Why Employee Recognition Is Important (and Key Benefits)

Employees are struggling with burnout, disconnection, and low morale more than ever before. But there’s a clear solution: recognition. Recognition is the number one ask from employees in this new normal. The vast majority — 82% — wish that they received more recognition. And meeting this desire can have a huge effect on key contributors to your bottom line, like employee engagement and retention.

Let’s look at some of the biggest ways employee recognition can impact your business.

The importance of employee recognition

If your organization doesn’t prioritize employee recognition, you’re missing out on a big boost to your bottom line. In fact, companies that practice recognition are more likely to improve stock prices, NPS scores, and employee performance.

Take a peek under the hood of your peers’ recognition programs to see how yours compares in this one-of-a-kind report.

Let’s take a deep dive into some of the many ways recognition matters.

Engagement

There may not be any aspect of the employee experience more impactful than engagement, and recognition is the fastest way to an engaged workforce. Doubling the number of recognitions in an organization leads to a five-point increase in employee engagement. And organizations with highly-rated cultures of recognition are more than twice as likely to see improved employee engagement.

Frequent recognition makes the impact even greater. The Achievers Workforce Institute found that half of employees recognized within the past week were very engaged. This dropped to less than a third for employees recognized in the last month and only 16% for those recognized more than a year ago.

Bayhealth Medical saw the link between engagement and recognition firsthand when they implemented a recognition program. Bayhealth employees felt a greater sense of belonging and connection with their coworkers, a key part of engagement.

“Integrating technology that streamlines and encourages regular recognition creates a culture rooted in said practices, which inspires a more engaged and satisfied workforce.” – Lauren Brittingham, Director, Organizational Development, Bayhealth

Productivity

When employees know they’re appreciated, it shows in their work: 90% say that recognition motivates them to give more effort. Both employee productivity and performance are 14% higher in organizations that actively practice recognition.

Employees’ productivity is boosted even further when they’re recognized for specific actions that contribute to the organization’s success. It’s true that what gets recognized, gets repeated. Almost all employees — 92% — say that they’re more likely to repeat actions they receive recognition for.

Retention

Employees who feel appreciated are more likely to stick with an organization, in good times and bad. A massive 91% of employees say that a strong culture of recognition makes them want to work for a company. And recognition is among the most effective non-financial factors employee retention. Organizations that rate their culture of recognition highly are also 3 times more likely to see increased employee retention.

Coborn’s, a retail and grocery chain that employs 9,200 people across the U.S. Midwest, saw the relationship between recognition and retention firsthand after they implemented a recognition program. Stores where employees received recognition more frequently typically also saw higher retention rates. In addition, employees who were recognized three or more times a month were six times less likely to leave.

Satisfaction

When your employees are satisfied, they’re happy with their job, and that high morale affects every minute of their day. Unsurprisingly, employees who receive recognition are more satisfied, but even giving recognition boosts happiness, according to 91% of employees.

Happy, appreciated employees mean happy customers. Meijer, a U.S. family-owned superstore chain, found that increasing the frequency of employee recognition from twice a month to twice a week led to a 5% increase in customer satisfaction. Meijer stores with higher recognition rates also reported higher customer satisfaction overall.

“If you aren’t proactively finding ways to frequently recognize your team, you won’t be in a position to improve your company’s customer focus. The employee experience ultimately drives the customer experience.” – Vanessa Brangwyn, Chief Customer Officer, Achievers

Culture

Example after example shows that practicing recognition is a surefire way to develop the culture you want to see at your organization. For instance, Meijer found that the strength of its in-store networks increased after introducing its recognition program. It became “Great Places to Work” certified for the first time within three years of starting its recognition initiative.

Recognition is one of the best ways to establish cultural expectations, so if you’re looking to strengthen your team’s relationships, start today. Peer-to-peer recognition is key as well: two-thirds of organizations realize it’s a necessary part of any cultural transformation.

How to start creating a culture of recognition

Almost half of employees aren’t satisfied with the level of recognition they receive. So how can you ensure your employees don’t fall into that camp? Follow these best practices, and you’ll be well on your way.

Practice both social and monetary recognition

Any recognition program should include both social and monetary components — the latter in the form of a points-based reward system. This lets employees earn points and redeem them for rewards they actually want. Social recognition can be even more impactful than rewards, so prioritizing each is the best approach.

Include everyone in your recognition program

The more team members who actively show recognition, the greater the impact. Encourage participation in your recognition program on every level: peer-to-peer, manager-to-staff, staff-to-leader, and beyond. This is easier when leaders frequently show appreciation and encourage others to do the same. In fact, 44% of employees value recognition from leaders above their direct supervisor the most.

Publicize recognition

Giving employees the option of making recognition public is an excellent way to amplify its effect. This can take the form of a company newsfeed or a newsletter. With the right recognition platform, you can also give your employees the spotlight recognitions they find especially meaningful by liking them, commenting, or “boosting” them through awarding additional reward points.

Encourage frequent recognition

As noted above, the more frequently employees receive recognition, the greater the effect. When organizations show appreciation to employees frequently, they’re 41% more likely to see increased retention and 34% more likely to see increased engagement.

Keep recognition specific

You know that employees are more likely to repeat behaviors they’re recognized for, but how can you clearly link each recognition to specific employee actions? Simple: recognize behavior in the moment. Real-time recognition makes it far easier to establish a direct link to the actions you appreciate and want to see more of. Employees notice when appreciation is personal and specific, and they find it all the more meaningful because of that.

“Our research indicates that the top important factor [of effective recognition] is correct alignment to company values. So we want to ensure that an organization is recognizing those behaviors that they want to see demonstrated more frequently by their people.” – Matt Seadon, GM APAC, Achievers

Leverage recognition tools

Reward and recognition (R&R) platforms are a must if you want to build a truly exceptional culture of recognition. R&R users are 72% more likely to rate their culture of recognition highly and 23% more likely to rate their employer brand highly. Their organizations are 160% more likely to recognize employees more than twice a year as well.

All the practices above are within easy reach using a reward and recognition platform. And a R&R solution lets everyone participate in your recognition program from anywhere with an internet connection, using the device of their choice.

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