Such recognition can help create a culture of high performance, inclusion, trust and healthy competition.

One survey highlighted that 90% of employees said peer-to-peer recognition gave them more work satisfaction. Furthermore, the impact of peer recognition goes beyond just making individuals more satisfied, as peer-to-peer recognition is 35% more likely to have a positive impact on financial results than just manager to employee recognition.

• Manager-to-employee recognition - is probably the most common form of recognition and one that all managers should practice frequently and fairly amongst their people. 

There are many different forms in which they can give recognition, but a good way to know how to give recognition is to ask each person individually. For example, if a manager asks an individual how they like to receive recognition, they'll better understand if they prefer private or public recognition. It should also be clear what types of work they like to be recognised for, and whether they prefer to be recognised individually or within a group and when they want to be recognised (e.g. straight after they've done something that warrants the recognition or perhaps at the end of a particular project).

Only seven in ten employees think their manager shows them enough appreciation, and 81% of employees say they are motivated to work harder when their manager shows them appreciation.

• Anonymous recognition - it doesn't have to be apparent where the feedback or recognition is coming from, although it may have more impact if the individual receiving the recognition knows where it's coming from. 

For example, if a manager wants to recognise somebody for going above and beyond, the individual may feel even happier with the recognition if they know it's from a senior manager or someone they look up to.

• Private recognition - it might sound self-explanatory, but this type of recognition is given in private. It could be from a manager to an employee, peer-to-peer or private recognition to a team.
• Public recognition - This is the opposite of private recognition as appreciation will be given publicly; it could be that a manager gives recognition to someone in a team meeting or a wider audience, or it could be peer-to-peer in a group setting.
• Formal recognition - many organisations will have a formal recognition programme with specific processes for recognising others, and they may be linked to reward.
• Informal recognition - there are many ways to give informal recognition within an organisation, whether from manager to employee or peer-to-peer. Managers may formally recognise their team by letting them leave early after completing a long project or giving them a low-cost lunch or extended lunch break, for example.
• Micro recognition - is when someone responds immediately to recognise someone else’s positive behaviour. Such feedback is quick and can make employees feel valued and appreciated without the person giving the recognition having to spend much time or effort on it.

How to Give Employee Recognition Verbally

Recognition during regular meetings - although it's important for managers to give their people recognition when faced with the daily challenges or tasks at work, it could be all too easy to forget to do it on a regular basis. However, if managers book weekly one to ones with each person they manage, then it's a reminder to give recognition every week. This should then become part of the relationship and increase employee engagement and can also be applied to team meetings where managers can give recognition and encourage peer-to-peer feedback too.

Don't just focus on tangible achievements - it might seem more appropriate or obvious to give recognition to someone once they've completed a project or specific task; however, recognition for intangible achievements is also really important. Furthermore, recognition isn't restricted to achievements; managers should also recognise when employees try hard or put in the effort to achieve their goals.

Examples of Employee Recognition Ideas

Intranet or newsletter shoutouts – if someone has gone the extra mile or achieved something great, you could feature them on the intranet or in a newsletter if you have one. Alternatively, it could also be for something they have achieved in their personal life if they’re happy for you to (for example, if they’ve completed a charity run or event etc.).

Team performer of the month – in a monthly team meeting, you could celebrate a high performing team member or ask your team to vote. For example, it may be that someone successfully passed a course or gained a new client etc.

Website blogs – you could feature a monthly blog on your website focusing on the team of the month and outline their achievements, how they have worked well together etc.

Recognition programme/employee awards – these programmes work in different ways at each organisation but may involve voting on the intranet or a site where individuals can nominate peers. Rewards may be giving a simple standing ovation, or a high five to someone or managers may be able to award vouchers, points or gifts etc.

Team lunches – a simple team lunch is a great and quick way to thank the team or members and recognise performance.

Longer lunch breaks – sometimes it's the little things that mean a lot. Awarding someone an extended lunch break or later start shows recognition and gives them something as a treat.

Social media mentions – if your organisation has a social media presence, use it as a recognition tool to highlight employee achievements and performance.

Bring your pet to work – this will depend on your workplace and culture, but sometimes pets in the office are a welcome treat and may motivate your people.

Dress down – if you don’t have a regular dress down day in the workplace, offer the whole company one to recognise their commitment to the organisation.

Other ideas include celebrating birthdays or work anniversaries, sending handwritten thank you cards, team trophies, and lunch with a senior leader.

Examples of Employee Recognition Through Rewards

Bonuses – you can’t give a bonus without it being a financial reward, and whether you offer bonuses or not will depend on your organisation and culture (and funds!). They are one of the most common monetary rewards to show recognition, and although they are discretionary, some organisations will have a culture where bonuses are the norm for recognition. 

Bonuses may be annual, spot bonuses, or bonuses given to complete a project or role. Although not everybody will be motivated by bonuses, they are an excellent way to give immediate recognition that goes above and beyond words.

Company tenure rewards – many organisations will reward employees for their length of service. The rewards and timeframes will differ from company to company, but they can act as an incentive and show recognition for the time spent at the organisation.

Gift cards or vouchers – there's so much choice when it comes to gift cards or vouchers that you can give to your people, whether it's for Amazon or, more specifically, for a restaurant in the form of a voucher to show recognition.

Training or development – you could offer specific courses or training as rewards for individuals. These may be directly related to their role, or you could offer a suite of entirely unrelated courses.

Gym incentives – fitness and well-being are generally high on an employer’s list of benefits or perks. And while many may offer subsidised gym memberships, you could also show employee recognition by offering other gym incentives such as vouchers for specific classes or free passes for those who may not be a member.

Company merchandise – not everybody may want a baseball cap with their company’s brand on the front; however, sometimes, it's not so much about the product as it is about the message. For example, if you give someone a free company tee-shirt, laptop bag or pen, the message that comes with it is recognition and thanks.

Meal subscriptions – we lead busy lives, and home meal delivery is a big business. If you reward someone with a free week or month subscription to a meal delivery service, you will encourage healthy eating and give them the convenience of having planned meals.

Charity donations – reward someone by giving to a cause that they’re passionate about. For example, offer to donate to their chosen charity to reward and recognise your employee. Again, this may not be for everyone, but it will appeal to those who don’t value personal rewards (or company merchandise!).

Time off – to award an individual a day off or an early finish for achievement is an easy win for you and a beneficial reward for your employee. You will have to plan when this an be taken, but at the end of a project or when work is quieter will reward and recognise your people.

Subscriptions – there are many, but as the organisation, you may select magazines, television, book or other subscriptions to reward individuals.

Building an attractive and motivational employee reward and recognition programme has always been important, but new challenges in the world of work make it more so. You need to be competitive to attract and retain talent, and salary may not be enough. As the workplace demographics move on and Millenials and Gen Z fill more of the workforce, recognition will be more important, and employers will need to be more creative and practice what they say they offer. There are many options and usual ways you can reward and recognise without just reverting to annual feedback or bonuses.

A technology partner like Sorwe can help with employee recognition by giving employees an easy way to record feedback sessions, have two-way feedback conversations, ask for 360 feedback, give positive feedback in the form of recognition, and get feedback through surveys, among other things. 

Sorwe provides the tools you need to provide effective employee recognition. Please get in touch with us to learn more about how Sorwe solutions can help you improve your feedback practices.