What Are the Benefits of Employee Recognition?

April 6, 2023 Aaron Kinne

benefits of employee recognitionIf you’re looking for hard, empirical data on the benefits of employee recognition, look no further than the Gallup Report, “Unleashing the Human Element at Work: Transforming Workplaces Through Recognition.”

Created in partnership with Workhuman®, this seminal study focuses on the ways organizations can build a workforce for the future that has recognition at its core.

Among its key findings, the report notes that when recognition hits the mark, workers are:

  • 73% less likely to “always” or “very often” feel burned out
  • 56% less likely to be looking or watching for job opportunities
  • 44% more likely to be “thriving” in their life overall
  • 5x as likely to feel connected to their culture
  • 4x as likely to be engaged
  • 5x as like to see a path to grow at their organization
  • 4x as likely to recommend their organization to friends and family

In one of the report’s most stunning findings, it found that creating a culture of recognition can save a 10,000-employee company up to $16.1 million in employee turnover costs annually. That’s in addition to the cost-savings that accrue from boosted employee engagement and productivity.

What is employee recognition?

importance of employee recognition includes showing appreciation to boost morale

Employee recognition – also known as Social Recognition®– is the act of publicly acknowledging employees for who they are and what they do. Through employee appreciation, workers recognize each other and make the workplace feel more inclusive and human.

In fact, recognition is one of the most important factors in driving workplace engagement, productivity, connection, and employee retention.

At its core, recognition is just another word for positive feedback – feedback focused on an employee’s strengths and what they’re doing right. It’s also an expression of thanks and gratitude.

And when it’s done across all levels of an organization, it strengthens teams and makes work more meaningful – and makes companies more successful.

What types of actions should be recognized?

There’s a broad spectrum of efforts and results that deserve to be recognized. It could be celebrating something an employee did with little effort – yet had a phenomenal impact on the organization.

It could be something that failed despite a herculean effort – yet produced a valuable learning moment. Or it could be an otherwise ordinary contribution – yet the employee made it uniquely special.    

In other words, the real value of an employee’s effort is measured not just in what they accomplished, but in how they accomplished it. With that in mind, you might consider giving recognition when you see employees do something:

  • That embodies your company’s values.
  • That goes above and beyond the call of duty.
  • You’d like to see others emulate.
  • That helps your company achieve its mission and goals.
  • Others are noticing and talking about
  • That is otherwise thankless
  • They’ve recently been recognized for – but with a new twist
  • You’d like to see them perform more often.
  • That has impacted company or team business results.
  • That makes your life much easier.

Why is employee recognition important?

employee accomplishments for satisfied employees

When organizations fail to have a vibrant, intentional recognition program in place, the impact is large and far-reaching. As the Gallup report points out, “Experiencing consistently low levels of recognition is a drain on the employee experience and workplace culture that can have serious repercussions.

When organizations fall short on showing employees they are valued, they risk losing their employees altogether.”

The report goes on to note that employees who receive recognition just a few times a year from a manager, supervisor, or other leader, are:

  • 5x as likely to be actively disengaged
  • 74% more likely to say they do not plan to be at their organization in one year
  • 27% more likely to be struggling

Likewise, employees who receive recognition just a few times a year from their peers are:

  • 3x as likely to be actively disengaged
  • 39% more likely to say they do not plan to be at their organization in one year
  • 24% more likely to be struggling  

How does recognition impact the employee experience?

As the Gallup report reminds us, recognition brings the “human” element to the workplace by setting the tone for the entire employee experience. It points out that

When organizations get recognition right, employees are more committed, more engaged and connected to their workplace culture, have stronger working relationships, and feel a sense of belonging at their organizations.

Why is that important? Quite simply, employee engagement is critical for high-performing teams and organizations, and recognition is one of its most vital foundations.

Findings from the report back this up: Employees who agree that their recognition needs are fulfilled, and that recognition is authentic, equitable, and embedded in the culture are far more likely to be engaged:

Of course, this all takes on a renewed importance and poignancy in a time when many employees are working remotely – either all or part of the time. In this dynamic, the need for connection and community is more critical – and more elusive. That’s where the power of recognition comes in.

A Harvard Business Review article agrees. It notes that that “Expressing gratitude is even more important (and challenging) in the context of remote work. The widespread increase in remote work, ushered in by the Covid-19 pandemic, makes gratitude expression all the more important, but also more challenging. That’s because richer communication mediums (e.g., face-to-face) are perceived to be a more authentic means of expressing emotion.”

Likewise, the Gallup report points out that “As a culture-building tactic, recognition creates a consistent source of positive regard that allows employees to participate in the culture and benefit from it, regardless of their working arrangement.

When employees — whether remote, hybrid or on-site — get the right amount of recognition, they feel more connected to their organization’s culture.”

How does recognition impact employee retention?

employee experience well beingA Workhuman® iQ survey of 2,268 full-time workers across the U.S., Canada, and Ireland pointed to four reasons why recognition has a direct impact on employee retention:

1. Recognition strengthens connection to your company culture – while reducing burnout.

When employees have a strong connection to culture, it drives a sense of purpose and collaboration, reduces burnout, and is strongly associated with decreased employee turnover intention.

In short, when workers are thanked, they feel more connected and are more likely to stay with your organization.

That’s because recognition strengthens the essential bonds of a culture that workers want to be a part of. And when employees feel more connected to your organizational culture, they are more likely to stay.

2. Recognition supports and advances your diversity, equity, and inclusion (DE&I) initiatives.

Making DE&I central to your organization’s DNA has a profound and very real power to attract and retain the kind of top talent your organization needs to thrive. Knowing that an organization is genuinely committed to DE&I is a key consideration for many – if not most – of your most valued employees.

The Workhuman survey findings bear this out: 72% of workers said that DE&I is “somewhat” or “very important” in their decision to stay with their current organization.

And the best way to give more than just lip service to your DE&I initiatives? Operationalize them through a unified, cohesive recognition program. Such programs are open to all and in this way, engage everyone in a social experience – creating a more inclusive culture.

3. Recognition builds your work community by celebrating life events.

Why is community important? Bringing people together from across your organization deepens social connections, gives them a sense of belonging, and builds a culture that people want to be a part of – and stay a part of.

That’s why an employee recognition program that celebrates life events is an important tool in retaining valuable employees. And it’s even more important because many workers are either working remotely or in a hybrid arrangement.

According to a Workhuman survey report, remote workers employed at companies that commemorate life events feel more respected (78% vs. 58%} and appreciated (75% vs. 44%) than remote workers at companies that do not. Forging a stronger sense of community and connection makes your organization a place where people want to work – and stay.

4. Recognition creates a psychologically safe, connected work environment.

Witnessing colleagues being thanked publicly makes employees feel more grateful. And that translates into other benefits such as greater appreciation for their achievements and a stronger connection to colleagues and culture. Public appreciation also creates a psychologically safe environment in which employees feel empowered to share opinions and ideas.

frequent recognition boosts employee moraleWhen employees witness moments of appreciation, they feel more respected at work, are more inclined to grade their manager favorably, and report less burnout and stress. The more you can amplify and socialize recognition, the more impact it will have across your organization. Those are the kinds of benefits that will greatly reduce the urge of your workers to look for greener pastures – and encourage them to stay with your organization.

How can a recognition program drive business goals and employee morale?

“Social recognition is an investment with quantifiable returns: increased engagement, productivity, quality, and profitability; decreased employee turnover and absenteeism,” note Eric Mosley and Derek Irvine in their book, “Making Work Human.”

It’s true. Countless studies and volumes of research have proven the effect recognition has on many key business metrics that impact your bottom line. Social recognition is proven to retain employees, increase employee job satisfaction, drive psychological safety, and improve motivation. It also drives engagement. And – attention CFOs – engagement leads directly to improvements to the top and bottom lines, such as increased productivity, job satisfaction, customer loyalty, sales, and profits.

The Gallup research shows that engaged companies have a significant competitive advantage. In today’s business landscape, where there is one disengaged employee for every 2.4 engaged employees, employee engagement can make or break a company. Compared to the bottom quartile, companies in the top quartile for engagement experience 23% higher profitability, 64% fewer safety incidents, and 18% lower employee turnover rates for high-turnover industries.

And what about employee morale? Happy employees are crucial to a healthy, productive, and profitable corporate culture. In fact, according to New York Times bestselling author Shawn Achor, happiness raises nearly every business outcome we can measure, raising sales by 37%, productivity by 31%, accuracy on tasks by 19%, and providing myriad health and quality of life improvements.

But happiness at work isn’t a given. According to a Workhuman white paper, only about half of employees report a happy employee experience, yet 73% of employees report that being recognized makes them happier at work and 35% said it also makes them happier at home. Social recognition amplifies appreciation and relationships by creating a continuous loop of positive feedback in the workplace.

Recognition creates a groundswell of positive thinking throughout an organization, which is also a central driver of performance. And considering all the benefits that come with employee engagement, happiness, and positivity, boosting employee morale through recognition is one of your organization’s most important initiatives.

How can recognition boost company culture and build company brand?

“Recognition is a two-way street,” notes the Gallup report. It goes on to explain that when employees’ contributions and achievements are celebrated through recognition, they become energized, engaged, and motivated.

That incentivizes them to “pay it forward” by becoming “brand ambassadors” for their company – evangelists who “spread the word about products, services, and their workplace.

In other words, when organizations appreciate employees for the value they add, they add [even] more value by attracting customers and future employees to the organization.”

In the heated competition to attract top talent, the power of employee referrals becomes crucial. But as Gallup points out, “only 28% of employees strongly agree they would recommend their organization as a great place to work.”

That number jumps to 68% in organizations with a strong culture of recognition. “In short, when employees work in a positive environment, they tell their friends and families.”

How can recognition boost employee health and wellbeing?

“The best ways organizations can help reinforce the fortitude of their employees is by supporting their health and wellbeing proactively, intentionally, and holistically,” notes the Gallup report.

It points out that recognition is a highly effective way for organizations to demonstrate that they care about the wellbeing of their employees.

In fact, those employees who receive peer recognition – even just a few times a month – are nearly 2x as likely to agree that their company cares about their overall wellbeing.

And those who receive recognition from their manager, supervisor, or a leader a few times a month are nearly three times as likely to agree they work for an organization that cares about their wellbeing.  

Gallup also pointed out that employees who have a good recognition experience at work tend to view their overall lives more positively and are more likely to be thriving personally. “Organizations can help improve employees’ lives by acknowledging their value as people and contributors,” the report observes.

Why is recognition important for leadership?

workplace leaders showing appreciation in the workplaceThere’s another arena in which recognition has a profound and meaningful impact: its ability to make leading individuals and teams easier and more effective.

That’s important because, as Rob Desimone notes in an article for Gallup: “70% of the variance in employee engagement – the level of psychological commitment to work – ties back to the immediate supervisor … From setting expectations and providing supplies and materials, to challenging employees to learn and grow, a good manager guides their employees to tap into their talents in pursuit of higher performance.”

It’s true … leading employees is one of the most important roles managers play, and how well they fulfill this role can have a profound impact on employee engagement, productivity, and tenure. Here are some of the ways recognition helps leaders be inspiring and effective:

1. Gives a more accurate record of employee achievements

Recognition gives leaders a body of information that makes leading easier.

How? When it comes time to create individual development plans or evaluations, you have an accurate, comprehensive record of your employee’s achievements that were created in the moment – rather than trying to recall them months after the fact.

2. Makes giving feedback easier and more effective

Recognition breaks feedback into small, individual moments. As a leader, you can see and appreciate great work in real time – and in manageable bites.

By making feedback a day-to-day process, it becomes part of your regular routine – rather than an imposing, overwhelming burden to deal with at the end of the year. 

And giving consistent, ongoing feedback helps you positively shape behavior, reinforce values, and get peak performance from your employee.

3. Provides a more diverse and accurate view

Because employee recognition is often peer-to-peer, it makes all team members your eyes and ears on the ground. They become witness to your employee’s performance when you can’t be there.

This brings a more diverse, balanced, and rounded view of your employee’s strengths and weaknesses since peers expand the scope of recognition and bring more voices into the conversation.

4. Motivates new employees

Onboarding a new hire? By recognizing them during their first weeks and encouraging them to recognize others, you show your newest reports firsthand what it means to truly practice your values and embrace the behaviors your organization cherishes most.

What are the most effective ways to recognize employees?

According to the Gallup, report, “All recognition matters, from simple, day-to-day “thank-you’s” to companywide awards. But not all recognition is equal.” It identifies five factors that drive the effectiveness of an employee recognition program. Recognition must be:

1. Fulfilling

If employees do not feel fulfilled by their recognition experience, then employers are missing the mark. Creating a fulfilling recognition experience has far more impact than frequency alone. Recognition is about validating effort, value-added and an employee’s inherent worth.

2. Authentic

What makes recognition impactful is what it means to individuals — about themselves, their job, their teams, and workplace — and the organization. If recognition is not perceived to be authentic, it can undermine the experience.

3. Equitable

Although recognition should be targeted and personal, how much recognition others receive matters to the employee. It’s in our human nature.

When employees see recognition that is out of balance — particularly when they feel they are being shorted — it triggers an alarm to their basic need for fairness and damages their overall employee experience.

4. Embedded in the culture

Recognizing employees can be a practice, or it can be the way of life at an organization. The distinction between the two makes a noticeable difference in the daily experience of employees. Simply having a program is not enough.

A culture of recognition is one in which gratitude, praise and appreciation are freely given, regularly received and reach all corners of the organization.

5. Personalized

Employees can have different preferences for how and where they receive recognition. While some employees like being in the spotlight, not everyone does.

Technology-mediated recognition can strike a balance by “packing the punch” of public recognition while being more comfortable for employees who like a low profile.

Organizations that provide a variety of outlets for recognition offer the flexibility to personalize it and ensure it creates the intended impact.

How do you improve employee recognition at your organization?

thanking employees makes employees feel valuedMany organizations may have some form of employee recognition already in place. It may be nothing more than some gift cards in a manager’s desk, or a modest, “homegrown” rewards solution.

And such approaches are fine – as far as they go. But the truth is, there are a number of concrete steps you can take to improve on your organization’s recognition efforts – no matter what form they currently take.

1. Make sure your program is easy to use

If it’s not easy to use, people are not going to use it. The technology of today’s modern, cutting-edge platforms can help ensure employees are comfortable – and eager – to participate in company-wide recognition.

2. Make it reflect your organization’s culture with strong branding ​

Recognition programs should look and feel like they are part of your organization. They should create a common language for your colleagues and reinforce your brand and core values. They should inspire positivity, action, connection, and celebration.

3. Design a program that broadcasts values, and shows a positive business outcome

A well-designed program takes your core values out of the employee handbook, off the wall next to the elevator, and puts it in front of people.

It says, ‘This is what’s important to us. This is what you can be recognized for. An effective program should reinforce a company’s goals and values. After all, that’s what drives the bottom line.

4. Make sure everyone can participate

A well-designed program makes possible widespread participation – both giving and receiving. By expanding a recognition program and empowering peers to recognize each other, you’re going to see it become a part of your culture every day.

And that really reinforces your bottom line and the business goals you’ve set. And it brings your corporate values to life.

5. Be sure it offers meaningful rewards

Just as recognition moments should be meaningful and memorable, so should the recognition rewards themselves. They should be culturally relevant – no matter where on the globe the recipient lives – and they should be timely.  

And when it comes to meaningful rewards, “cash is not king.” A large survey found that 27% of those who received cash rewards spent it on bills; 10% actually forgot how they spent the money.

6. Leverage the data to understand and improve your program

With a true, comprehensive program, data is built into the platform and easily available – and often in formats that anyone on the leadership team can immediately access and use.

And what’s particularly valuable is that you can design a program to deliver the kind of data that’s important to leadership. Turnover? Productivity? Employee engagement? The customer experience?

Analytics can provide a real action plan for individuals, managers, and teams to be able to do their jobs better and work in a more collaborative way.

7. Get executive buy-in

Executive sponsorship plays a key role, especially in the success of a newly introduced program. If you can get leadership buy-in early, it usually works to your advantage because you’re able to demonstrate what the value will be.

When a program is launched effectively, you start to see results immediately.

8. Turn to technology

The “Making Work Human” book points to three essential reasons organizations should capture moments of gratitude in a social recognition platform:

1. The power of gratitude itself: The benefits – for both giver and receiver – “echo out into the culture, as more and more people describe good performance and extra effort.” 

2. Creates teachable moments: By highlighting positive behavior and positive results for all to see, “you provide raw material for understanding subtle organization dynamics.”

3. Expands and enriches a database of human-to-human interactions: “Data analysis can identify which interactions produce which benefits. It can produce ‘aha moments’ for HR and other leaders.” 

9. Share recognition company wide

The key to achieving positive results in an employee recognition program is having the correct volume of reach, frequency, and value. A consistent stream of positive interactions fuels unparalleled, provocative workplace data and human insights.

It draws on your entire organization as a community – unlocking human potential and inspiring people to do the best work of their lives. The data proves it, over and over again.

How can recognition reinforce company values and drive business goals?

According to research from SHRM and Workhuman, values-based programs – programs in which employees are recognized and rewarded for behavior that exemplifies a company’s core values – are more highly adopted (70%) than programs not tied to a company’s core values (30%).

Programs tied to values are also more than 2x as likely to be focused on reinforcing and driving business goals; 33% more likely to be focused on empowering employees; and 29% more likely to be focused on creating a positive employer brand.

So, why don’t all organizations choose values-based recognition programs? After all, programs tied to values are more than two times as likely to be focused on reinforcing/driving business goals, 33% more likely to be focused on empowering employees, and 29% more likely to be focused on creating a positive employer brand.

Conversely, programs not tied to values are much more likely to be designed as cost-cutting measures with no associated business goals.

The survey went further to uncover which awards have the most positive impact if the program is designed with associated employee awards.

Employee choice is important: 94% of surveyed professionals said points or a certain dollar value that allow for employee choice – such as experiences, merchandise, or gift cards – have a very positive impact on employee motivation.

Finally, HR is nearly 6x as likely to rate a program as excellent if it’s integrated with their overall people/talent strategy, compared to a program that’s only somewhat tied to a company’s people/talent strategy.

The best way to craft an effective program is to have it incorporated as a key piece of the organization’s overall people goals.

HR leaders should treat recognizing employees as not just a program, but a management practice that has very real business impact.

And the way in which the program is built is important – tie it to company values, associate it with choice-driven rewards, and integrate it into an overall people strategy.