What is Employee Recognition? Why is it important?

Employee recognition refers to the act of acknowledging an individual or team’s behavior, performance, effort and accomplishment that help the organizational goals and values. Recognition encourages employees to repeat good performances.

An employee is holding a trophy and other people are applauding.

Employee recognition, as important as it is, can become exhausting for any leader. Most of the exhaustion comes from spending tons of time, money and energy on recognizing employees and not getting a fruitful result. It happens because many leaders are still confused between recognition and incentives.

Recognition is a form of non-monetary reward. Thus, it has nothing to do with money. It simply refers to witnessing, approving and appreciating positive contributions of the employees, making them realize that they are being noticed and that their works are valued.

Why is employee recognition important?

Gone are those days when an employer could have any work done from employees by adding monetary rewards to tasks. Majority of the present-day employees value praise over a gift and this has been proven scientifically.

According to an online survey site, whose statistics are updated in real time by a large data sample coming from over 150 countries and more than 1000 organizations, 82% of employees have upvoted praise against gifts and sadly, 63% of them feel like they don’t get enough praise.

According to another study published in Dr. Donald Clifton’s book, How Full is Your Bucket, the top reason people leave their job is because they don’t feel appreciated.

Also, in social psychology, it’s well documented that adding monetary incentives to a task lowers motivation. For example, when a task is extrinsically rewarded, employees may feel motivated for a certain time or until the task finishes. But the next time, when the reward is lowered or removed, employees’ interests in the task drops and intrinsic motivation is gone. There arises the need for the extrinsic rewards to be offered continuously to keep even simple activities going and it can cost the company a lot.

Thus, it is really important for employers to understand the importance of recognition. Given below is a list of importance of employee recognition.

  1. Employees who feel praised/valued often go on to achieve beyond expectations.
  2. They are the ones with the highest level of motivation, productivity, and morale.
  3. Recognition builds loyalty in the employees.
  4. Recognition improves employee retention. Employees who feel appreciated are more likely to stay with the organization in the long run.
  5. Employee recognition develops good communication between employer and employees.
  6. Employee recognition strengthens the employee-organization relationship. It develops a sense of ownership in the employees.
  7. Recognition increases engagement among the colleagues. Employees who feel appreciated are confident while the unrecognized employees tend to be reserved.
  8. Recognition adds humanity in the workplace.
  9. Recognition creates a way for direct feedback for individual and teams.
  10. Recognition lowers stress and frustration and increases job satisfaction in employees.
  11. Employees who feel praised and valued believe that they have career advancement opportunities.
  12. Employees who feel valued would recommend their organization as a good working place to others.

While employee recognition is helpful in improving employees’ intrinsic motivation, it’s ultimate beneficiary is the organization. Employees with a high level of job satisfaction tend to stay with the organization for a longer time, reducing organization’s costs of interviewing, screening, recruiting, training, etc. Moreover, it helps the organization in building stronger employment brand.

Types of employee recognition

Employees can be praised or appreciated for any given possibilities like personal accomplishments, team accomplishments, milestones, length of service, etc. There are different ways they can receive appreciation from, on the basis of which employee recognition has been categorized into following types.

Top-down recognition

In this system, employers/managers/supervisors witness, approve and appreciate the contributions of employees. Recognition can be tangible like an award, gold stars, etc. or intangible like verbal praise.

For example: Nathan’s sales number exceeded his quota for this month. To recognize his accomplishment, the manager felicitated him with “Employee of the Month” award for his valuable contribution.

Peer-to-peer recognition

In this system, all the members of the organization are empowered to recognize and acknowledge the contribution of every other member.

For example: Despite an already busy schedule, Julie from marketing department manages to help her colleague Suzanna at customer service department who is having a difficult time handling the customers at the desk. For her contribution, Suzanna gives Julie a gold star.

Customer-to-employee recognition

In this system, customers acknowledge the employees for the valuable service they receive.

For example: At Trendz Salon, a customer was extremely impressed with Jahir (a barber)’s attention to details and his end result. The customer verbally praised him for his good work and thanked him sincerely.

Points to remember for employee recognition

Employee recognition is a crucial practice, which if used properly, can add great values to the organization. Here are some points that an employer must remember for effective employee recognition.

  1. Employee recognition should be a common practice in an organization. All the members of the organization should make it a habit to appreciate their subordinates or colleagues whenever they make a positive contribution. This contributes to a healthy working environment.
  2. When recognizing employees for a group achievement, it is important for each individual to be distinguished for their respective contribution. Employers/managers must not focus on only one employee and must not overlook any of the employees’ contribution. Group recognition should be done carefully in a way that it builds the team and not break them.
  3. Recognition must be done at the right time in order to be effective. More importantly, it should be sincere and heartfelt. Employees have the ability to sense if the acknowledgment is only out of duty.
  4. Recognition must be provided by the party who is actually benefited.