Back to Basics: What Is Employee Recognition?

7-minute read

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I’ll never forget my first true employee recognition moment.

I had just started working for Workhuman®, and one morning I received an email with the subject line: “Your Gratitudes Shout Out! Award from Kevin Mullins.” When I opened the email, I learned that Kevin – my manager at the time – had awarded me a $100 reward for “teamwork.” Accompanying the announcement was a brief message from Kevin thanking me for the impact I had made in my first few days on the job. In fact, Kevin’s note was perhaps the best part of my recognition experience. Yes, even better than the money.

Then the real magic happened. I began to receive comments from my peers – posted on an online feed – welcoming me and adding their thanks and appreciation for my efforts. I had never felt so energized, motivated, and appreciated as I did in those days after receiving my first award.

That’s the way it is with true employee recognition. It has a transformative power to lift employees – inspiring them to do the best work of their lives. And in the process, it helps take companies to new levels of success.

With that in mind, let’s take a look at some of the most commonly asked questions surrounding employee recognition. It will help you understand how it can transform your employees – and your bottom line

What is employee recognition?

The most successful businesses know that the more gratitude in a company, the better it performs. The data proves it, over and over again. And the best way to infuse gratitude into your organization? Peer-to-peer employee recognition – connecting people to shared purpose through a consistent stream of gratitude and acknowledgement.

Employee recognition – also known as Social Recognition® – is the act of publicly acknowledging your people for who they are and what they do. With employee recognition, workers recognize each other and make the workplace feel more inclusive and human. Employee recognition is one of the most important factors in driving workplace engagement, productivity, and employee retention.

Learn more about the ROI of Social Recognition here.

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

What defines an effective and successful employee recognition program?

Historically, recognition has been tactical in nature – consisting of managers randomly handing out gift cards from a drawer or years-of-service programs that give tenured employees items such as watches or pins.

A comprehensive, strategic employee recognition program, on the other hand, leverages technology to amplify recognition and broadcast it throughout your company. That way, everyone can see what your organization values, participate in congratulating and reinforcing those values, and be inspired to emulate them.

Read case studies from companies with successful recognition programs here.

Making work more human through employee recognition drives results by capturing, amplifying, and echoing recognition moments across the organization. Social recognition is different from traditional recognition because it’s:

  • Democratic, meaning it can occur between employees, regardless of level
  • Tied back to your core values to connect culture to shared purpose
  • A source of unparalled, provocative workplace data and human insights

Culture-based programs – ones that allow for peer-to-peer recognition – are better for the bottom line. Peer-to-peer programs create a stronger sense of belonging, and compared to “e-thanks,” programs funded at 1% or more of payroll are 86% more likely to be rated as good or excellent. With its strong impact on engagement, employee recognition drives business outcomes in a direct and compelling way.

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 innovating people to do the best work of their lives. The data proves it, over and over again.

What are the benefits of employee recognition?

  1. Drives excellence – Employee recognition is the foundation for creating a culture of excellence – one that fosters appreciation and empowers individuals. It strengthens relationships and provides a clear purpose aligned to achievable goals. A culture of excellence allows business leaders to drive toward key goals like retention, culture, and employee happiness by connecting people and culture to shared purpose.
  2. Drives engagement – Eighty-four percent of those surveyed in the SHRM/Workhuman Employee Recognition Survey said that social recognition measurably and positively impacted engagement.
  3. Reinforces company values – Employee recognition puts the power of gratitude to work, aligning your people and culture to a shared purpose. Because employee recognition is designed with rewards that map back specifically to each value, it integrates those ideals into employees’ everyday thoughts and actions.
  4. Nurtures trust – Strong organizational trust is a key indicator for profitability. Research has shown that workers who trust senior leaders are nearly 2x as likely to be engaged and love their jobs.
  5. Delivers vital data – Employee recognition provides the crowdsourced data that will deliver deep insights into your culture and quickly spot your cultural energizers and top performers. Data tools such as Workhuman’s Crowdsourced Performance Report and Talent Maps® let you visualize the connections among employees and identify key performers and influencers for the purposes of performance management, succession planning, and retention. Data delivered through an employee recognition program is the only true, impartial performance data in your company.

How does employee recognition impact the bottom line?

How much is employee turnover costing your business?

A Korn Ferry study estimates the cost of replacing an employee is between 50 and 150% of salary. For specialist, senior, and executive positions, the cost per employee rises to up to 213% of salary. When you factor in the intellectual loss, and the time and productivity lost to vacancies and onboarding, you begin to see just how significant the “hidden costs” of employee turnover really are.

Research overwhelmingly shows that recognized employees are more likely to stick with you. In the SHRM/Workhuman Employee Recognition Survey, 68% of organizations with employee recognition reported a direct positive impact on retention.  IBM’s WorkTrends study showed “intention to leave is twice as high among employees who do not receive recognition (51%) compared to those who do (25%).” That's because employees want to be acknowledged for who they are and what they do.

As the research shows, employee recognition measurably and positively impacts engagement. And engagement leads directly to improvements to the top and bottom lines, such as increased productivity, customer loyalty, sales, and profits.

What are some examples of the impact of employee recognition?

Here are real-life success stories some of the top companies in the world have achieved, thanks to an effective, strategic employee recognition program:

  • Cisco – The most engaged Cisco employees receive 10+ awards per year from 10+ unique nominators.
  • Eaton – Data from its employee recognition program shows employees who receive recognition are 2x less likely to leave the organization.
  • P&G – Consolidated all recognition into one SaaS program for 140,000 employees in 100+ countries.
  • LinkedIn – Achieved a 96% retention rate for employees who receive four or more awards; among new hires, retention rates are nearly 10 percentage points greater for employees who receive four or more awards.
  • Denso – Two months after launch, their engagement survey showed a 5% increase in engagement, recognition, and leader/employee relationship scores.
  • Symantec – In just nine months, Symantec consolidated a “culture of cultures” into one culture of recognition for 20,500 employees in 50 countries.
  • AtlantiCare – Within the first year, AtlantiCare saw an 86% adoption rate and a 5-point increase in recognition scores on its annual engagement survey.

I’ve had the good fortune to receive many more Gratitudes during my career at Workhuman. And – like that very first reward – each one has renewed my spirit and inspired me to do the best work of my life. A well-designed, strategic employee recognition program can do the same for your employees.

Want to discover how you can bring the power of employee recognition to your organization?

Visit: workhuman.com/products/social-recognition

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About the Author

Aaron Kinne

Aaron Kinne is a senior writer at Workhuman.

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