Why Employee Recognition Matters

September 27, 2023

By Paul Ferguson
HR leaders are looking for ways to improve the overall workplace environment and employee recognition can play a pivotal role in achieving this goal, fostering a positive workplace culture and driving productivity.

In today's competitive business landscape and evolving workplace dynamics, one of the most valuable assets an organization can have is a motivated and engaged workforce. But with an increasingly remote workforce, higher turnover rates, and an uncertain economic future, employees are more stressed than ever, with 83% of US workers suffering from work-related stress.

HR leaders are looking for ways to improve the overall workplace environment and employee recognition can play a pivotal role in achieving this goal, fostering a positive workplace culture and driving productivity.

As HR leaders continue to search for ways to improve the employee experience, they need to understand the significance employee recognition has on the workforce, the four types of employee recognition, and real-world examples of successful employee recognition programs that can be implemented in their organization today.

Why Employee Recognition Matters

Employee recognition is not just a nice-to-have; it is a strategic imperative for any organization aiming to thrive in a dynamic marketplace. With nearly 38% of employees quitting within the first year of employment, engagement and recognition programs are now becoming table stakes for organizations looking to create a positive workplace, while looking to achieve business objectives. Employee recognition isn’t just about patting someone on the back for good work, successful programs impact multiple areas of an organization:

  • Boosts Morale and Motivation: Recognizing employees' efforts and achievements boosts their morale and motivation. When employees feel appreciated, they are more likely to go the extra mile and take pride in their work. According to a study by Gallup, companies with high employee engagement see a 21% increase in profitability.
  • Enhances Retention: Employees who feel valued are less likely to seek opportunities elsewhere. High turnover rates can be costly and disruptive to a business. High employee turnover can be very costly for a company. The cost of replacing an employee can range from one-half to two times the employee's annual salary. For example, if an employee makes $60,000 per year, it can cost $30,000 - $45,000 to replace them. 
  • Improves Productivity: Recognized employees are more engaged and productive. Employee recognition programs can increase employee productivity, performance, and engagement by 14%. Companies with highly engaged workforces score 17% higher on productivity. A well-designed recognition program can also increase average employee performance by 11.1%.
  • Fosters a Positive Culture: A culture of recognition promotes positivity, teamwork, and a sense of belonging. Employees are more likely to collaborate when they feel valued. A Great Place to Work survey revealed that 86% of the best workplaces have strong recognition programs.

These are just a few of the areas which employee engagement and recognition programs can impact both the cultural and financial areas of an organization. Not only are recognition and engagement solutions beneficial to employees, but the impact to organizations is undeniable.

The Four Types of Employee Recognition


Years of Service Awards

Years of service awards are a traditional form of recognition, celebrating employees' loyalty and dedication to the company. These awards are typically given at milestone anniversaries, such as 5, 10, or 20 years of service. Example: XYZ Corporation honors employees who reach their 10-year anniversary with a personalized crystal plaque and an extra week of paid vacation.


Customer Service Awards

Customer service awards recognize employees who consistently provide exceptional service to customers. This type of recognition acknowledges the critical role employees play in ensuring customer satisfaction. Example: ABC Retailers presents a monthly "Customer Champion" award to the employee who receives the most positive customer feedback. The winner receives a trophy and a gift card.


Social Recognition

Social recognition leverages social media platforms and internal communication channels to publicly acknowledge and celebrate employees' achievements. It fosters a sense of community within the organization. Example: CompanyConnect, a tech firm, has an internal social recognition platform where employees can send virtual "kudos" to their colleagues. These recognitions are visible to the entire company.


Employee Appreciation Events 

Employee appreciation events are a way to recognize and celebrate employees as a group. These events can range from casual gatherings to elaborate ceremonies, depending on the company's culture and budget. Example: DEF Healthcare hosts an annual "Employee Appreciation Day" with a picnic, games, and awards for outstanding teams. It's a day for employees to relax and enjoy each other's company.

Examples of Employee Recognition Programs

Employee Recognition isn’t a new concept and many of the world’s leading companies have already implemented highly regarded programs that you can mimic.

  1. Google's Peer Recognition Program - Google's culture and work environment has long been heralded as best in class. However, their peer recognition program, known as "Peer Bonuses," allows employees to nominate their colleagues for exceptional contributions. If selected, the nominated employee receives a cash bonus. This program promotes teamwork and peer-to-peer recognition.
  2. Salesforce's "Ohana" Culture - Salesforce, has a strong culture of recognition called "Ohana," which means family in Hawaiian. They have a dedicated platform where employees can send "Thank You" badges to their peers. Salesforce also organizes regular recognition events to celebrate achievements.
  3. Microsoft's Rewards and Recognition - Microsoft's "You Make a Difference" program allows employees to recognize their colleagues for going above and beyond. Recipients receive points that can be redeemed for a wide range of rewards, from gift cards to experiences. (Learn more about the benefits of points-based recognition solutions here)
  4. LinkedIn's "InDays" - LinkedIn offers a unique recognition program called "InDays," where employees are encouraged to take a day off to volunteer and give back to their communities. This program not only recognizes employees but also promotes corporate social responsibility.
  5. ATCC Peer-to-Peer Recognition – Launched a centralized recognition program platform to give employees a voice via feedback tools and streamline communication to connect employees to news and each other. This program helped increase retention by 10% and reduce recruiting and training costs. You can learn more about ATCC here.

Showing employees appreciation and gratitude doesn’t have to be expensive or elaborate, but it is clear that employee recognition is a powerful tool for enhancing workplace culture, improving productivity, and retaining top talent. By implementing various types of recognition programs, organizations can create a culture of appreciation that drives success and employee satisfaction. Remember, recognizing employees is not just a feel-good gesture; it's a strategic investment in the future of your business. Don’t miss out on the opportunity to thank those who are working so hard to help you achieve business results!

Interested in learning how an employee engagement and recognition solution can impact your organization and provide you with significant ROI? Talk with an Inspirus Specialist today!