Rewards and recognition are pivotal in shaping the work culture and fostering employee engagement. Understanding the nuances of reward and recognition can transform how organizations appreciate their employees, thereby enhancing productivity and morale. This comprehensive guide aims to shed light on the importance of employee rewards and recognition, offering valuable insights into implementing effective strategies that resonate with your workforce. Stay tuned as we delve into the intricacies of reward and recognition and explore how they can redefine your organization’s success. Recognition and rewards are the staples of any company that wants to give the ultimate employee experience to its workers. The knowledge of 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. What Are Recognition and Rewards? According to WorldAtWork, employee recognition and rewards are a part of the company’s Total Rewards model. Along with compensation and benefits, well-being and employee development, recognition, and rewards constitute the total package employers offer their employees. More specifically, recognition and rewards refer to specific appreciation and rewarding standards companies implement to achieve certain goals. On the other hand, employees have already come to expect recognition and rewards in their workplaces. What Is the Difference Between Recognition and Rewards? In the realm of employee engagement and satisfaction, the terms reward and recognition often go hand in hand. However, they are not interchangeable, and understanding their differences is crucial for effective management. Recognition is about acknowledging an individual’s or team’s behavior, effort, or business result that aligns with the company’s values and goals. It’s about showing appreciation for employees’ hard work and dedication. Recognition can be expressed in various ways, from a simple “thank you” to formal programs like Employee of the Month. It’s often immediate, spontaneous, and tied to specific achievements, and managers use it to encourage employees to keep putting their best foot forward when doing their jobs. On the other hand, rewards are tangible and often have a monetary value. They are given in return for achieving specific goals or benchmarks and can take many forms, including bonuses, gift cards, or paid time off. Rewards are typically part of a structured program with defined objectives and criteria. While both recognition and rewards can boost employee morale and productivity, they serve different purposes. Recognition satisfies the intrinsic need for appreciation and respect, fostering a positive work environment. Meanwhile, rewards motivate employees and can incentivize employees to meet or exceed their goals. To highlight their differences even more, managers reward employees after they accomplish certain goals, demonstrate exceptional employee performance, or reach milestones, such as employee anniversaries. On the other hand, recognition can be given for displaying a desirable behavior, such as teamwork, innovation, or finishing a project in a timely manner. Furthermore, employee rewards are usually given to employees by their employers or higher-ups, while recognition is given by higher-ups and peers. In conclusion, a balanced approach incorporating recognition and rewards can create a more engaged, motivated, and productive workforce. By understanding the unique benefits of each, organizations can better tailor their strategies to meet the needs and preferences of their employees. What Are the Benefits of Recognition and Rewards? 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 some of the most significant benefits of recognition and rewards – and 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 of 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 a lack of development opportunities 41% are unsatisfied with leadership 34% are unsatisfied with compensation and benefits 32% leave because they lack 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 often see their work’s impact. 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 others. This is why HR Pros use recognition and rewards to drive higher employee engagement. Improving employee productivity Employees are most commonly distracted by social media and news websites, with 45% admitting they spend time on them during work hours. Employee productivity is crucial to business output, so employers know they must use the best employee motivation strategies at their disposal. Before designing a recognition and rewards strategy to improve employee productivity, employers usually conduct employee surveys to determine what motivates their workforce. Some employees are more intrinsically motivated, so a non-monetary recognition program would improve their productivity. On the other hand, rewards would have a greater impact on extrinsically motivated employees’ productivity. Attracting top talent The candidate market is scarce when it comes to top talent, especially tech. In fact, 75% of employers globally report talent shortages, emphasizing the global nature of the issue. However, some HR Professionals are creating recognition and rewards programs that incentivize their employees to refer suitable candidates for job openings. Research states that referral hires have a 46% retention rate after 12 months, compared to 33% for other hiring sources. Moreover, 88% of employers say that referrals are their best source of hire. Moreover, candidates check their potential employers on Glassdoor and other similar websites where employees give their direct impressions on the 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 sharing 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 the form of a 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 and appreciation and a bad work atmosphere can be stressful and conducive to larger problems such as high employee attrition. However, recognition and rewards support 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 the company’s mission and values. One of the most common purposes of both B2B and B2C companies is to provide value to their customers, which is easier said than done. Companies must improve their product features and customer service and adjust their prices to achieve the best customer satisfaction scores. This is not easy – and it mostly depends on the 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. Building Employee Recognition and Rewards Programs HR Professionals are usually well aware of the positive changes they can make by utilizing the 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 senior managers do. Set up goals 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 designed with the intention to adhere to your goals. Define policies and procedures There are a lot of processes to define regarding your recognition and rewards program. If you offer 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 must 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 the benefits of participating in such programs. You will need to include your employee communication specialists at this point. Pro tip: include your leadership in communicating about the recognition and rewards program. As 89% of employees believe that CEO communications are good for morale and productivity, it will ensure a high participation rate in your recognition and rewards program, too. Also, you can get our internal communications plan for managing employee recognition and rewards programs 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 initiatives. Encourage recognition continuously One of the frequent pain points of recognition and rewards programs is that their popularity drops after the 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 others. 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 setup process needs to be circular in nature in order to work. That means that you need to review your goals, communication, policies, analytics, and others 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 choosing 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 a myriad of them, HR Pros opt for recognition and reward 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 reward ideas for monetary and non-monetary programs, as well as simple employee recognition ideas. Monetary employee rewards ideas When they want to recognize their employees’ achievements or important milestones, employers frequently opt for monetary rewards. One such reward, prepaid cards, is the favorite type of monetary reward for 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 reward 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 the community instead of the workplace. Here are some examples of simple recognition and reward ideas. Employee appreciation letter Employee recognition card or note Featuring employee on the 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 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: the recognition and rewards platform is essential for mid-sized businesses and enterprises that want to offer the best employee experience and boost employee satisfaction. 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 measure your efforts truly. 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, many face the problem of keeping the same level of interest in recognition and reward 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 an 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 simultaneously. 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, running an efficient recognition and rewards program on a global scale, let alone with a low FTE, is virtually impossible. However, having a recognition and rewards solution in place allows running programs with a low total cost of ownership and 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. Secrets for Maximizing ROI of Employee Recognition in 2021 and Beyond Employee Recognition in Technology and Telecommunications Industries Employee Recognition in Consumer Industries Employee Recognition in Construction and Manufacturing Employee Recognition in Financial Services Employee Recognition in Energy and Natural Resources Industry Employee Recognition and Rewards Solution Buyer’s Guide