The Science of Employee Recognition and Rewards

The Science of Employee Recognition and Rewards

Table of Contents

Think recognition is fluff? Think again. The open secret of creating engaged workforces lies in motivational psychology — aka, the power of employee recognition and rewards.

Why is employee recognition so important?

Employee recognition is a critical part of employee engagement. As such, recognition has an undeniable effect on a business’s performance and profitability.

Many managers use compensation and cash rewards in lieu of thoughtful employee recognition. And is that so wrong? Money is a great motivator, except for one thing. Money alone doesn’t work. Compensation may seem like a no-brainer. However studies show financial incentives can actually rob employees of the joy associated with doing their work and lose value over time.

So what can companies do to keep workforces aligned, motivated, and connected? It’s simple: Lean into employee recognition and rewards.

A few stats that prove it:

  • The #1 reason people leave jobs is limited recognition and praise.
  • 81% of employees say they’re motivated to work harder when their boss shows appreciation.
  • Companies with effective recognition programs see 31% lower turnover.
  • 41% of companies that use peer-to-peer recognition reported increased customer satisfaction.
  • 50% of employees said they’d stay at their job if they felt appreciated.

The numbers don’t lie — recognition is the employee engagement power tool. Unlike a trophy or pre-determined bonus, spontaneous recognition for outstanding work isn’t something that an employee can anticipate.

As a result, public recognition enforces good behavior and performance, all while forging connections between the people giving and receiving praise.

How do you share employee recognition?

Not all recognition is created equal.

“Thanks for your help on that spreadsheet” is nice to hear. But not as meaningful as, “Your help with this week’s data pull helped me secure a 2-year renewal with our biggest customer. Couldn’t have done it without you!”

See the difference? So take your recognition from stale to stellar by incorporating the 5 components of effective recognition the next time you want to say thank you:

  1. Share recognition publicly within your organization
  2. Be timely and specific
  3. Focus on impact
  4. Celebrate daily wins
  5. Use peer-to-peer recognition

Have the art of recognition down, but need help identifying what to give recognition for? No worries. We’ve put together a list of 50 behaviors to recognize and reward. It covers everything from company milestones, performance wins, learning & development initiatives, and more.

Example: How to do employee recognition and rewards

In the last section, we talked about the importance of making recognition public. Managers can praise their team in company meetings, public Slack channels, or the monthly newsletter. But WorkTango has a different solution.

WorkTango’s Employee Recognition and Rewards platform allows businesses to build a culture of recognition across teams, departments, and locations.

Let’s unpack how in the example below:

A screenshot of a recognition sent to Jordon Monopoly using WorkTango's Employee Recognition & Rewards Platform. The recognition has received 5 high fives and one comment cheering on Jordan.

This recognition of Jordan was public, timely, focused on impact, and celebrated the kind of work Jordan does every day. Plus, this points-based recognition allows Jordan to earn a reward he actually cares about, which motivates them to keep bringing their best to work. The best part?

Because this happened in your organization’s public recognition feed, team members across the company could read it and “High Five” Jordan for their effort.

Call us biased, but we think that’s pretty awesome.

Don’t have a formal program yet but want to send a recognition to a teammate? Send a digital employee recognition card today.

How rewards and recognition work together

As we mentioned, money alone isn’t an effective method for employee engagement. That’s not to say incentives and rewards aren’t powerful when combined with other engagement strategies.

Once a business starts a recognition program, the best results will come when they can support that recognition with small employee rewards that amplify the power of both components.

Employee recognition and employee engagement

To truly understand the ROI of a recognition and rewards program, we’ll also need to look at the price of not having one: lower engagement, less productivity, and a higher chance of employees walking out the door.

Gallup defines an engaged employee as one who is involved in, enthusiastic about, and committed to their work and workplace. By this definition, disengaged employees have the exact opposite qualities of an engaged one. This means they can be apathetic and unmotivated by their work or environment. And the numbers prove it.

So, what does that mean in dollars? Disengaged employees cost U.S. companies a shocking $450-$550 billion in lost productivity annually.

Sounds crazy, right? But it makes sense if you consider this fact: 70% of U.S. employees are unengaged at work. That’s right. This means a whopping two-thirds of the U.S. workforce feels actively disconnected from their role, company, and day-to-day responsibilities.

So why are so many employees disengaged in the first place?

The answer varies, but most disengagement occurs when employees:

  • Feel their work lacks purpose
  • Believe they are working in a thankless job
  • Feel disconnected from a company’s mission or values
  • Feel stuck in the same routine with no opportunity for growth

As we mentioned, a robust recognition and rewards program can help solve these problems and more. And when you do it right, recognition can bring purpose and appreciation to an employee’s work. In turn, this ultimately increases their engagement and productivity within a role. And when employees are engaged, happy, and productive, businesses win.