Recognition and Rewards: Everything You Need to Know

Learn everything you need to know about recognition and rewards in order to ensure the best experience for your employees.

February 25, 2021 By Sara Ana Cemazar

Recognition and rewards are the staple of any company that wants to give the ultimate employee experience to its workers. The knowledge on Recognition and Rewards has grown immensely in recent years, and companies and HR Professionals are eager to implement the best employee recognition and rewards practices.

We have created this article to give you the ultimate guide to covering recognition and rewards topic. From its definition, difference between rewards and recognition, to its benefits, ideas and guidelines on building successful employee recognition and rewards programs – you can find it all here, as well as many additional resources.

📒 Before you start reading, learn why employee recognition is crucial for company success in this eBook.

What Is Recognition and Rewards

According to WorldAtWork, employee recognition and rewards are a part of companies’ Total Rewards model. Along with compensation and benefits, wellbeing and employee development, recognition and rewards constitute the total package that employers offer to their employees.

More specifically, recognition and rewards refer to specific set of appreciation and rewarding standards that companies implement to achieve certain goals. On the other hand, employees have already come to expect recognition and rewards in their workplaces.

Difference Between Recognition and Rewards

Although they are mostly known as part of the phrase “Recognition and Rewards”, recognition and rewards are two separate terms. They are sometimes used interchangeably, but they actually do not mean the same thing.

The main difference between recognition and rewards is that rewards are usually tangible, whereas recognition is not. Moreover, rewards have a monetary value and recognition is non-monetary in nature.

To highlight their differences even more, rewards are usually given to employees after they accomplished certain goals or reached milestones such as employee anniversaries. On the other hand, recognition can be given for displaying a desirable behavior such as teamwork or innovation.

Furthermore, employee rewards are usually given to employees by their employers or higher-ups, while recognition is given by higher-ups and peers.

Recognition and Rewards Benefits

HR Pros know that implementing recognition and rewards initiatives in their companies is very beneficial. From driving cultural change to improving productivity, employee recognition and rewards are used to achieve many company-wide goals.

In this section, you can learn what are some of the biggest benefits of recognition and rewards – which are also the reasons why companies invest in them.

Reducing employee turnover

One of the biggest pain-points in any company is employee turnover. It is costly both financially and resource–wise. Improving employee retention is very often one of the HR Professionals’ most important KPIs.

To reduce employee turnover, you must first be aware why employees leave your company at all. According to this LinkedIn research, these are the main reasons why Tech-oriented people leave:

45% leave because of lack of development opportunities
41% are unsatisfied with leadership
34% are unsatisfied with compensation and benefits
32% leave because of lack of recognition and rewards for their work.

Besides directly addressing one of the top reasons that employees leave companies, recognition and rewards influence can influence other workplace aspects that affect employees’ decision to stay with the company. After all, 68% of HR Professionals say that employee recognition programs positively affect employee retention, and another 56% say that they also help with recruitment.

Driving employee engagement

Employees say it themselves: 58% of employees agree that their leaders could engage them better by recognizing them.

When employees’ work is recognized by their leaders, they are reassured of their purpose and they often see the impact their work has. Therefore, employees are motivated to perform the same actions they were recognized for, thus increasing their engagement.

Employee engagement is a key aspect of many other indicators of successful workplaces, such as productivity, innovation and other. This is why HR Pros use recognition and rewards to drive higher employee engagement.

Improving employee productivity

Employees are most commonly distracted with social media and news websites, with 45% admitting they spend time on them during work hours. Employee productivity is crucial to business output, and that is why employers know they must use best employee motivation strategies at their disposal.

Before designing a recognition and rewards strategy that will improve employee productivity, employers usually perform employee surveys to find out what motivates their workforce. Some employees are more intrinsically motivated, so a non-monetary recognition program would affect their productivity better. On the other hand, rewards would have a greater impact on productivity of employees who are extrinsically motivated.

Attracting top talent

Candidate market is scarce when it comes to top-talent, especially tech one. In fact, 75% HR Professionals say that there is a shortage of skills in candidates for job openings.

However, some HR Professionals are creating recognition and rewards programs that incentivize their employees to refer suitable candidates for job openings. According to LinkedIn, 45% of referred candidates stay with their employers for at least a year compared to 33% that applied in another way. Moreover, 88% of employers say that referrals are their best source of hire.

Moreover, candidates are checking their potential employers on Glassdoor and other similar websites where employees give their direct impressions on working atmosphere, managers, compensation and employee benefits… Since recognition and rewards are a good way to improve company culture and appreciate your employees’ work, you can also expect improvements in employee experience and therefore become a more attractive employer.

Fostering teamwork and collaboration

Recognition and rewards are commonly utilized to foster teamwork and collaboration. This is done through creating employee recognition programs oriented towards these goals. More often than not, teamwork and collaboration are facilitated through peer-to-peer recognition.

Moreover, when employees recognize their peers for supportive behavior, selfless share of knowledge or good collaboration experience, it is useful for others to see it in order to replicate those actions. This is where social recognition in form of recognition wall can be very useful – and why you should seek this functionality in your next employee recognition platform.

Supporting positive company culture

Company culture is often hard to define, but the fact is that a negative company culture is easy to detect. Lack of teamwork, appreciation and bad work atmosphere can be stressful and conducive to larger problems such as high employee attrition.

However, recognition and rewards are supporting positive company culture by motivating employees to recognize their peers. Once again, it is important to include the social aspect of recognition and rewards into your strategy to drive an organizational change.

Enhancing customer satisfaction

Recognition and rewards are most successful in their impact if they are aligned with company’s mission and values. One of the most common purposes of both B2B and B2C companies is to provide value to its customers, which is easier said than done.

Companies must improve their product features, customer service and adjust their prices to achieve best customer satisfaction scores. This is not easy – and it mostly depends on company’s employees. This is why implementing a recognition and reward system that affects the before mentioned areas is how companies can improve their customer satisfaction.

📒 Read more on how employee recognition impacts customer satisfaction.

Supporting learning and development

Among the most frequent answers that employees cite as a reason for leaving their employers is lack of development opportunities. Employees, especially Millennials and Gen Z, are eager to learn and advance their careers.

As they know how important employee development is to employees personally, but also to their companies who find it hard to find adequate skills in candidates, HR Pros often use recognition and rewards programs to support learning and development. For example, employees can be incentivized with rewards to finish certain educational courses – which will also help them to grow and land that promotion they are hoping for.

📒 Learn in what other ways do recognition and rewards support learning and development.

Building Employee Recognition and Rewards Programs

HR Professionals are usually well aware of the positive changes they can make by utilizing best employee recognition and rewards practices. However, building recognition and rewards programs can be challenging as it is a comprehensive task that also requires collaboration with other departments.

In this section, you can find out how to build successful recognition and rewards programs. For more thorough instructions, get our Employee Recognition Playbook and read our 20+ employee recognition programs benefits and ideas.

Get leadership’s buy-in

Without getting your leaders on board, it will be hard to make your recognition and rewards program successful. Your leaders need to see recognition and rewards as an investment rather than an expense, just like 46% of senior managers do.

Set up golas

What is the reason that you are setting up an employee recognition and rewards program? Do you want to improve employee engagement, enhance employee development or increase collaboration between your employees? In any case, your recognition and rewards program should always be design with intention to adhere to your goals.

Define policies and procedures

There is a lot of processes to define regarding your recognition and rewards program. If you are offering point-based recognition, what will be the monetary value of one recognition point, and how will it translate into local currency and index of living standard? Moreover, who will supervise the allocation of points – I.e., how far up the hierarchy will the supervision go in order to ensure staying within the budget?

Of course, this is just one aspect of policies related to recognition and rewards programs you need to specify.

Communicate internally

For your recognition and rewards program to be effective, you need to excite your employees for it. Employees need to know how the program works, and what are the benefits of participating in such programs. This is a point where you will need to include your employee communication specialists.

📒 Pro tip: include your leadership in your communication around recognition and rewards program. As 89% of employees believe that CEO communications are good for morale and productivity, it will ensure high participation rate in your recognition and rewards program too.

Also, you can get our internal communications plan for managing employee recognition and rewards program to assist you in your efforts.

Educate employees

In order to make the most out of your recognition and rewards program, your employees need to know what is the right way to use the system at hand. Moreover, they need to know for what type of behavior they will be recognized or rewarded, so you can include clear instructions in your internal communications around recognition and rewards initiative.

Encourage recognition continuously

One of the frequent pain points of recognition and rewards programs is that their popularity drops after initial excitement. This is why you need to encourage continuous usage of your recognition and reward programs. Therefore, use opportunities throughout the year to drive employee recognition on important dates such as employee appreciation day, employee anniversaries, individual goal accomplishments and other.

Track your progress

Without tracking your progress, you cannot optimize your recognition and rewards efforts. In other words, you need to set up analytics and measure the success and efficiency of your program in order to identify gaps in it and improve your performance.

Of course, the whole recognition and rewards program set up process needs to be circular in nature in order to work. That means that you need to review your goals, communication, policies, analytics and other, and change them if needed.

Moreover, it is hard to adhere to these best recognition and rewards programs practices if you do not have the right software. In the next sections, you can find more info on how to choose the best recognition and rewards platform.

Best Recognition and Rewards Ideas

Employee recognition and rewards area offers a lot of opportunities to show off your creative side. Among myriad of them, HR Pros opt for recognition and rewards ideas that their employees really want and love. To figure out which those are, you have to give it time and try out different ones.

Here are some of the best recognition and rewards ideas for monetary and non-monetary programs, as well as simple employee recognition ideas.

Monetary employee rewards ideas

When they want to recognize your employees’ achievements or important milestones, employers frequently opt for monetary rewards. One of such rewards, prepaid cards, are favorite type of monetary reward to 88% of Millennials.

Here are some common examples of monetary employee rewards you can offer within your recognition and rewards programs.

Bonuses
Salary increase
Expanded healthcare plan
Scholarship reimbursement plan
Paid training opportunities
Company car
Lunch reimbursement
Prepaid cards
Gift cards
Event passes
Concert or theater tickets
Travel reimbursement
Gym membership
Spa vouchers
Health checkups
Gift basket
New work equipment

Non-monetary rewards ideas

If you are looking to incentivize your employees with rewards of non-monetary value, here are some of the most common ideas you can include in your recognition and rewards portfolio:

Job promotion
Parking space
Flexible work options
More vacation time
Custom employee achievement trophy
Leave-early days
Lunch with the CEO

Simple employee recognition ideas

Sometimes, the simplest recognition and rewards ideas have the greatest effect. A sincere, heartfelt “Thank you” note can make your employees’ day. Moreover, this kind of recognition will inspire positive emotions and make your employees feel like a part of community instead of workplace.

Here are some examples of simple recognition and rewards ideas.

Employee appreciation letter
Employee recognition card or note
Featuring employee on company’s social media
Employee recognition video
Employee of the Month certificate

Also, you can get inspiration from our employee appreciation quotes.

Recognition and Rewards Platform: Why Does It Pay Off

While thinking about best recognition and rewards practices, you may ask yourself: what is the exact benefit of having an employee recognition and rewards software? How does it support your goals and how does it impact your overall recognition and rewards strategy?

The answer is simple: recognition and rewards platform is essential for mid-sized businesses and enterprises that want to offer the best employee experience to their workers. In the previous sections, you have seen the benefits of recognition and rewards – however, you also probably understand that it is difficult to operate recognition and rewards programs without the appropriate software.

Here are three issues related to running successful recognition programs that a recognition and rewards platform resolves.

1. Enhancing company culture and employee engagement

When HR Professionals start looking for the best recognition and rewards solution, they aim to enhance company culture and improve employee engagement, performance and retention. In theory, you can read all about the best recognition practices – but the real question is, which one of those will work for your organization?

In reality, there is no one size-fits-all solution. A customized recognition and rewards solution allows you to map your core values into it, and it allows you to map your specific organizational structure. By doing that, you are able to use the best tactics for improving your people-oriented KPIs.

Moreover, by utilizing surveys, analytics and sometimes even AI, you will have a powerful machine on your side that will allow you to truly measure your efforts. Without such a comprehensive solution, you can either only guess what works or does not, or you would spend too much time on manual work connecting all the information you need to make logical conclusions.

2. Continuous engagement in recognition and rewards programs

Many HR Professionals are excited to implement new recognition and rewards initiatives, and they usually give great results. However, the problem that many face is keeping the same level of interest into recognition and rewards initiatives over time. Without making it a habit, how will the recognition become a part of the culture?

With a customized recognition and rewards system, you can give your employees easy-to-use, branded interface they will love to use. With gamification, social recognition features and integration with your most used communication channels, it is easy to make recognition a habit and drive engagement continuously – not just on selected dates.

📒 See how you can continuously drive high participation rates in your recognition programs with intuitive recognition and rewards platform such as JobPts.

3. Ease of management and ability to scale

When you do employee recognition manually, it takes you a lot more time. Moreover, you want to have the option to scale your initiatives and manage them easily at the same time.

Per joint Bersin&Deloitte research, high-performing organizations are 4 times more likely to pilot new recognition and rewards prior to broader implementation. This is because they want to see how their recognition and rewards solution would work in reality.

Without a recognition and rewards app, it is virtually impossible to run an efficient recognition and rewards program on a global scale, let alone with a low FTE. However, having a recognition and rewards solution in place allows running programs with low total cost of ownership as well as replicating programs on a bigger scale with minimum management resources added.

Useful Recognition and Rewards Resources and Materials

After covering major areas of recognition and rewards such as its benefits, ideas, steps for building successful programs and more, you should have a well-rounded picture of it. However, if you are looking for specific materials – here is a list of resources you might find useful.