The Science of Recognition and Rewards
The open secret of creating engaged workforces lies in motivational psychology — aka, the science of employee recognition and rewards.
Many managers use compensation and cash rewards in lieu of thoughtful employee recognition. And is that so wrong? Money is a great motivator, except for one thing. Money alone doesn’t work. Compensation may seem like a no-brainer. But studies show financial incentives can actually rob employees of the joy associated with doing their work and lose value over time.
- Neurons in our brain fire up when we anticipate a reward & when we receive a reward
- Rewards are reinforcers
- Rewards motivate to achieve desired outcome
Being recognized is important for your employees.
Recognition is key to effective employee engagement and has a strategic impact on a company performance and growth.
A few stats that prove it:
- The #1 reason people leave jobs is limited recognition and praise.
- 81% of employees say they’re motivated to work harder when their boss shows appreciation.
- Companies with effective recognition programs see 31% lower turnover.
- 41% of companies that use peer-to-peer recognition reported seeing increases in customer satisfaction.
- 50% of employees said they’d stay at their job if they felt appreciated.
The numbers don’t lie — recognition is the employee engagement power tool. Unlike a trophy or pre-determined bonus, spontaneous recognition for great work isn’t something that an employee can anticipate.
As a result, public recognition enforces good behavior and performance, all while forging connections between the people giving and receiving praise.
Top 5 scientific principles for your recognition and reward program
Recognition is meaningful and specific. Not all types of recognition have the same impact to people.
Learn what the top 5 principles can you apply to your recognition and reward program.
- Reciprocity. This universal principle of give and take applies to both recognition and rewards. People will perform better if recognition is given to them. Employers are more likely to reciprocate to employee performance by giving rewards. TIP: Use the two directions of both items for their reciprocity and sustainable impact.
- Conformity. This principle is easily observed. When people see the best performing employees are acknowledged or rewarded, employees are influenced by these performing employees. Thus, the unrecognized employees desire to conform to the normative behavior of top performers and pleasing management. TIP: Make rewards and recognition public and highly visible to impact the whole organization’s performance.
- Messaging. A positive message is sent every time recognition is given to employees. Thus, improving the employer-employee dynamic. This positive feedback creates a sustainable culture of positive pro-social employee behavior. TIP: Use the right words and channels in your communications.
- Validation. The need of people to feel validated for their efforts and good work is an important principle with recognition and reward. Thus, it is crucial to highlight the top performers, sincerely acknowledge their contributions, and validate the worth of employees. TIP: Focus on tangible contributions and the effort employees make to grow the business.
- Justification. This is a perceived difference between cash and matching value of non-monetary rewards. Employees commonly say they prefer cash over a tangible reward. However, people actually work harder for non-monetary rewards they could not normally get or justify spending their own money on. TIP: Design your program well with what your employees desire or aspire for.
Carrots has an interesting approach that applies the science of recognition and rewards effectively.
Bea (Head of operations for BPO company) has this to say
"We wanted to drive employee performance while building their loyalty to our company. We tried manually providing rewards but it was not effective. We truly like CARROTS.PH for making recognition and reward easy for us aligning goals attainment and rewards to drive sustained performance."
Although noncash incentives and recognition programs have been in play since the (last) Great Depression, the science and research supporting business use has, until recently, been surprisingly sparse. However, driven by a proliferation of renewed interest in uncovering alternative cost-effective performance solutions, a new body of research has emerged that strongly confirms the value of noncash rewards within the engagement mix and provides increased insight into how to design programs more effectively.
Noncash rewards impact revenue and key sales indicators: Some of the most important research about the effectiveness of noncash rewards comes from a fall 2011 study by the Aberdeen Group of almost 300 organizations, "Sales Performance Management 2012: How the Best-In-Class Optimize the Front Line to Grow the Bottom Line."
Among its findings:
• Organizations that provide noncash reward/recognition had an average year-to-year annual corporate revenue increase of 9.6% versus just 3% for all other organizations.
• Organizations that provide noncash reward/recognition had a 2.1% year-to-year increase in revenue per full time sales employee versus a 0.7% decrease for all other firms.
• Adopters of non-cash rewards/recognition also had 34% shorter sales rep time-to-productivity.
Tangible awards capture attention and impact business results. A 2011 study by Jeffrey & Adomdza concluded that employees think more frequently about tangible, noncash awards than cash awards and that the increased interest leads to higher performance. The logic followed that since noncash awards capture an employee’s imagination, they also motivate the employee to do more.
Rewards and engagement are inextricably linked. Over the last decade or so an overwhelming amount of research from such respected organizations as Gallup, Hay Group, and Towers Watson has made an irrefutable connection between an organization’s level of engagement and its financial results. In addition, these studies have shown that an organization’s use of rewards and recognition plays a vital role in driving engagement levels.
Once an organization launches its recognition program, the best outcomes are achieved when recognition is partnered with tangible employee rewards.
We hope you have gain valuable insights and knowledge on the science of employee recognition and rewards. And, if you’re ready to take it to the next level, CARROTS.PH’s Employee Experience platform combines recognition, rewards, and engagement under one powerful system.
Program design is the most critical component when developing an effective and efficient approach to driving higher levels of engagement, performance, and loyalty. Research shows that, when designed prudently and implemented properly, noncash inducements can actually be more effective in capturing employees’ attention and producing measurable results than more expensive forms of compensation. Furthermore, using technology can be a big help to leverage the science and best practices in employee recognition and rewards.
Our Employee Surveys showed that every company had a boost in engagement after implementing CARROTS. And, the cost of employee rewards programs decreased between 20-30%. Plus, it saved tons of effort and man-hours for HR and operations staff.