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SHRM provides comprehensive yet pragmatic recommendations so companies and HR leaders can effectively manage an employee recognition program that can truly add value to thier company and be successful for the long-term.
Organizations consistently recognized as "great places to work" are typically those that frequently recognize, validate and value outstanding work — not only by telling employees they are doing an excellent job but also by giving them rewards or noncash incentives.
Employees not only want good pay and benefits; they also want to be treated fairly, to make a substantial contribution to the organization through their work, and to be valued and appreciated for their efforts. In a recent survey by SHRM and the recognition consulting firm Globoforce, 80 percent of organizations reported having an employee recognition program. See SHRM/Globoforce Using Recognition and Other Workplace Efforts to Engage Employees.
According to SHRM:
The most common programs are those that recognize:
- Length of service, generally in five-year increments.
- Exemplary one-time achievement, often with an on-the-spot cash award or additional paid time off.
- Noteworthy performance over a period of time, often for employees who add quality to the work process or product or who provide superior customer or client service.
- Rewards range from simple spoken or written thank-you notes and "spot" bonuses of cash or gift cards to catalog merchandise and gift certificates for retailers or restaurants. Organizations may even provide vacation packages for employees' special achievements. Some programs that reward excellent work provide non-monetary awards such as public recognition or staff appreciation events.
The point is to say "thank you" frequently to employees who deserve it.
Although organizations typically recognize employees' length-of-service milestones and instances of strong individual or team performance, many organizations are beginning to focus on other, less traditional areas for recognition. Among them are the following:
The ability to manage or champion change.
- Customer or client retention.
- Talent acquisition and retention.
- Actions that embody the organization's core values.
Organizations adopt employee recognition programs to raise employee morale; attract and retain key employees; elevate productivity; increase competitiveness, revenues and profitability; improve quality and customer service; and reduce employee stress, absenteeism and turnover. In a SHRM/Globoforce survey, Using Recognition and Other Workplace Efforts to Engage Employees, 68 percent of HR professionals agreed that employee recognition has a positive impact on retention and 56 percent said such programs also help with recruitment.
In addition, awards and incentives can keep employees motivated and reinforce organizational expectations and goals during times when budgets are small or frozen and overall job satisfaction is low.
A positive employee reward and recognition strategy essentially reflects the conviction that nothing is better than a sincere "thank you/job well done." In an era of increasing competitiveness for top talent, a well-managed recognition program can provide valuable help for employers that must use every available means to attract and retain the best employees and keep them engaged and productive. See Viewpoint: Why Showing Gratitude to Employees Is as Important as Generating Revenue.
Policy and Design
Employers should provide a clear, written policy and guidelines describing the recognition program and its terms, including:
- Employee eligibility requirements.
- The approval process.
- The types of awards that will be provided.
- The frequency of award presentations.
- The performance goals that will be measured.
- When defining the decision-making process and the levels of approval required to receive an award, authority and responsibility for program administration should be distributed as widely as possible in the organization.
The organization should communicate both the criteria and examples of the types of work behaviors that warrant an award. This communication will help all employees understand how to judge the desired outcomes. It will also ensure timely recognition, which is necessary for the program to be effective.
Some employees may not be as motivated as others by an organization's incentives, so organizations should offer a variety of incentives and recognition opportunities to meet various employee needs. Because job types, job levels, work locations and working environments differ, offering a variety of incentives is usually most effective in making the program meaningful to all participants. See What Motivates Your Workers? It Depends on Their Generation.
Finally, when designing a recognition program, allow it to be adjusted later as circumstances warrant—new situations may suggest new ways to recognize employees.
Few managers are "naturals" in carrying out employee recognition and awards programs. Most need to acquire skills related to recognizing employees' contributions and giving effective feedback and praise. All managers should be trained to do the following:
Stress the importance of the program to employees, and explain how it can affect the company's bottom line.
- Help employees understand the impact their performance has on the organization's goals and how they drive the business to succeed.
- Discuss the approach for managing and rewarding individual and team performance.
- Explain how the program works and how employees can achieve recognition.
- Learn how to communicate needs, expectations, and goals clearly.
- Deliver appreciation and praise in a sincere and timely manner for maximum results.
- Managers should be reminded about the many ways they can recognize and reward employee achievement so that they feel comfortable deciding the best types of recognition and how to present them to their employees.
When starting a new recognition program, organizations must provide supervisors and managers with information about the rationale for the program and how it will work before they begin to field questions from employees. A Q&A packet can be an effective way to brief managers. Once supervisors and managers are up to speed, the organization's senior management should send out a kick-off communication to all employees explaining the reasons for the program and the potential rewards.
Different methods of communication can be used to disseminate information about the recognition program. Intranet postings, staff meetings, new-hire orientation materials and e-mail are examples of how to spread the word to employees.
The means of telling employees who is receiving recognition and why depends on the organization's culture, including how comfortable employees and managers are with public recognition.
Metrics and Reporting
An employee recognition program should include a means of measuring the value it creates. Few organizations track the returnon investment of their employee engagement or recognition programs. Those that do such tracking, however, generally use employee retention levels, overall financial results and employee productivity levels.
Programs should also be monitored continuously to keep them relevant and current. Among the questions that can help determine the program's effectiveness are the following:
Are rewards adequate, fair, competitive and appropriate?