Back Close Menu

How to Build an Effective Employee Recognition Program

January 17, 2023

There is no question that companies with an employee recognition program are becoming more common. But does this mean that they actually work?

Employee recognition programs can take many different forms, but at their core, they all aim to appreciate employees for a job well done. There are many benefits to creating an employee recognition program, but there are also some potential downsides.

In this article, we'll explore both sides of the debate and help you decide if an employee recognition program is right for your business.


What Is an Employee Recognition Program and How Do They Work?

An employee recognition program is a system that businesses put in place to acknowledge employees for their hard work and achievements. Employee recognition programs can take many different forms, but they all have the same goal-to show appreciation for employees. So, how do you create a culture of recognition?

There are many different ways to show appreciation, but some common methods of employee recognition include:

  • Giving employees a day off
  • Giving employees a monetary bonus
  • Recognising employees at company-wide meetings
  • Giving employees a gift card or voucher
  • Implementing a social recognition platform

They work by providing employees with motivation to work harder and achieve more, therefore improving engagement. Employee recognition programs can also help to improve morale and build a stronger sense of team unity.


Types of Employee Recognition Programs

There are many different types of employee recognition programs, but they can all be classified into three main categories.


Social/Peer-to-Peer Recognition

As the name suggests, peer recognition occurs when employees express appreciation for their colleagues. This is sometimes also known as social recognition.

A peer recognition program is a structured plan that builds recognition into a company's culture. Some peer recognition programs are housed via an online platform accessible to all employees in a company, similar to how social media platforms operate.

Social/peer-to-peer recognition can be a great way to open up recognition to the whole company and really build recognition into the company culture, all while taking some of the responsibility off of managers' shoulders.

This isn't to say that managers can skip out on recognition. In fact, managers oftentimes need to lead by example to win employee buy-in. But once a peer recognition platform has been implemented and adopted, recognition is truly owned by everyone.


RELATED: What is Social Recognition?


Monetary Recognition

Money talks in almost every aspect of life, and work is no different. Monetary recognition is one of the most popular and effective ways to show appreciation for employees.

Monetary recognition can come in many different forms, but some common examples include:

  • Giving employees a bonus
  • Giving employees a raise
  • Offering employees cash rewards


While monetary recognition is often very effective, it's impersonal. So, it's important to remember that it's not the only way to show appreciation. In fact, money should not be the only form of recognition you give employees.

Too much focus on monetary rewards can also create a competitive and cutthroat environment, which is often counter-productive. It's important to find a balance that works for your company culture.


Benefits of an Employee Recognition Program

Employee appreciation is a fundamental building block of any successful business. Employee recognition programs are a great way to show your employees that you appreciate their hard work. When employees feel appreciated, they are more likely to be engaged and willing to work harder.


1. Increased Productivity

Employee recognition programs have been shown to lead to increased productivity. In fact, research from Deloitte's Talent Survey showed that companies with an employee recognition program are 14% more engaged and productive.


2. Decreased Employee Turnover

When an employee doesn't feel valued for their efforts at work, 76% of them will look for a new job opportunity, with businesses losing about $1 trillion annually because of turnover. Employee recognition programs can help to improve employee retention by making employees feel appreciated. When employees feel valued, they are less likely to look for a new job.


Employee recognition programs can also help to create a strong sense of team unity. When employees feel like they are part of a team, they are less likely to leave.


3. Improved Team Culture

Fostering a culture of inclusion by making employees feel seen for their efforts can have a profound impact on team morale. Employee recognition programs are a great way to improve team culture by making employees feel appreciated.

Employee recognition also empowers employees to align with company values. Giving them an opportunity to connect their efforts to the overall company mission can create a feeling of inclusion and belonging, which is essential for a strong team culture.


employee recognition program in use by three employees

The Downsides of an Employee Recognition Program

Employee recognition programs are not without their challenges. While they can have a positive impact on employee productivity, retention, and morale, there are also some potential downsides to consider.


  • Competition: Employee recognition programs can create a sense of competition among employees. While a little healthy competition can be motivating, too much focus on rewards can create a hostile environment that is counter-productive.
  • Decreased Productivity: Employee recognition programs can also lead to decreased productivity if they are not properly implemented. For example, if employee recognition is given for meeting unrealistic goals, it can lead to employees cutting corners or taking shortcuts. This can ultimately have a negative impact on productivity.
  • Time-Consuming: Employee recognition programs can also be time-consuming and expensive to implement. If not done correctly, they can end up costing your company time and money, with little benefit.
  • Limited Raises: Employee recognition programs can sometimes be seen as a way for businesses to avoid giving employees raises or other forms of financial compensation. This can lead to employees feeling undervalued. That's why it's important to continue paying employees fair wages.


How to Make a Employee Recognition Program Successful

Employee recognition programs can be a great way to improve employee productivity, retention, and morale. To make sure your employee recognition program is successful, here are a few tips:


1. Be Clear About Goals

Employee recognition programs should have clearly defined goals. This will help to ensure that the program is properly aligned with your company's overall mission. Be sure to outline how specific behaviors will be tied to the recognition. Use your company values as paths to encourage behavior that exemplifies what those values mean.


2. Make It Easy to Use

The easier it's for employees to use the employee recognition program, the more successful it will be. Employee recognition programs should be accessible and easy to understand. This is where an online social recognition platform can be convenient. Also, be sure to provide clear instructions on how the program works and how employees can earn rewards.


3. Be Consistent

Employee recognition should be given out on a regular basis. This will help to ensure that employees feel appreciated and valued. Try to create a system that is fair and consistent. Be sure to recognise employees for their individual efforts as well as their team contributions.


4. Avoid Comparison

Employee recognition programs should avoid creating a sense of competition among employees. Instead, they should focus on celebrating each individual's accomplishments.


5. Make It Timely

Employee recognition should be given in a timely manner. Recognising someone in real time shows that you are paying attention to and acknowledging their efforts on a consistent basis.


6. Be Genuine

Employee recognition should be genuine and authentic. This will help to ensure that employees feel valued for their contributions. Make it personal by customising your messages to each individual employee.


7. Communicate Regularly

Regular communication is essential for any employee recognition program. Be sure to keep employees updated on the goals of the program and how they can earn rewards. Keep the lines of communication open so that employees can provide feedback on the program.


8. Get Executive Buy-In

An employee recognition program is only as strong as the support behind it, which is why executive buy-in is essential. When presenting the idea, be sure to include tangible benefits of a recognition program like talent retention, employee engagement, and an overall positive impact on the company's bottom line.


Examples of Effective Modern Employee Recognition Programs

As you build your own employee recognition program, it's important to keep in mind what other businesses are doing. Here are a few examples of effective modern employee recognition programs:


  • Google's "Peer Bonuses'' program allows employees to give each other cash bonuses for a job well done. This form of social recognition encourages team members to take notice of each other.
  • Amazon gives out a "Just Do It" award each year to employees who go above and beyond with innovations on behalf of their customers. This encourages employees to think outside the box and speak up when they have an idea.
  • Southwest Airlines allows employees to nominate each other for "Spirit Awards." These awards are given to employees who exemplify the company's core values.
  • Globoforce empowers employees to give peer-to-peer recognition to recognise those who may be doing a great job but fly under the radar.


Build An Employee Recognition Program That Works

Employee recognition programs can be a great way to improve employee productivity, retention, and morale. When done correctly, they can be an invaluable tool for businesses. However, it is important to keep in mind that employee recognition programs should have clear goals, be easy to use, and be consistent. Most importantly, they should be genuine and authentic.

If you're thinking about implementing an employee recognition program, schedule a demo with our team to see how Terryberry can transform your organisation's recognition and employee benefits programs.