A Holistic Framework for Employee Recognition
To foster a culture of recognition, companies should incorporate both formal and informal opportunities that celebrate employees' work, personal milestones, and well-being achievements. Measuring program effectiveness is essential for enhancing employee engagement, retention, and productivity.
Employee recognition is a powerful way to retain, motivate and engage employees within any organization and has been associated with many positive benefits, such as:
- Improved talent acquisition
- Increased employee engagement
- Increased employee satisfaction and happiness
- Better employee performance
- Increased employee well-being
- Reduced worker stress and burnout
- Decreased company turnover and retention
For example, research from MetLife's 22nd annual U.S. employee benefit trends study found that when employers demonstrate care for employees, they see a positive impact on talent outcomes, including a higher likelihood of employees feeling valued, saying they are happy, feeling a sense of belonging at work and to say that they are successful. Employee recognition firm O.C. Tanner's research correlated employee recognition with company performance: They found that organizations that practice recognition effectively are 12 times more likely to have strong business results, including increases in shareholder return. Studies like these can help provide the business case for organizations seeking to start or expand upon their employee recognition program(s).
Employee recognition programs should not be delivered in an ad hoc, one-time fashion at companies; ideally, they are part of a holistic, aligned approach. Following is a framework to help guide a company's employee recognition efforts and build a culture where employees are valued and appreciated for their efforts.
Framework for employee recognition
At the center of the framework is a company's most valuable asset, its employees. Employees are what make up the heart and soul of companies. They produce, deliver and sell the company's goods and services, provide intellectual capital, service customers and generate revenue. All recognition efforts surround this important organizational constituency.
Moving from left to right, ultimately, the goal of employee recognition is to create a culture of well-being and appreciation for employees, which leads to the myriad benefits described in the introduction of this article. A culture of employee recognition is one where there are pervasive tangible (for example, formal recognition programs) and less tangible (for example, regular feedback from people managers) "artifacts" demonstrating employee value at the company. A company's cumulative, ongoing employee recognition efforts create such a culture.
The employee recognition program should also align with the company's mission, vision and values. For example, if a company considers diversity and inclusion one of its key values, it should recognize employees who go above and beyond from that perspective. If a company lists innovation as a key value, it should acknowledge activities that showcase innovative employee efforts. An interesting alignment exercise would be to think about what your company lists as its key values on its website and/or promotes in posters or pictures on the walls in the halls. For those values that it lists, does the company have informal or formal practices to regularly recognize employees who demonstrate those values in action?
Regarding employee recognition, the tone is set from the top in terms of senior leader role modeling. It would be very difficult to say that a company values its employees if senior leaders don't demonstrate that they value employees in their own interactions. For example, at ADP this past September our chief human resources officer sent employees a note of appreciation for World Gratitude Day. Similarly, this past November, our large accounts business unit president sent all employees in the business unit an email in the spirit of the holiday season to tell us how thankful and proud he is of us.
Emailed communications such as these are in addition to the more interpersonal interactions that senior leaders regularly engage in with ADP associates to show that they care. For example, the large accounts business unit president takes the time at our annual Meeting of the Minds user conference to meet and take pictures with the winners of the associate IMPACT Awards (further described below). Senior leader role modeling can be a powerful force for change in helping a company build and maintain a culture of recognition.
In the middle of the model surrounding employees are all of the different HR interventions that a company should have in place, which ought to align and incorporate an element of recognition:
Appreciation and engagement activities and events
Organizations should create a calendar of appreciation and engagement activities and events throughout the year. For example, ADP recently celebrated its 75th anniversary milestone, and to mark the occasion, various locations hosted anniversary celebration parties to honor associates and clients.
Recognition and awards programs
Similarly, companies should develop formal programs to recognize employees who go above and beyond to live the company's values. These programs may take place at multiple levels (team, department, physical location, business unit, function, and/or enterprise), but the programs must be complimentary and ideally aligned. For example, ADP's large accounts division offers a formal employee recognition program called the "IMPACT" Awards that are aligned with the strategic pillars and recognize employees in the business unit who go above and beyond and live our values every day. Winners receive an award and are invited to attend the annual "Meeting of the Minds" user conference for a VIP experience.
ADP also leverages a peer-to-peer recognition program whereby associates can send an online appreciation note to other associates that is aligned with a corporate value or celebrate a work or life milestone.
The total rewards professional association WorldatWork lists length of service awards (76%), appreciation events (71%), performance awards (49%), Peer-to-peer awards (46%), and retirement awards (43%) as some of the most frequent recognition programs offered to some or all employees. Recognition advisory firm O.C. Tanner recommends that companies budget anywhere from $250 to $300 per employee per year for employee recognition.
Training and development opportunities
Training and development opportunities may also be considered part of the employee recognition repertoire. For example, leadership development and/or high-potential leadership programs may be offered to employees who have been tapped for them as part of their career paths and in recognition of their performance/potential within the company. Extending the opportunity to attend an industry conference or event for professional development purposes is another way that companies can give a nod to their appreciation of employees.
Employee surveying and regular check-ins
Certainly, it's important to stay in tune with employee satisfaction and engagement with the company and depending on what the results reveal may indicate an opportunity for employee appreciation or recognition events and activities. For example, remote employees who indicate they feel isolated and are struggling with engaging with co-workers might be recognized in part by periodic virtual and/or face-to-face team events to build synergies and recognize accomplishments.
Regular check-ins with managers are a way to keep employees engaged and also serve as another (less formal) opportunity to provide employees with ongoing feedback and give a nod to great work accomplished. This practice may come full circle and benefit the company as well. ADP Research has found that increased levels of attention from managers to employees have been associated with increased levels of talent brand promotion: The research found that workers who reported more frequent contact with their managers, HR, or colleagues were far more likely to be talent brand promoters.
Finally, a framework for employee recognition would be remiss without a discussion of the role that performance management and the typical results in terms of financial and nonfinancial incentives play in rewarding and recognizing employees. As an outcome of these discussions top-performing employees may be considered for salary increases, one-time bonuses, and equity compensation or similar. Nonfinancial recognition may include promotions and a change in title or responsibility. However, organizations should not be tempted to stop here and consider the performance management process and resulting awards as the only leads into employee recognition.
Surrounding the different HR interventions are reminders that to truly create a culture of recognition, companies should consider both formal and informal recognition opportunities as discussed above. Recognition may be both work-related (such as for performance or a service milestone) but also recognize important life events (birth of a child, retirement, etc.) and even well-being milestones (such completing an exercise, sleep or mindfulness goal through a well-being program) throughout the life cycle of the employee.
To the right of the model are program measures. The ultimate measures of employee recognition are engagement, retention and productivity levels of employees. A company should also consider measures of individual programs, perhaps in terms of participation, post-event survey results, or increases in proficiency, depending on the intervention. Program measurement helps a company determine if goals for the program have been achieved and are trending in the right direction.
Building a culture of employee recognition
Employee recognition is an important practice that contributes to employee engagement, retention, performance and organizational productivity. Ultimately, recognition is a key component of delivering on the employee experience, which is what employees see, hear, think and feel throughout their tenure (hire to retire) at a company.
How employees are personally recognized, both formally and informally, can go a long way in helping employees feel safe, esteemed and valued at a company. Incorporating the elements from the recognition framework above, beginning with the mission/vision/values and senior leader role modeling, incorporating a variety of formal and informal recognition means beyond performance management, and monitoring and trending results, can genuinely help a company aspire to create an aligned and holistic culture of employee recognition that celebrates and acknowledges employees throughout their tenure.
