Employee recognition is a continuously evolving practice. Not long ago, many people spent their entire careers working for the same company and received annual bonuses to meet recognition needs. In recent years, expectations have changed, and companies that want to remain successful should actively work to address their evolving demands — especially if you’re experiencing high levels of turnover, poor performance, or burnout.
Here’s an overview to help you understand employee recognition and how you can make your team and colleagues feel proud of their contributions at work.
Happy employees are vital to today’s workforce. Data collected by Gallup revealed that praising and recognizing employees can positively affect employee well-being and your organization’s bottom line. The report found that 66% of respondents trusted and collaborated with their colleagues more, produced better results, and were more productive when they felt sufficiently appreciated. A Deloitte study on the importance of recognition found that today’s most progressive organizations use recognition to consistently reinforce key behaviors and outcomes necessary to drive success.
According to this Forbes article, recognized employees are “more satisfied, perform better, are more productive, and are more likely to engage with the rest of the team.” The article goes on to explain that acknowledging employees for individual contributions reduces stress, absenteeism, and attrition.
Deloitte identified five factors that make recognition especially important and relevant:
1) Unstable economy: Recognition is typically more cost-effective and has a longer-term impact than expensive salary increases and bonuses.
2) Need for greater agility: Through recognition, organizations can retain employees and attract top talent.
3) Flattening organizational cultures: Recognition serves as appreciation for strong performance when promotions aren’t possible or the norm.
4) Technology: Technology facilitates transparency, collaboration, and knowledge sharing, which has become the expectation for today’s employees. Organizational recognition programs should fit that mold.
5) Millennial Workforce: Millennials are the largest generation in the workforce, and they expect and demand more feedback than previous generations.
The ROI of recognition and employee engagement runs deep, but one of the most noticeable benefits to organizational culture and the bottom line is simple: improved employee retention. According to Gallup, employees who feel that they’re not adequately recognized at work are 3x more likely to quit in the next year. Another Deloitte article also reported that companies with cultures of recognition have 31% lower voluntary turnover. The same Deloitte report also found that recognition is among the top three most effective factors for increased retention.
The timing of recognition matters. For recognition to appear authentic, it should be shared as close to the event or activity being recognized as possible, which means recognition should be given frequently. According to Gallup, fewer than a third of workers have received praise from a supervisor in the last seven days.
To foster a culture of recognition, significant accomplishments, and small favors should be acknowledged often. Praise and gratitude are critical components of recognition and should be shared equally. Beyond that, inclusivity is key. Everyone's contributions, regardless of their role, should be appreciated if the impact is meaningful to foster belonging and improve morale.
Speaking of inclusivity, we believe that both individuals and groups should be recognized to maximize the benefits. When interviewed by Gallup, David Grazian, the Director of Corporate Taxation at Granite Construction, Inc., shared that “publicly recognizing entire departments can improve the department's reputation within the organization while also helping you get more resources when you need them.”
Recognition shouldn’t only come from the top-down (i.e., manager-to-employee); it should come from employees at all levels, too! This is what's known as peer-to-peer recognition. In some cases, the Society for Human Resource Management found that employees prefer to be recognized by their peers over their managers or superiors because their recognition feels more genuine.
How you deliver your recognition can make a difference in its impact. Here are a few things to keep in mind:
Be specific: Avoid using the cliche "Great job!" Instead, focus on what the person specifically did to earn the recognition. When possible, include how it advanced them or the team towards a goal and/or demonstrated how to exemplify a core value.
Be transparent: If a team member contributed to a larger project or initiative, specify exactly what they did and why you’re recognizing them for added sincerity.
Recognize the effort, not the outcome: The goal of recognition is to encourage and reinforce positive behavior. Recognizing the energy and thought that went into an accomplishment signals to the broader organization what type of effort is valued most.
Make it meaningful: “If everyone wins, no one wins,” and that recognition approach where everyone gets a turn regardless of the quality of their work can breed resentment and, ultimately, cynicism.
Organizational values and mission: Tying recognition to the organization’s goals can make employees feel their contributions truly ladder up to its success. Today’s definition of employee recognition is as follows: “Employee Recognition is the acknowledgment of an individual or team for their hard work, efforts, and accomplishments that go with the organization's goals and values.”
Today, recognition is often confused with reward systems, specifically points employees can accumulate and use toward gift cards or other perks that equate to perceived value. While non-monetary rewards are a fantastic tool to reinforce performance and contribution, point systems certainly don’t have the same long-lasting impact on employees.
While point reward systems aim to motivate employees, they can often have unintended negative consequences that lead to employee dissatisfaction. Companies should carefully consider the following potential drawbacks when implementing point systems:
Low adoption rates: Cited as one of the top reasons why employee recognition programs fail, low adoption rates suggest that point-based systems struggle with user engagement.
Lack of immediate gratification: Point systems often require accumulating points over time, leading to delayed rewards and a disconnect between earning points and receiving rewards, thus weakening the link between positive behaviors and recognition.
Perceived unfairness: They can create feelings of inequity among employees. Like other performance evaluation methods, point systems may be subject to manager bias. This can also lead to a lack of transparency, and employees may not fully understand how points are awarded or redeemed.
Inadequate rewards: The rewards offered in point systems may not meet employee expectations. Limited choices might not offer items of interest to all employees, and insufficient value of accumulated points may only be redeemable for small, underwhelming rewards.
System limitations: Technical aspects of point systems can cause frustration.
Outdated platforms can create a poor user experience, and integration issues with other apps can make the system feel disconnected.
Psychological impact: Point systems can negatively affect employee mindset and workplace dynamics. Similar to performance reviews, point systems may create an atmosphere of constant evaluation, which leads to stress and anxiety. This can also increase unhealthy competition, meaning employees might focus more on earning points than collaboration and teamwork.
Administrative burdens: Point systems can create additional work for employees and managers. Tracking, awarding, and redeeming points can be tedious and time-consuming. Plus, data-related issues may arise to maintain accurate balances and address discrepancies.
Potential manipulation: These can be manipulated by team members giving each other points for insignificant tasks in order for someone to get an item they have been wanting. In other words, they find ways to game the system.
Points are not the point: Instead of adopting point systems, organizations should strive for more immediate, innovative, and meaningful forms of recognition.
Finally, meaningful recognition is all in the delivery. To enjoy all the benefits outlined above, like increased productivity, employee engagement, and reduced turnover, the delivery method must be effective.
Luckily, as employee expectations have changed, so has technology. Where recognition used to be more at the individual manager’s discretion and generally hidden from the rest of the company, organizations who want to build a culture of recognition have implemented online platforms to streamline the process and create more transparency and accountability surrounding who is receiving recognition and how often.
Instead of recognizing employees with generic company swag, coffee mugs, or notebooks, you can appreciate every person on your team with thoughtful and personalized gifts from Cultivate’s Online Gifting platform. Not only does Online Gifting help you stay connected to all employees regardless of location, but its intuitive, user-friendly interface saves you time and energy when employing a company-wide recognition program. It also invites recipients to choose their gifts. This concept of choice reinforces the value of their contributions. It ensures they’ll receive a token of appreciation that’s personal to them and speaks louder than words every time they use it.
In 2025, employee recognition is a critical component of any organization's strategy. The ROI of appreciating staff is undeniable. With hybrid workforces as the new normal, having a plan for employee engagement should be at the top of every C-suite's mind.
If it isn’t, we challenge you to add it to your next meeting agenda and start the conversation, then schedule a demo to find the right Online Gifting solution for your recognition needs!