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Small companies may view employee recognition programs as a frill, but the data suggests that having a program translates into bottom-line results.
A 2012 study of 834 organizations by Bersin & Associates concluded that organizations that recognize employees perform about 14 percent better than ones that do not. A SHRM study demonstrated that companies with formal recognition programs experience 48 percent higher engagement than those that do not.
Creating an effective employee recognition program takes a healthy dose of planning and collaboration, but is well worth the investment. When employees receive a pat on the back, they become energized, stay motivated and often encourage fellow employees to take their performance up a notch. In addition, a well-crafted recognition program gives company leadership an excellent platform from which to emphasize its key values and keep everyone working in concert.
As small companies grow larger, more complex and more successful, these benefits of a recognition program pay untold dividends in terms of operating efficiency, employee engagement and employee retention.
Set Clear Program Goals and Criteria
One thing that will undermine any recognition program is arbitrariness. Employees need to know the criteria for being recognized, and must also feel that everyone has a fair shot at being recognized. This is one reason why many recognition programs focus on years of employment — there is nothing arbitrary about determining whether a person has been on the payroll for five years or 25 years. In addition, the criterion of years of employment has the advantage of simplicity; complex formulas for determining winners make it difficult for employees to know what to shoot for.
Program goals and performance criteria must, of course, be strategically important. As appealing as years of employment is, if a company is in a business where turnover is expected and common after three to five years, then building a reward program that sets 25 years as the ultimate achievement probably won’t make sense.
Multiple Winners Multiplies Value
A winner-take-all program creates a sense of winners and losers among the workforce, with losers far outnumbering winners. This dynamic does not usually promote teamwork and morale, and is probably a poor design strategy for all but the most competitive company cultures.
For the most part, recognition programs that allow for multiple winners (e.g., years of employment, closing a particular number of sales) give all participants an opportunity to win. If the objectives are reasonable, everyone starts every recognition program feeling like a potential winner.
On the flip side, if the recognition program is too easy, or obviously designed to make everyone a winner regardless of performance, employee morale will suffer and the program will fail. Without demanding some type of achievement, a company’s recognition program sends a signal that any level of performance is acceptable.
Peer-to-Peer Programs Prosper
Peer-to-Peer recognition is becoming more popular and often works more effectively than top-down recognition. Younger generations put more stock in peer reviews, and everyone regardless of age or position takes pride in getting a pat on the back from a co-worker.
If a Peer-to-Peer program structure is selected, it becomes all the more important to fully articulate program goals and criteria — there will be more people involved in the decision making, and thus more opportunity for misinterpretation and disputes.
For companies new to recognition programs in general and Peer-to-Peer structures in particular, it is wise to start small, with one or two simple performance criteria and a modest reward. If the program is successful, it can always be expanded in scope and cost. If problems arise, fixes are much easier when the program is still small enough for leadership to get its arms fully around it.
Having the right recognition program strategy and structure is one key to success; the other key is consistently communicating the program both in terms of frequency and message content. Without ongoing communication, employees will soon conclude that the company is not serious about recognition. If communication is contradictory, employees soon become confused and stop trying to win recognition. A few aspects of communication that deserve special mention:
- Top leadership must be seen to fully support the program. For a small business, this means the owner needs to show enthusiasm and take an active role in recognizing winners.
- Onboarding of new employees must include a full explanation of the recognition program; never rely on co-workers to fill in the blanks. To this end, setting up a web page on the company intranet or producing a printed or PDF program brochure helps keep the message on point and powerfully conveyed.
- Take program communication outside the box with press releases to local or even national media — journalists love business stories with a human angle. In addition, websites and blogs in a company’s niche may also be interested in publishing stories about the program and winners.
Canvas, Review and Improve
Finally, take stock of the program at least annually. What is working? What is not working? How have employees reacted to the program? What do employees see as the strengths and weaknesses? The best source of improvements to your program will most likely come from the participants. Gather their feedback diligently, review it, and your program is almost certain to improve year after year.
About the Author
Kelly Chesterson is Vice President of Operations for Point Recognition. Kelly holds a Master of Business Administration degree from Baldwin-Wallace College and is a Certified Engagement Practitioner. She has worked in the reward and recognition industry for more than eight years.
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