The Importance of Employee Recognition

Employee recognition is the backbone of a healthy culture—employees want and need to be valued, appreciated, and supported, and recognition is the best way to accomplish that.

And when employees are recognized for their efforts, they are more productive, happy, and loyal to the company. Recognition is the starting point of a cycle of mutual respect, trust, and effectiveness between employee and employer.

In this post, we’ll go over all of the impacts of employee recognition—by the end, you’ll see that employee recognition is not only important, but it’s vital to the success of an organization.

Benefits and Impacts of Employee Recognition

When employees are recognized and rewarded for their work, they feel happier and work better—that’s why recognition is the single-most transformative initiative for any business. Let’s look at some of the specific benefits recognition can bring.

Impact of Recognition on Employee Engagement

Employees are 4X more likely to be engaged when they feel recognized a fair amount for their work. This falls on managers’ shoulders because when managers are good at recognizing their employees, those employees are 40% more engaged.

Engaged employees are the type of people you want at your company—they’re more productive, more loyal, more profitable, and much less likely to leave the company. And employee recognition is the key to nearly doubling engagement levels.

Impact of Recognition on Productivity

Employee recognition increases productivity and performance by 14%. Just think about it for a bit—when someone feels like the work they do is seen and valued, they’re more likely to want to succeed in that work, right? But when someone feels ignored or uncared for, they won’t put in that extra effort. It’s just human nature.

To get the best of your employees, recognize them frequently. 40% of people would put more effort into their work if they were recognized for it more often, so it’s time to start doing so.

Impact of Recognition on Turnover Rates

The number one reason employees quit their jobs is not feeling valued. We’re still feeling the sting of the Great Resignation, and the fact remains that if employees don’t feel valued or appreciated, they’re much more likely to leave.

Employee recognition is the solution, as it can lower voluntary turnover by 31%. Just by saying thank you to employees and showing them that they matter can cut the massive costs of high employee turnover.

Impact of Recognition on Employee Well-Being

Employee recognition has a psychological impact on your people. Recognition increases feelings of safety and job security, enhances employees’ sense of belonging, and raises their self-esteem.

It also strengthens the bonds of trust between employees and the company and makes employees happier in general. And happy employees are 20% more productive than unhappy ones.

Recognition’s Role in Company Culture

First, consider that company culture is 10X more important to employees than pay. Employees want to work at a place with a wholesome, supportive, and fun culture where they feel valued, safe, and comfortable. 

Here are some ways that recognition can improve culture:

• Employee happiness. 80% of HR leaders agree that recognition positively affects employees’ experience, engagement, happiness, and relationships.
• Culture of success. Companies that perform the best are 10X more likely to have recognition programs that they invest in as competitive differentiators.
• Inclusion. 87% of employees agree that their culture is inclusive when there’s a strong culture of recognition.

Employee recognition helps build a culture of inclusion, appreciation, and motivation that will ensure all of your employees feel valued and cared for.

The Future of Employee Recognition

The workplace is changing, and employee expectations are evolving. They’re not satisfied with traditional recognition methods anymore (think a plaque, an impersonal gift card, or a fancy cooler). Here are some trends to keep in mind to create recognition programs that fit the modern workplace:

• The use of technology. Digital tools such as Awardco make recognition much easier to implement, manage, track, and spread to everyone in the company. Even if your employees are on the front lines and don’t use computers often, there are ways to use digital tools to recognize these offline employees.

• This is doubly important because of the growth of remote and hybrid work. Digital recognition tools are vital for creating a culture where remote employees feel included and valued.

• The power of choice. Recognition and rewards are most effective when employees have their choice of rewards. Giving one-size-fits-all messages or gifts sends the wrong message—but personalized messages and the power to choose their own rewards makes recognition much better for employees.
• The importance of frequency. Employees now want more recognition than ever before. Millennials and Gen Z (employees age 18-38) crave recognition and perform much better when they feel recognized.

The Overall Impact of Recognition Can’t Be Overstated

Employee recognition can transform your workplace—it’s as simple as that. In today’s world of remote work, younger generations, high levels of stress, and economic uncertainty, it’s more important than ever to utilize recognition and rewards to build a culture of belonging.

In doing so, you’ll see greater productivity, motivation, and engagement from your people, so it’s really a win-win.

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