The Power of Recognition: 5 Benefits of Recognizing Employees

With only 30% of U.S. employees engaged, there has never been a better time for organizations to start a comprehensive employee recognition program. 

Employee recognition can be a powerful catalyst for organizational success, fueling everything from improved performance to stronger team cohesion. Discover how incorporating regular, meaningful recognition into your company's routine can help lead to a thriving, high-performing team. 

What is an Employee Recognition Program?

An employee recognition program is a formalized approach organizations use to acknowledge and reward employees for their hard work, achievements, and contributions. These programs can take various forms, including monetary rewards, public recognition, awards, or simple thank-you notes. 

Typically, these programs fall into one of the following categories:

1. Traditional Rewards Programs: These programs focus on one-time rewards and recognition for specific milestones, holidays, or special occasions. Examples include celebrating work anniversaries, employee of the month awards, and holiday bonuses. These programs create memorable moments and highlight significant achievements.
2. Social Recognition Programs: Social recognition programs are designed to foster peer-to-peer recognition. These programs often use platforms where employees can publicly acknowledge each other's efforts and achievements. This type of recognition builds camaraderie and reinforces a positive culture of appreciation.
3. Monetary Recognition Programs: Monetary recognition programs, such as points-based systems, provide financial incentives for employees. Points can be earned for various accomplishments and then redeemed for rewards. These programs encourage continuous recognition and can be tailored to align with company goals and values.

The primary goal of these programs is to create a culture of appreciation that motivates and supports employees to perform at their best. Recognition programs can be formal, with structured criteria and awards, or informal, with spontaneous acknowledgments.

The Importance of Employee Recognition Programs in the Modern Workplace

Recent years have highlighted the deep impact of the COVID-19 pandemic on the workforce, with many employees still grappling with its effects. Gallup's early February 2024 report reveals employee engagement has sunk to an 11-year low in the United States, while stress levels have surged since the pandemic began. On top of this, rising inflation and economic uncertainty are adding financial pressures, leaving many workers feeling more burnt out and stressed than ever before. 

This is where recognition can help.

Recognition programs provide HR, employees, and leaders with the tools needed to address these challenges. By celebrating employees' contributions and encouraging peer recognition, these programs can create a more positive work environment. With a comprehensive strategy in place, HR teams can strengthen the company culture, enable leaders to motivate and engage their teams, and provide employees with a sense of value and belonging -- all of which are crucial for enhancing engagement, reducing stress, and increasing employee satisfaction.

Benefits of Employee Recognition Programs

Recognition is a win-win situation. When employees are consistently recognized, they tend to be happier, more engaged, and more satisfied with their roles. And when employees are engaged, they are more productive and committed to their work – which can drive higher performance and better business results.

Here’s how recognition programs benefit both employers and employees.

How Employers and HR Benefit from Recognition

#1 Enhances the Employee Experience 

The employee experience encompasses every interaction an individual has with their company, from day one to departure. This cumulative experience strongly influences whether or not an employee feels happy or satisfied with their role -- and can even influence a company's performance. In fact,  research shows that companies that deliver a great employee experience outperform the Standard & Poor's (S&P) 500 by 122 percent. That's why getting the employee experience right is so important.

Fortunately, employee recognition programs can help with this endeavor. Recognition programs, when done right, highlight all the important moments, big or small, throughout the employee experience, creating a more rewarding experience for employees. 

#2 Improves Job Satisfaction 

Recent Gallup research indicates that one in two U.S. employees is open to leaving their organization in 2024. Although some turnover is healthy, a high turnover rate can hinder an organization and its bottom line. 

Gallup estimates that replacing leaders and managers costs around 200% of their salary; 80% for replacing technical roles; and 40% for replacing frontline workers. The high costs associated with turnover make the need for recognition even more important.

Fortunately, recognition is a key driver of job satisfaction. When employees feel appreciated, they are more likely to enjoy their work environment and remain committed to their roles. According to Zippia, recognized employees are nearly six times more likely to stay at their job compared to their counterparts,. This positive experience translates into higher retention rates and reduced turnover, saving organizations time and money on recruitment and training.

#3 Fuels Employee Engagement and Productivity

Recognition has a direct impact on employee engagement and productivity. Research shows that recognized employees are more motivated to achieve high standards and strive for excellence. They are also more likely to go above and beyond their job descriptions, leading them to feel more intrinsically motivated and care about the work they produce.

When employees are more engaged, their organization performs better – and data validates this. A study by Deloitte found that companies who recognize their employees can experience up to a 14% increase in employee engagement, productivity, and performance. Likewise, recent research from Gallup indicates that organizations with highly engaged teams can experience a 23% increase in profitability, a 10% increase in customer loyalty, a 51% decrease in turnover for low-turnover organizations, a 78% decrease in absenteeism, among other improved outcomes.

#4 Cultivates a Positive Workplace Culture

A culture of recognition fosters a positive work environment where employees feel valued and respected. This culture encourages collaboration, teamwork, and open communication, leading to a more cohesive and productive workforce. A positive workplace culture also enhances the organization's reputation, making it an attractive place to work for potential hires.

The problem is that not all employees feel satisfied with their company's culture. Gallup’s 2023 State of the Global Workplace Report reveals that 41% of unengaged employees would change their culture or engagement at their workplace if they could. What's one factor they would help change this? Receiving more recognition.

#5 Strengthens Employee Belonging

Recognition programs help foster a sense of belonging among employees. 34% of employees feel they belong at their organization when their unique contributions are valued, as revealed by research from EY. 

When individuals feel their contributions are noticed and appreciated, they develop a stronger connection to their team and organization. This sense of belonging reduces feelings of isolation and helps create a supportive and inclusive work environment. 

How Employees Benefit from Recognition

#1 Strengthens Their Relationship with Dispersed Co-Workers

Remote and hybrid work have surged across many organizations since the COVID-19 pandemic. As a result, employees within these organizations may not feel as connected to their dispersed teammates as they did previously.

Fortunately, recognition can help combat this new challenge. Using a digital social recognition tool, organizations can create a digital hub for their employees to connect and celebrate one another -- no matter where they are located. A peer-to-peer recognition program like this reinforces a sense of community and camaraderie for employees, helping to bridge the gap between geographically separated employees. 

#2 Makes Them Feel Valued and Seen for Contributions

Recognition initiatives help ensure employees feel valued and seen for their efforts. A comprehensive program will reinforce that their work is meaningful and positively impact the organization. This validation can boost employees' self-esteem and confidence, reinforcing their role within the organization and encouraging them to excel.

#3 Boost Their Morale and Motivation for Work

Frequent recognition is one of the best ways to uplift employees' spirits and energize for work. When employees are recognized for their efforts, achievements, or milestones, they feel their contributions matter and are appreciated for their hard work.

Plus, meaningful recognition can create a positive feedback loop.  Each recognition touchpoint increases employee motivation, which, in turn leads to higher performance and more recognition. This cycle helps create a high level of engagement and enthusiasm among employees.

The Value of Recognizing Frequently

Sporadic recognition can make it challenging to see a direct impact and true ROI from your programs. Recognition is one of those items on every employee's to-do list that often gets pushed to the bottom. Without adequate recognition, employees can feel defeated, making them less engaged, motivated, and satisfied at work.

That's why it's important to develop a recognition strategy that strategically celebrates all the important moments -- both big and small -- throughout the employee experience.

When employees are regularly celebrated for their achievements and contributions, it keeps them engaged and reinforces their roles and contributions. This consistent approach prevents employees from feeling overlooked or undervalued.

The problem is, HR can’t do it alone. To set your recognition initiatives up for success, your recognition programs should incorporate both leader-driven and peer-to-peer recognition, ensuring that each function within your organization participates and your recognition efforts impact each employee. 

The Importance of Incorporating Peer Recognition

Incorporating peer recognition into your recognition initiatives brings an additional layer of benefits to the workplace. Peer recognition provides employees with an easy format to acknowledge each other's contributions, fostering a supportive and healthy work environment. 

Here are some key reasons why peer recognition is important:

• When peers recognize positive behaviors and achievements, it reinforces those behaviors across the team. Employees are more likely to emulate actions that are publicly acknowledged and appreciated by their peers.
• Recognition can also help strengthen team cohesion. When employees recognize their peers, it promotes a sense of unity and teamwork. This kind of peer-to-peer recognition helps to break down silos, encourages collaboration, and strengthens relationships.
• Lastly, peer recognition can foster a culture of mutual respect. When employees acknowledge each other's hard work and achievements, it builds a supportive work environment where everyone feels valued. This mutual respect can reduce workplace conflicts and enhance overall job satisfaction.

Why Your Leaders and Managers Need to be Involved

Leaders and managers play an important role in preventing siloed recognition efforts. Their active participation in recognition efforts signals to everyone that recognizing each other's achievements should be a priority. This involvement can help embed recognition practices into the culture rather than confining them to specific teams or departments.

To effectively integrate recognition into daily practice, leaders and managers must leverage their regular interactions with their teams. By acknowledging achievements, both big and small, during meetings or one-on-one conversations, they can help elevate each of their direct reports' employee experience and reinforce their purpose within the organization. 

Daily, casual acknowledgments — such as praising a job well done or highlighting individual contributions — help to make recognition a natural part of the work environment. When leaders are consistently engaged in this manner, it becomes a norm for employees, ensuring that recognition is not just an occasional activity, but an integral part of the company culture. By leading the way, leaders set a powerful example for their teams.

Understanding ROI from Recognition Programs

One of the main challenges of recognition programs? Determining its ROI. This is because many of the benefits of recognition and appreciation are often intangible, leading HR professionals to feel the impact may not be trackable.

Although the ROI of recognition may not always show up on a balance sheet, there are a few key metrics you can track to understand the effectiveness of your recognition programs. 

Program administrators can track several KPIs to help track the impact of their programs, including:

1. Number of Users that are Registered and Active in Your Recognition Program
2. Number of Recognitions Sent
3. Employee Engagement Surveys
4. Employee Net Promoter Score
5. Employee Absenteeism Rate
6. Employee Turnover Rate
7. Employee Sentiment Analysis

Remember, though, your program's ROI should account for intangible benefits as well. It should be measured not just from a financial standpoint, but also for benefits such as cultural changes and morale improvement.

Track Employee Engagement and Satisfaction Levels

Ultimately, tracking how engaged your employees are and their sentiments about your company is the most effective way to understand its impact. Why is that? Well, when employees are satisfied and engaged, they are more committed and productive. When engagement levels are high, employees tend to feel good about and support the company culture, thus being more productive and helping fuel the organization’s business performance. Engaged employees = better business results.

Discover more best practices for calculating your program's ROI in our free guide.

Using Software to Maximize Outcomes and Deliver Tangible Results

One challenge HR teams often face when starting and maintaining an employee recognition program is the amount of time and effort needed to manage it. From selecting appropriate rewards to tracking nominations to providing timely delivery, the administrative load can be substantial. This is especially true for larger organizations, where an internal recognition program is often not scalable.

Fortunately, digital tools are now available to help streamline recognition programs. Digital employee recognition platforms, like Inspirus Connects, make it easier for both managers and peers to acknowledge achievements, milestones, and more in real-time. From small to large organizations, these platforms empower program administrators to easily celebrate employees' important contributions – no matter where their employees are located.

For instance, with Inspirus’ digital recognition platform, Inspirus Connects, HR teams can:

• Celebrate Milestones and Achievements: Send employees a personalized, branded digital card and gift of choice on their important milestones.
• Foster Peer-to-Peer Recognition: Create a central hub for your employees to celebrate achievements and milestones. Plus, you can integrate your platform with Teams, Slack, or your HRIS system to make recognition easily accessible.
• Recognize Globally: Recognize employees across the globe with ease. Inspirus Connects offers shipping capabilities to 185 countries and is available in 33+ languages.
• Provide a Gift of Choice: Empower your employees to select a budget-aligned gift of choice from over 2,500 popular brands and categories across merchandise, gift cards, charities, and more, ensuring they get a gift that’s truly meaningful.
• Monitor Team Engagement: Program administrators and team leaders can track their employees’ recognition engagement with robust dashboards.
• Track Employee Sentiments: Use a 24/7 anonymous pulse survey to monitor employee sentiment levels.

Do you need help streamlining and scaling your recognition efforts? We can help! Talk with an Inspirus specialist today to see how we can help you build a culture of appreciation.

Summing It Up

Employee recognition programs are powerful tools that benefit both employers and employees. A comprehensive strategy can enhance the employee experience, improve job satisfaction, boost performance, create a positive workplace culture, foster a sense of belonging, and even strengthen a company's bottom line. 

Incorporating frequent recognition touchpoints throughout an employee's journey is key to delivering a great employee experience that makes employees feel valued, belong, and heard. By incorporating a bottom-up and top-down approach, organizations can strengthen their team's cohesion and create a positive work environment their employees can thrive in.