A Guide to Employee Recognition Programs

Many employees need more than a paycheck to stay motivated. When it comes to motivating people, recognition can be a powerful tool for employers.

Implementing an employee recognition program can allow a company to help build the framework for improved employee morale, higher retention rates and superior customer service.

The purpose of an employee recognition program is to acknowledge staff members for a job well done. Through such a program, an employer may offer recognition to reinforce positive behaviour or reward employees for achieving certain goals.

Recognition acknowledges employees' achievements, while rewards incentivize employees to achieve a goal or improve performance. It’s no wonder many organizations view employee recognition programs as a key to unlocking workforce productivity.

Types of employee recognition

Recognition comes in all shapes and sizes and deciding which recognition strategy to use depends on what best suits your company. Some companies may find it worthwhile to invest in lavish vacations and other big-ticket incentives for their employees. Others may find that simple gestures can make a big impact. Employee recognition programs for small companies, for example, may rely more on nominal cost perks such as an extra vacation day, a specialty coffee or an encouraging email.

Here are a few types of rewards and recognition for employees:

Incentives. Rewards such as financial compensation, gifts and prizes can deliver “wow" factor when it comes to motivating employees. These incentives can be large or small, tangible or intangible, and may include:

• Bonuses: Cash can provide employees with a gratifying reward for a glowing annual performance review, or for meeting quarterly goals. Or, an employer can offer a smaller “spot" bonus to immediately recognize an achievement.
• Commissions: One of the more traditional means of motivation, commissions provide an employee a portion of each sale he or she makes.
• Profit-sharing: Awarding employees a percentage of the company's profits may give them a stronger sense of ownership in the company and in their jobs.
• Prizes: No matter the size, prizes can be an exciting way to motivate employees to achieve their objectives. Employers may offer:
• Travel opportunities: This could include an all-expenses-paid trip to reward a top performer or to engage employees who are working toward a big goal
• Gifts: These can range from simple gift cards for restaurants, movies, shopping and spa services to more elaborate gift baskets. American Express^® business card members often take advantage of their Membership Rewards^® 1 for these very purposes.
• Special privileges: From extra time off and early dismissals to catered lunches, "Employee of the Month" recognitions or designated parking spots, "perks" are often perceived as valuable ways to show employees your gratitude.

Recognition for events. Special events such as an employee's first day on the job, work anniversary or birthday can be good opportunities to fit in appreciative gestures. You might also consider holding an annual Employee Appreciation Day with some company-sponsored fun like an employee picnic, an office party, or a visit from a massage therapist.

Recognition for milestones. Annual performance reviews, the completion of a project or the end of a successful quarter can be other good occasions to recognize employees for a job well done.

Words of praise. Kind words make a lasting impression. A handwritten note of praise, or a verbal shout-out during a company meeting can be meaningful gestures that make someone's day.

Benefits of employee rewards and recognition programs

Recognizing employees may serve the dual purpose of making your employees feel appreciated while helping to improve the performance of your organization.

Here are five potential benefits of employee recognition and rewards:

1. Productivity. Happy employees tend to more motivated, efficient and focused on getting the job done.
2. Loyalty. Grateful employees are more likely to form a connection with their company, and they may feel compelled to return the favor by giving back and taking actions that benefit the business. This could include an ambitious interest in furthering their professional development, a mutually beneficial perk for both the employee and your company.
3. Morale. Employee morale can be contagious, leading to a more enthusiastic and productive work force.
4. Less turnover. Simply put, employees who genuinely like where they work will want to stay there.
5. Company performance. When your employees are content, committed and engaged, customer service is often enhanced.

There is no such thing as a free lunch, of course, and being able to reap the benefits of employee rewards and recognition programs requires some costs in the form of money, time or both. You can expect to invest:

• Time to design, plan and implement an employee recognition program;
• Money to pay for prizes, bonuses, perks and other rewards;
• Time spent recognizing employees through special events and personal interactions.

Questions to ask employees about reward and recognition

A good place to practice employee engagement is to involve them in the process of coming up with employee recognition ideas.

Here are three questions you can ask employees about reward and recognition to get started:

1. What types of rewards motivate you, either as an individual or a team member? Different things motivate different people. Would a cash bonus incentivize them, or do they consider time off more valuable? Is there a special trip they've dreamed of taking? Is verbal recognition or a letter of appreciation more meaningful than a tangible gift?
2. What types of actions merit recognition? Employees may also want to have a say in which tasks or events deserve recognition. Should the company recognize employees for achieving a goal? Or for receiving a good performance review? Years of service, sales figures and customer service might be other possible reasons for recognition.
3. Who should determine who receives recognition? Should it be up to a senior manager? Should team members be able to nominate their peers and supervisors?

Importance of incentives for employees

Incentives can play a vital role in the workplace because they challenge employees to meet higher standards, which ultimately could make for a better company.

Building your own employee engagement and rewards program is an important element to help retain talent and reduce turnover. Investing a little time and effort can help your business cultivate an eager team, some remarkable talent and impressive ideas.

¹ ®: Used by Amex Bank of Canada under license from American Express

This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.