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Employee Recognition

Complete Guide to Successful Employee Recognition Programs

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Amidst the Great Resignation and plummeting retention rates, employee recognition and appreciation readily take center stage. Your hard work to recruit top talent may not pay off unless you can hold on to it and ensure peak work efficiency. A smart approach to employee recognition can increase productivity, decrease turnover, improve team culture, boost loyalty, and even prevent burnout. That’s where employee recognition programs come in. While 80% of companies have some type of employee recognition program, around 48% of employees still feel undervalued. Let’s take a closer look at what employee recognition is and how to create an effective recognition program for your workforce.

What is Employee Recognition?

Employee recognition is the practice of acknowledging and appreciating the efforts and achievements of employees in a workplace. It is about giving credit where it’s due, appreciating the hard work and achievements of your team. It’s the act of saying “thanks” in a way that boosts happiness, prevents burnout, and creates a positive vibe at work, ultimately making everyone feel valued and appreciated. Often provided immediately after an achievement, in the moment recognition is highly effective and reinforces the value of the work, further motivating employees and ensuring they feel valued.

Table of Contents

What is Employee Recognition?

Why Is Employee Recognition Important?

How to Calculate ROI for Employee Rewards Programs

What Are the Benefits of a Recognition Program?

Employee Recognition Programs That Work- Google’s Success Story

Done Right, Employee Recognition Reduces Churn and Improves Morale

employee recognition programs

Why Is Employee Recognition Important?

In psychology, gratitude has a strong connection to happiness. It contributes to positive emotions, higher productivity, and even better health. Employee recognition is a direct demonstration of gratitude and appreciation.

When done right, recognition can have a direct effect on your company’s reputation, success, and bottom line. In fact, when recognition hits the mark, employees are 5x as likely to be connected to company culture and 4x as likely to be engaged. Ultimately, the strategic integration of gratitude and recognition within a company’s culture can create a harmonious and thriving work environment with far-reaching benefits.

Want to build a great recognition program? – Check out Bucketlist Rewards here, it builds great cultures in both Fortune 500 companies and small startups.

How to Calculate ROI for Employee Rewards Programs

Implementing an effective employee rewards program can have a significant return on investment for three key reasons.

Higher Engagement

According to Gallup, only 36% of U.S. employees are actively engaged in their work. This jarring statistic demonstrates a key area where employee recognition programs can help improve workplace culture and employee motivation.  Organizations with employee recognition programs experience employee engagement, productivity, and performance levels that are as much as 14% higher compared to organizations without recognition programs. 

Furthermore, it was reported that organizations with a high level of engagement  report 22% higher productivity. This productivity demonstrates a clear ROI and if you calculate how much revenue a 22% increase in productivity brings your company, you can easily start calculating the ROI of the employee rewards program. Employee engagement is profoundly influenced by recognition. When employees witness their efforts being acknowledged, it serves as a powerful incentive for them to persist in their hard work. Simultaneously, those who observe successful recognition scenarios are inspired to strive for improved outcomes.

However, an increase in productivity, isn’t the only factor contributing to the high ROI of employee recognition. Lower turnover and reduced absenteeism are just as important.

Lower Turnover

In the modern workplace, employees are continuously recognizing the profound impact that recognition and appreciation can have on the employee experience. In 2022, turnover rates skyrocketed to all time highs with 50.5 million people voluntarily quitting their jobs. A major contributor to these turnover rates is poor recognition and engagement and in fact, 79% of people have reported that they quit a job because of a lack of appreciation. 

While these statistics can seem overwhelming and daunting, employee recognition programs can help. 69% of employees planning to quit their jobs said that receiving recognition and rewards would cause them to choose to stay at their current positions and frequent recognition can actually decrease voluntary turnover by as much as 31%

When you truly take into consideration the fact that businesses lose a staggering $1 trillion due to employee turnover, there is clear ROI that can be seen by implementing recognition programs that can reduce turnover by 31%. By failing to implement effective strategies to mitigate turnover, you need to get ready to pay:

  • $1,500 for hourly workers.
  • Over 100% of salary for technical positions.
  • Over 200% of salary for C-suite positions.

If, like most of us, you find these costs to be overwhelmingly high, consider employee recognition which can save a large company (10,000 workers) over $16 million annually.

The substantial impact of poor recognition and engagement on employee retention underscores the importance of proactive measures. Employee recognition programs emerge as a strategic solution, not only offering a lifeline for retaining talent but also demonstrating a clear return on investment, potentially saving large companies millions annually and mitigating the substantial financial repercussions associated with turnover.

employee recognition programs

Reduced Absenteeism

Companies that implement successful employee rewards programs experience a 41% reduction in absenteeism. According to CDC, the cost of absenteeism is:

  • For small employers – between $16 and $81 per year.
  • For large employers – between $17 and $286 per year.

The average cost of an employee recognition program is 2% of the payroll. If you add all the possible savings from lower turnover, reduced absenteeism, and higher engagement, you can calculate the ROI of a successful employee rewards program.

What Are the Benefits of a Recognition Program?

An effective employee recognition program is an integral part of your company’s success. While the Great Resignation is in full swing, employers need employees much more than the other way around.

That’s why everything that keeps your top talent in place and at its peak capacity has a direct impact on the company’s bottom line.

Motivating Employees

A well-designed employee recognition initiative boosts employee motivation significantly. Surveys indicate that 80% of employees experience heightened productivity when motivated through recognition and rewards. This involves acknowledging talent, identifying positive actions, and promptly rewarding them. Establishing a structured program not only allows for the identification of recognition-worthy instances but also facilitates the implementation of an efficient reward system.

Reducing Churn & Increasing Longevity

Research indicates that employees receiving consistent recognition are 7x more likely to stay with their current employer for at least another year. Conversely, when recognition is lacking, employee satisfaction levels drop, and thoughts of leaving the job start to emerge. Implementing effective recognition initiatives is a way of giving your workforce the attention they rightfully deserve, fostering employee happiness, motivation, and increased productivity.

Employee Satisfaction

Employee happiness yields significant benefits, including heightened productivity and enhanced loyalty to the organization. Recognition plays a pivotal role in influencing this sense of fulfillment and happiness. When organizations offer frequent recognition, employees are 82% happier, correlating with a substantial boost in productivity, reaching up to 31%.

Conversely, dissatisfied employees are more likely to be disengaged, and this disengagement is costly. In fact, disengaged and not engaged employees cost $8.8 trillion to companies globally in lost productivity. When leaders or human resources specialists acknowledge achievements, employees experience greater satisfaction with their work, uplifting the overall morale of the workforce and inspiring others to achieve higher levels of productivity.

Sustaining employee satisfaction not only amplifies productivity but also enhances the overall work environment and diminishes turnover rates. Additionally, contented employees often transform into brand ambassadors, playing a crucial role in recruiting new talent for your business.

Employee Engagement

Employee engagement is one of the major factors that contribute to the company’s success. Highly engaged teams show 21% greater profitability than poorly engaged or disengaged workers.

Recognition programs can cement engagement for your top talent and boost it for the rest of your workforce.

While engagement doesn’t depend on recognition alone, it’s rarely possible without due appreciation. While your HR specialists arrange training and provide the right working tools, they also need to focus on public and private recognition.

Keep in mind that the most memorable recognition comes from:

  • Worker’s manager – 28%
  • High-level leader – 24%
  • Manager’s manager – 12%
  • Peers – 9%

In many cases a simple “thank you” announced publicly can go a long way toward boosting employee engagement rates.

employee recognition programs

Attract Top Talent

Companies that implement successful employee recognition programs become more appealing to the top talent. In fact, recent studies have shown that organizations with a reputation for appreciating employees is one of the most effective ways for companies to attract top talent. Besides taking the time to study company values, benefits, and salaries, many employees try to learn about company culture and recognition opportunities.

An effective recognition program sends a clear message that the company cares for its employees and rewards their achievements.

Reduce Burnout

It was recently reported that 89% of workers have experienced burnout within the past year and 21% of workers say their company does not offer any program to help alleviate burnout. These jarring statistics demonstrate a clear gap in organizations where employee recognition can help. Employee recognition can help prevent burnout in many different ways, including:

  • Boosting employee happiness – happy employees are less likely to feel overworked and underappreciated.
  • Increasing engagement – under-engaged and disengaged workers are more prone to burnout.
  • Implementing wellness – many companies choose wellness-related rewards to recognize their talent’s effort. This can improve employees’ health and prevent burnout.

Recognized employees feel appreciated and more secure. In fact, when employees feel they are recognized enough they are 73% less likely to experience ongoing or frequent burnout. The prevalent issue of burnout in the workforce and the absence of dedicated company programs to address it underscores the immense role of employee recognition as a preventive measure. Recognizing employees not only boosts happiness and engagement but also contributes to a more secure and appreciated workforce, reducing the likelihood of ongoing burnout.

Employee Recognition Programs That Work- Google’s Success Story

When it comes to creating the kind of workplace where people actually want to be – and stay – there are certain companies whose names come up again and again. Companies with strong employee recognition programs – like Google – regularly top this list. Just Google it and you’ll see – top of the Fortune 100 list, top of the Business Insider 50 list, and top of the Comparably 50 list.

This didn’t happen by accident. Of course, everyone hates to lose good employees, especially A players. Studies regularly show a top reason employees leave is lack of recognition. As many as 66% would leave if they did not feel appreciated – and that number jumps to 76% among Millennials. That’s as many as three-quarters of your workers.

That’s a problem.

At Google, they recognized the issue. They did what they do best – they analyzed it. And then they rolled out a comprehensive rewards and recognition strategy for making sure people wanted to work there and keep working there.

Guess what? It worked like a charm. According to research by PayScale, 86% of Google employees are satisfied with their jobs. As Google’s former HR head Laszlo Bock explains in his book, Work Rules! Insights from Inside Google That Will Transform How You Live and Lead, there are three defining aspects of Google’s culture: finding a compelling mission, being transparent, and giving people a voice.

Google employees agree. Here’s the kind of review every company should strive for on Glassdoor: Google is “a company that treats their employees great and in return gets motivated and loyal employees.”

There are plenty of lessons you can take away from Google’s experience and apply to your own company. Here’s a look at how Google made this happen – and how you can, too.

employee recognition programs

Give Experiences Instead of Money

Google learned through experience that non-monetary rewards motivate people better than cold hard cash. In fact, experiential rewards have nearly 4x more impact on the employee experience than any other type of reward. It may seem counterintuitive, but Bock explains it’s the difference in the way people view the two types of rewards.

Consider that time when Google offered big cash awards – up to $1 million – for its top performers. The idea was to generously reward the people who helped the company based on their accomplishments. Sounds good, right?

Well, that’s not the way it worked out. Google discovered the program fostered jealousy and resentment – not the positive response they had in mind.

So Google phased out the cash rewards program and rolled out a new rewards program that offered experiences – everything from dinners out to new tech gadgets to trips to Hawaii. Employees said they found the new program more fun, more memorable, and more thoughtful than the cash awards.

Cash prizes are evaluated on a cognitive level, and seen through practical eyes, Bock says. Meanwhile, a non-cash prize conjures up a different feeling, triggering an emotional response. And it helps when you take a page from former General Electric CEO Jack Welch and get to know your employees personally.

“In the end, employees will end up happier if you give them an experience—something personal and nonfinancial,” Bock says. “But it only works if you know what makes your people tick.”

That’s the thinking behind Bucketlist, where rewards are thoughtfully designed to reflect what matters to your employees. When you’re ready to offer the kind of experiences Google does, you can learn more here.

It Doesn’t Have to Cost Much

Bock regularly says anyone can replicate much of Google’s success. Surprisingly, some of the company’s most popular perks don’t really cost that much.

The bottom line is that the company’s culture underpins everything else it does. It’s a self-fulling prophecy: By taking care of its employees, Google has created the kind of culture that people want in a workplace, which means it can attract and retain the best employees.

“Most of the programs we use to delight and care for Googlers are free, or very close to it,” Bock writes. “And most would be easy for almost anyone to duplicate.”

Give Bonuses for Individual Efforts

Google uses two specific types of employee rewards programs, one where managers can reward employees and another where employees can recognize each other.

Spot Bonuses Recognition:

  • A spot bonus program is typically used to recognize and reward exemplary one-time achievements. That’s exactly how Google applies its program, as a way tool for recognizing special behavior.
  • The program allows managers to reward any employee who served on their project teams with a monetary award or with non-cash recognition, such as dinner for two.

Google Peer Bonus:

As one Google employee explains: “Both the peer and spot bonuses are intended to recognize going ‘above and beyond’ one’s normal duties and expectations. It may be working extra hours to help a team finish a project, or fixing an issue.”

employee recognition programs

Don’t Forget to Recognize Group Achievements

Rewarding an entire group for its performance also can benefit your company. At Google, they use the “no name program” to do just that. It was designed for executives to recognize teams for outstanding performance, with incentives ranging from team celebrations to team trips.

Group rewards encourage bonding among team members. Getting your teams to work together benefits the entire company. As the Society for Human Resource Management points out, “successful organizations are highly innovative, and innovation requires teamwork for the development of new ideas. Team-based incentives create, as well as emphasize, the need for collaboration across the company.”

The program was modified from an earlier version so that it would be easy to use and easy to share. It’s a public shout-out for a job well done. “Broadcasting a compliment makes both the giver and the receiver happier,” explains Bock.

During his tenure at Google, Bock also kept a “Wall of Happy” outside his office door, where he posted the kudos received by members of his team.

“Simple, public recognition is one of the most effective and most underutilized management tools,” Bock says.

Give Lots of Kudos

Googlers can send each other gThanks notes – a peer-to-peer recognition program that lets employees send online thank-you notes to coworkers without going through an approval process.

To learn more about the power of employee recognition and rewards, click the button above!

Done Right, Employee Recognition Reduces Churn and Improves Morale

Today, employee recognition isn’t a choice, it’s an integral part of successful business operations. To hold on to your top talent, improve efficiency, boost productivity, and become an industry leader, it’s important to implement a successful employee recognition program.

Appreciative companies are appreciated companies. Reducing churn and improving morale are key factors that contribute to the bottom line of your business.

At Bucketlist, we developed a highly effective employee retention tool that helps you design and manage an effective employee recognition program. Contact us for a free demo today!

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