Employee recognition is important, no matter how big or small the size of your company is. It is a proven method to increase work productivity and reduce turnover. If properly executed, it helps business owners generate higher profit and, in the long run, increase customer satisfaction.

What is employee recognition?

Employee recognition happens when acknowledgment and appreciation are given to the employees for their contribution to the company. It comes in different forms, and it can be as simple as giving high-five for a job well done or as rewarding as giving a bonus for reaching a monthly sales quota.

Whatever your approach is, employee recognition is an important aspect that you should focus on. You need to create and implement an effective employee recognition program. You should continuously develop and reassess your program, depending on what is required. You have to remember that an effective recognition program will help you boost employee engagement, increase productivity, improve morale, and decrease turnover.

Types of Recognition

Everyone in the company needs to be recognized. It does not matter if you are a manager or a janitor. Everyone should appreciate each other, and depending on the circumstance, there are several ways to give recognition.

Top-Down Recognition

It is the traditional way of giving recognition. It happens when the manager or the supervisor gives appreciation and acknowledgment for the employees’ contributions.

There are many ways to recognize a team member’s effort and contribution, but usually, it involves monetary recognition. In a traditional recognition program, salary increases and promotions are among the conventional and practical approaches.

Giving this kind of recognition is not easy for managers and supervisors. They need to recognize and reward countless contributions. And in most cases, leaders do not have the bandwidth to monitor everyone’s contribution. They need to have a systematic approach on how to give employee recognition.

One common approach of top-down recognition is the annual employee performance review. However, it can be challenging and a possible source of stress. A yearly review is not just about the employee’s achievement and contribution. It also includes areas of improvement, which could affect the recognition and praise.

Giving recognition to employees is necessary; thus, managers and supervisors should know how to do it effectively. Also, aside from the annual employee review, managers and supervisors should practice giving day-to-day recognition.

Peer Recognition

In the peer-recognition approach, managers and team members provide acknowledgment and praise to each other. Traditionally, managers give recognition to employees. But ideally, employees should learn to appreciate the contribution of their co-workers too. Since they work right beside their co-workers, they can immediately recognize each other’s contributions.

The approach is quite simple. If your teammates did something valuable, you should praise and recognize them for it.

Bottom-Up Recognition

This recognition approach is not common practice, but companies should encourage employees to do more of this. Managers and senior positions need appreciation, too! Recognition will also make them motivated.

It is also highly advisable to encourage employees to express their feedback and maintain excellent interpersonal communication. It will surely benefit everyone involved.

Building a Recognition-Rich Culture

Having an effective employee recognition program can benefit everyone on the team. It allows employees to be appreciated and, at the same time, appreciate the contribution made by their co-workers. You need to establish a good recognition program that is also effective in motivating people.

It would be best if you established a notion that everyone’s contribution is much appreciated. Building a recognition-rich culture in your company will be beneficial for the entire team, from the lowest ranking employee to the CEO. It will result to lower turnover rates and to increase work productivity.

From a physiological point of view, being appreciated makes employees feel good. It is because of the release of the chemical called oxytocin, which flows when we feel loved and appreciated. According to the TINYpulse Employee Engagement and Organizational Culture Report, 58% of the happy employees are more likely to encourage and recognize their peers’ success.

The key to building an effective recognition-rich culture in the organization is to understand how employee recognition works. And of course, the execution should be useful and applicable to your unique environment.

The Cost of Employee Recognition

You need to allocate a reasonable amount of money for your employee recognition program. Some companies do not have a systematic recognition program; thus, they end up spending too much time and money on recognition. Some companies are buying gift cards and making celebratory lunches. These things are good but are time-consuming for the supervisors and the HR team.

It is highly advisable to establish a formal recognition program, and you need to consider who will benefit from the program. Do not worry about the money you invest in employee recognition; it will pay for itself.

An effective employee recognition program will increase employee motivation, engagement, productivity, and retention.

So, what now?

You need to start establishing an effective recognition program, and the first step is to understand how it works. You also need to learn its benefits and how to make employees truly valued. Dig deeper and learn more.

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