“Treat employees like they make a difference and they will.”
Jim Goodnight
8 Key Benefits of Implementing Employee Recognition Programs by Katerina Pouspourika
The importance of employee recognition in 2020 is well documented. Yet there are still a lot of companies operating with HR policies and management practices in place that don’t seem to be aware of or acknowledge the benefits of recognizing and awarding employees for their work.
Whether you’re a manager at a larger organization or the owner of a small and growing start-up here are eight proven major benefits of employee recognition programs.
1. Higher Motivation. Highly motivated and efficient employees are one of the key forces that drive growth and success. This applies to corporations, small businesses and charitable organizations alike. If employees get recognized for their hard work and contribution they will perform better. Praise and commendation from manager’s rank as the top performance motivator even beating out financial incentives.
2. Lower Employee Frustration. If your workforce is frustrated and feeling underappreciated trouble is brewing on the horizon. One of the root causes of employee frustration is that they feel underappreciated for their contribution. Companies that have quality employee recognition programs in place report 28.6% lower frustration levels than their counterparts who don’t implement these initiatives. Prolonged frustration level can lead to turn-over which will be covered next.
3. Improved Retention Rates. Employee turnover is a huge issue for many companies, 3. particularly in high turnover sectors and industries. As a manager, it’s crucial to understand which employees benefits help retain top talent. The cost of firing and hiring is an unwelcome expense that can significantly cut into profitability, not just due to legal and settlement costs but the time it takes to hire and train new talent. Companies with effective employee recognition programs in place report a 23.2% lower turnover rate.
4. Better Performance. Better performance typically goes hand in hand with higher motivation. If your employees are motivated that will directly translate into improved productivity and performance. 60% of surveyed organizations credit employee recognition as one of the most valuable drivers to boost individual performance. A performance like any of these benefits can and should be tracked. This will make it easy to measure the success of recognition initiatives.
5. Improved Customer Satisfaction Rates. Happy employees mean happy customers, especially when it comes to customer-facing teams. It should be no surprise that happy and motivated staff will do a better job of serving and supporting customers. 41% of companies that have tracked customer satisfaction rates prior to implementing peer-to-peer recognition and after have noticed positive improvements. Ensuring your employees and customers are satisfied is a win-win.
6. Increased Revenue. Besides wanting to do a good job from a management perspective, increased revenue alone should motivate company owners and executives to implement employee recognition initiatives. Higher motivation, better performance and customer satisfaction can have a significant impact on your gross sales and bottom line. Peer-to-peer recognition is the more effective method over manager-only. Peer-to-peer has a 35.7% higher chance to impact financial key performance metrics than manager-only.
7. Broader Engagement. Happy and appreciated employees also translate to broader engagement company-wide. Engagement is often overlooked as a key benefit but it is crucial to morale and company culture. Leading a company with poor company culture is a difficult undertaking and not sustainable. 85% of companies that allocated 1% or more of their payroll to employee recognition see a positive impact on engagement.
8. Enhanced Employee Satisfaction. Giving appropriate recognition ranks very high when it comes to employee satisfaction, ideally peer-to-peer but manager-only is a sufficient starting point. When employees were asked how managers could improve satisfaction and engagement 58% simply answered ‘give recognition’.
It’s one thing to understand the importance and benefits of employee recognition programs. It’s another to properly implement and manage them. The success of employee recognition programs comes down to how they are structured and managed. If you are in a larger organization the head of HR should definitely spearhead this initiative to ensure proper implementation and acceptance within the company culture.
Additional Reading
Make Their Day!: Employee Recognition That Works by Cindy Ventrice
Zapp! The Lightning of Empowerment: How to Improve Quality, Productivity, and Employee Satisfaction by William Byham, Jeff Cox
Point of Reflection
“Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free and worth a fortune.”
Sam Walton
“Don’t worry when you are not recognized, but strive to be worthy of recognition.”
Abraham Lincoln