Why employee recognition is so important – and how you can start doing it
To be really effective in your job, you need to understand the importance of praising others for their good work, to apply the principles of employee recognition yourself and to encourage others to initiate it in their working relationships.
Employee recognition is the timely, informal or formal acknowledgement of a person’s or team’s behavior, effort or business result that supports the organization’s goals and values, and which has clearly been beyond normal expectations.
Appreciation is a fundamental human need. Employees respond to appreciation expressed through recognition of their good work because it confirms their work is valued by others. When employees and their work are valued, their satisfaction and productivity rises, and they are motivated to maintain or improve their good work.
Praise and recognition are essential to an outstanding workplace. People want to be respected and valued by others for their contribution. Everyone feels the need to be recognized as an individual or member of a group and to feel a sense of achievement for work well done or even for a valiant effort. Everyone wants a ‘pat on the back’ to make them feel good.
See opportunities and act on them
There are two aspects to employee recognition:
- The first aspect is to actually see, identify or realize an opportunity to praise someone. If you are not in a receptive frame of mind you can easily pass over many such opportunities. This happens all too frequently.
- The other aspect of employee recognition is, of course, the physical act of doing something to acknowledge and praise people for their good work.
Yet Gallup analysis in 2018 found that only 1 in 3 US workers strongly agreed they have received recognition or praise for doing good work in the previous 7 days. Gallup consultants recommend that recognition should be given weekly in broad terms to those who deserve it – and in a timely way so the employee knows the significance of their recent achievement and to reinforce company values.
Vital communication role in giving recognition
Why should you get involved in employee recognition? Firstly, because you can use the principles to great effect in your own working relationships (and personal relationships).
Secondly, because employee recognition has a huge communication component! Recognizing people for their good work sends an extremely powerful message to the recipient, their work team and other employees through the grapevine and formal communication channels. Employee recognition is therefore a potent communication technique.
Employee recognition isn’t rocket science – it is an obvious thing to do. Despite the unquestioned benefits arising from employee recognition, one of the mysteries of the workplace is that recognition invariably is done badly, if done at all. A 2017 Harvard Business Review article, “Why do so many managers avoid giving praise?” (subscription access) throws some more light on this topic.
Managers need reinforcing and coaching. They need a program, principles and procedures to help them apply recognition effectively within their area of responsibility. Employee recognition remains an undervalued management technique – and it can be completely cost-free at the individual workplace level!
One thing you can do is to ensure there are questions on employee recognition in your organization’s employee surveys. The results can be used to prove the need for greater employee recognition.
Surveys conducted by Sirota Consulting have revealed that only 51% of workers were satisfied with the recognition they received after a job well done. This figure is as conclusive as you could get – it resulted from interviewing 2.5 million employees in 237 private, public and not-for-profit organizations in 89 countries around the world over 10 years.
Cost-benefit analysis of employee recognition
The cost of a recognition system is quite small, even cost-free, and the benefits are large when implemented effectively. Extensive research has found the following benefits result at very low cost:
- Increased individual productivity – the act of recognizing desired behavior increases the repetition of the desired behavior, and therefore productivity. This is classic behavioral psychology. The reinforced behavior supports the organization’s mission and key performance indicators.
- Greater employee satisfaction and enjoyment of work – more time spent focusing on the job and less time complaining.
- Direct performance feedback for individuals and teams is provided.
- Higher loyalty and satisfaction scores from customers.
- Teamwork between employees is enhanced.
- Retention of quality employees increases – lower employee turnover.
- Better safety records and fewer accidents on the job.
- Lower negative effects such as absenteeism and stress.
- Time spent in designing and implementing the program.
- Time taken to give recognition. Dollar cost of the recognition items given
- Time and cost of teaching people how to give recognition.
- Costs of introducing a new process.
Individual Performance → Recognition → Increased productivity and satisfaction → Increased value to your organization
Measurable improvement in profitability
Measuring the direct impact of recognition on profitability is difficult because it is only one of many factors influencing employees in every workplace. However, case studies make a persuasive case that bottom line benefits have been achieved through recognition schemes. The Walt Disney World Resort established an employee recognition program that resulted in a 15% increase in staff satisfaction with their day-to-day recognition by their immediate supervisors. These results correlated highly with high guest-satisfaction scores, which showed a strong intent to return, and therefore directly flowed to increased profitability.
Engagement the key driver of organizational performance improvement
Extensive Gallup research has found that engaged employees contribute to the economic health of their organization in ways that other employees do not. Employees who are engaged are more likely to stay with their organization, reducing overall turnover and the costs associated with it. They feel a stronger bond to their organization’s mission and purpose, making them more effective brand ambassadors. They build stronger relationships with customers, helping their company increase sales and profitability.
Gallup defines engaged employees as “those who are involved in, enthusiastic about and committed to their work and workplace,” while Aon defines employee engagement as “the level of an employee’s psychological investment in their organization.” Between 2001 and 2018, the average US employee engagement level only rose from a low 30% to a similarly low 34%. According to Gallup’s 2017 State of the American Workplace, the world’s best organizations record an average of 70% engaged employees. This shows that most employers have a long way to go. Better recognition practices would be central to increasing the level.
Recognition is the most important factor in employee engagement
The Aon 2018 Trends in Global Employee Engagement survey, conducted in 1,000 companies employing 8 million people globally, showed rewards and recognition as “the strongest driver of engagement,” and that recognition for contributions (apart from pay and benefits) was the key factor in the rewards and recognition component.
The Boston Consulting Group conducted an online global study of 200,000 employees from 189 countries in 2014, finding that “Globally, the most important single job element for all people is appreciation for their work.” Appreciation was the top factor for happiness on the job, ahead of 25 other factors, and was highlighted in the findings as an indication of “the growing importance of ‘softer’ factors.”
A Cicero study in 2015 found that employees self-reported that their own drivers of great work were:
Source: Cicero 2015 research: Employee performance: What causes great work?
If you want further detailed research findings on the vital importance of employee recognition to employee engagement and organizational performance, read my recent article, “Here’s detailed proof that employee recognition lifts workplace performance.”
High cost of disengaged employees
On the other hand, lack of recognition leads to disengaged employees, who are more likely to steal from their company, negatively influence their coworkers, miss work days and drive customers away. The cost of extremely negative or ‘actively disengaged’ workers comprises a massive 10% of the US Gross Domestic Product annually, including workplace injury, illness, employee turnover, absences and fraud. This amounts to a cost of around $500 billion per year to the economy. Gallup Data for 2018 show that around 13% of US employees are actively disengaged. According to Chairman and CEO, Jim Clifton:
They are miserable in the workplace and destroy what the most engaged employees build. The remaining 51% of employees are not engaged — they’re just there.”
In addition, Gallup data shows that actively disengaged employees are twice as likely as engaged employees to seek new jobs (73% compared with 37% respectively), while 56% of not-engaged employees seek new jobs. It can cost about $100,000 to replace each person lost to the organization, so the direct cost of losing employees can really add up. According to industry analyst, Josh Bersin, the effective cost of losing an employee includes:
- the cost of hiring a new employee (advertising, interviewing, screening, hiring), and onboarding them (training, management time)
- lost productivity while the new person gets up to speed
- lost engagement as other employees perceive high turnover and tend to lose productivity
- reduced customer service efficiency and errors
- training cost and cultural impact.
How to give employee recognition
You can be a catalyst in your organization. Initiate it in your area. You could start doing it discreetly, not even telling others about the change, but doing it and observing the results.
You can spontaneously praise people – this is highly effective. To many employees, receiving sincere thanks is more important than receiving something tangible. Employees enjoy recognition through personal, written, electronic and public praise from those they respect at work, given in a timely, specific and sincere way.
This day-to-day recognition is the most important. Day-to-day recognition brings the benefit of immediate and powerful reinforcement of desired behavior and sets an example to other employees of desired behavior that aligns with organizational objectives. It gives individuals and teams at all levels the opportunity to recognize good work by other employees and teams, and it also gives the opportunity for them to be recognized on the spot for their own good work.
Employee recognition is the principle of social proof in action, a term pioneered by social psychology professor Robert Cialdini. Writing an article, “Harnessing the science of persuasion,” in the Harvard Business Review (subscription access), he defined the principle in this way:
We view a behavior as correct in a given situation to the degree that we see others performing it…People follow the lead of similar others.”
Even if you aren’t a manager, you can be alert for opportunities to recognize others and take the initiative to do something. You can nudge your manager to do more of it and to encourage it in other departments.
The best formula for recognizing an individual for their efforts is:
- Thank the person by name.
- Specifically state what they did that is being recognized. It is vital to be specific because it identifies and reinforces the desired behavior.
- Explain how the behavior made you feel (assuming you felt some pride or respect for their accomplishment!).
- Point out the value added to the team or organization by the behavior.
- Thank the person again by name for their contribution.
Recognition is a key success factor even at higher levels of management. Dr Lawrence Hrebiniak, Professor of Management in the Wharton School at the University of Pennsylvania, states in his book, Making strategy work: leading effective execution and change:
What’s absolutely critical…is that the organization celebrates success. Those who perform must be recognized. Their behavior and its results must be reinforced…Managers have emphasized this point to me time and time again, suggesting that, as basic as it is, it is violated often enough to become an execution problem…Give positive feedback to those responsible for execution success and making strategy work.”
I believe employee recognition is so important, I have written an ebook about it based on my own experience in introducing and managing employee recognition in several organizations. If you would like to know how to initiate and conduct employee recognition activities, you can find lots of ideas, and the best framework with guiding principles in my eBook, How to create a top employee recognition program.