Recognize the Power of Employee Recognition

A simple “thank you” and “job well done” can go a long way in the workplace.

Visual communication platform provider Canva recently released insights from a survey of 1,500 U.S. and Australian business professionals, highlighting the strong link between workplace recognition and job satisfaction. According to the survey:

81% of employees who feel highly appreciated report elevated job satisfaction, compared to just 7% among those who feel unappreciated or neutral.
94% of employees who feel highly appreciated love their workplace, and 91% love their job. In stark contrast, only 18% of those who feel unappreciated or neutral report loving their workplace, and just 33% say they love their job.
81% of employees who are very satisfied believe their employer has fostered a culture of appreciation, compared to just 8% of those who are neutral or dissatisfied.

Gallup research also found workplace recognition motivates employees, provides them with a sense of accomplishment and makes them feel valued for their work.

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“While compensation and benefits are foundational to a total rewards strategy, if employees do not feel recognized and appreciated for their efforts, it will diminish the employee experience, negatively impacting work performance, retention and well-being,” said Kathleen Schulz, a vice president and global innovation leader at Gallagher.

Why Recognition Matters

Employee recognition is not just a “nice-to-have” practice but a strategic business tool that has a great impact on various aspects of an organization, said Shilpi Arora, a total rewards content manager at WorldatWork.

“[Organizations] that prioritize recognition see higher performance levels, reduced turnover and enhanced employee loyalty, making recognition a crucial component of successful business strategies,” she said.

Gallagher’s latest Organizational Well-Being Poll showed enhancing employee recognition and appreciation as the number one strategic priority in 2024, up three spots from 2023.

“Sophisticated technology platforms, customized communications and budget dollars related to recognition incentives are on the rise and can truly transform recognition into a cultural imperative,” Schulz said.

Additionally, recognition tends to employees’ physiological needs, so employees have a reason to show up to work other than a paycheck, said Brie Harvey, head of market research and community at Achievers, an employee experience and recognition platform.

Achievers Workforce Institute’s 2024 Engagement and Retention report found that employees who receive recognition monthly are 2.5 times more likely to feel a strong sense of belonging at work compared to those recognized quarterly or less, and they’re also twice as engaged and productive.

“Seventy-two percent of employees say they’d rather work in a job where they feel supported and valued over one with a 30% pay increase, so it’s no surprise that organizations with strong thank-you cultures see higher employee retention,” Harvey said.

The report also found low earners who felt appreciated for their work were 12% less motivated by money than high earners who did not feel appreciated.

“The fact employees paid under market rate who received at least one recognition per month were 33% more likely to say they’re not job hunting, compared to their cohorts who did not receive monthly recognition, demonstrates the buffering effect of emotional salary,” Harvey said.

Types of Workplace Recognition

Workplace recognition comes in many forms, each customized for employee needs and preferences, Arora said.

“Recognition should be tailored according to the unique motivations, preferences and work styles of each employee,” she said. “It should be customized so employees feel truly valued, and that the recognition drives the desired behavior, such as increased motivation, engagement and loyalty.”

These types of recognition can range from informal, day-to-day acknowledgments to formal, structured programs. According to Arora and Schulz, common types of workplace recognition include:

Verbal recognition
Peer-to-peer recognition
Recognition from leadership
Employee-of-the-month programs
Awards for lengths of service
Promotional awards
Employer swag/merchandise
Department- or team-specific events
Small personal gifts/gift cards
Thank-you cards
Special lunches or other treats
Spot bonuses
Corporate celebrations and events

Harvey said taking a blended approach — encouraging both formal and informal displays of gratitude — can also yield good results.

“The ultimate goal of any recognition program should be to ensure recognition is multidirectional and flowing from the bottom up, side to side, top down and in all directions so all the unsung heroes of your business are illuminated and silos are eliminated,” she said.

Schulz added that beyond work-related achievements, recognition can also honor more personal milestones such as marriage, educational accomplishments and the birth of a child.

“These work and non-work-related efforts can help employees feel a deeper connection to the workplace, positively impacting retention and well-being,” she said.

Recognition Mistakes to Avoid

Recognition, like culture and pride, can’t be mandated — it must be inspired, Schulz said.

“You can’t force the fun,” she explained. “Well-intended organizations sometimes put a ‘recognition quota’ on managers. For example, each manager must recognize three employees per month. While this is intended to encourage positive behaviors, managers often realize at the end of the month that they are below quota and act quickly to stay on target. This can diminish the value to the receiver if the recognition feels forced.”

Focusing too much on tactics and not enough on communication can lead to inconsistency in how recognition is delivered, Schulz noted. Therefore, training is especially important for leaders as their messaging and behavior significantly influences employee perceptions and behaviors. (Gallagher’s 2023 Organizational Well-Being Poll found only 26% employers implement best-practice training on how to effectively deliver recognition.)

Harvey encouraged employers to adopt a continuous learning approach so employees are continuously reminded about why calling out meaningful effort should matter to them and how to express appreciation effectively.

“If the people in your business don’t know how to recognize effectively, it doesn’t matter what technology or processes you put in place,” Harvey said. “You’re going to be like a salmon swimming upstream until everyone understands that there’s a huge difference between praise and recognition.”

Praise, according to Harvey, is like a vague pat on the back, while recognition provides clarity about what a person did that was exemplary and why.

“It shouldn’t take more than two minutes but it does require building the muscle memory of being able to execute the one-two punch of describing in detail what the person did and why that matters to the bigger picture. What was the impact on the people or things that matter to the organization?” Harvey said.

Additionally, Schulz cautioned employers of equity issues. “Recognizing the same individuals over and over, recognizing those in the office more frequently than remote or hybrid employees, and in general not having clarity on what the criteria is for being recognized can dampen engagement,” she said.

Creating a Recognition Program

Integrated recognition starts early, happens often and is continual throughout the entire employee lifecycle, Schulz said.

“Getting input from employees through engagement surveys, focus groups, and different types of listening strategies and demographic analysis will help ensure a strategy that is relevant and valued by all generations in the workforce,” she explained.

Regardless of whether a financial or non-financial gift accompanies recognition, Schulz said a recognition program should be:

Specific. Make recognition very specific to enhance meaningfulness.
Connected. Recognize behaviors and or achievements that bring your mission and guiding values to life.
Authentic and sincere. For maximum impact, recognition needs to be delivered sincerely and authentically. This can be tough as personality styles and generational characteristics may lead to inconsistent delivery. Leaders should understand how important this is and how to deliver consistently.
Timely. Deliver recognition as timely as possible.
Public, when appropriate. Public recognition magnifies the impact to the receiver and helps other employees understand the behaviors that are valued by the organization. However, recognition needs to be personalized, and not everyone values or is comfortable with being publicly recognized. It’s important to understand the preferences of the receiver.

Measuring a Program’s Success

According to Schulz, once a recognition program is put into place, employers can understand the impact of how well-recognized and appreciated employees feel by evaluating:

Employee engagement surveys
Safety metrics
Absenteeism rates
Trust in leadership
Turnover/retention
Mental healthcare-related claims
Employee willingness to promote their organization as a great place to work (employee Net Promoter Score)
Productivity

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