Human Resources News & Insights

3 keys to successful recognition programs

Employee recognition programs have kind of become old hat these days. So how can you pump new life into this morale-building effort?

The most common characteristics of high-ROI recognition programs — regardless of their monetary value — are their spontaneity and perceived value by employees themselves.

In reality, the cost of some of most effective spot awards and bonuses often amount to less than 1% of base pay — and the awards don’t even have to be given in cash.

Less sense of entitlement

Part of the problem with traditional end-of-year or quarterly bonuses (apart from the fact that they cost employers an average of 10% of base pay) is that employees expect to receive them for reaching certain goals.

Sometimes employees simply expect it no matter what. For example, at many firms, an annual holiday bonus is viewed as an entitlement and people inevitably grumble that it’s not high enough. On the flip side, with spontaneous awards and bonuses, workers are often pleasantly surprised.

Here’s what the experts suggest to make the latter type of awards work, even if they’re lower in cost:

1. Creativity is crucial

The most effective programs typically give out awards weekly or monthly. To avoid over-stretching the budget – and avoid a ho-hum attitude setting in – creativity is a must.

One way that never gets old: combining time off with a second, non-cash award. Example: One firm gives a half-day off in combo with movie passes once a month.

Another, at weekly staff meetings, holds a random drawing for a dinner gift certificate, plus permission to leave work early once.

2. Make it personal

Rewards have more lasting impact when they’re geared to people’s personal needs or interests. Two examples:

  • one firm with many foreign-born, low-wage employees awards a $20 pre-paid phone card after 90 days of service, and a $100 card for outstanding work, and
  • another company with a lot of sports nuts took a few top-performers to a ball game. Managers said it was the best $200 they’ve ever spent in terms of creating ongoing enthusiasm.

3. Add structure

The awards may seem spur of the moment, but top programs have a fixed budget and structure set before anything is handed out. Example: One retail firm awards “points” for good work. Folks can then trade in their points for store merchandise.

By letting people bank points for more valuable rewards, the employer saw a solid jump in retention.

Other organizations prefer to let employees reward each other. For instance, a small healthcare provider keeps a “goodies box” onsite – paid for in petty cash and stocked by employees themselves.

When someone spots a co-worker going the extra mile, he or she pulls out a prize and awards it. The program is a huge hit: It’s immediate and personal, yet structured.

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  • HRP

    Sometimes the little things have a greater impact….Although a year-end bonus is great, they are most often distributed according to salary grade/position and can have a negative affect on those in lower paygrades…..

  • Vivian Harvey

    You state “Ken Stahlmann spells out four keys” but I see from the title and text that there appear to be three. Did I miss something?

  • ENG

    In addition to compensation, these are good ideas and generate enthusiasm. But at the same time, let’s get real. Until executives are held to the same pay policies that their employees are held to, this comes off as a scam to keep pay artificially low. If large bonusus weren’t motivators, then executives wouldn’t get them. According to the proxy statement of one company I know, the President is guaranteed $26M if he is terminated for cause.

    Companies need to do a better job of sharing increases in revenue and productivity with all employees, not just the handfull at the top.

  • Beth

    ENG: I do agree with what you are saying but this is not about compensation, it’s about recognition. Two entirely different things.

    I just had a visit yesterday from four ladies who told me their manager NEVER does anything to make them feel they are doing a good job. Only speaks to them when they make a mistake or commit some minor infraction. No pats on the back, no “thank you” or any other gesture of appreciation.

    The small things mentioned in this article, I believe, are great ideas.

  • James b kinn

    Giving a bonus makes no business sense unless it is conected to a profit. I am in favor of sharing profit. It can be on any regular time schedule that profit is determined.

  • Recognition is a must. I just lost a good employee of 6 years because the mgr of the department never nominated her for Employee of the Quarter. The employee never missed a monthly goal in 6 years. The Employee of the Quarter recieves recognition in front of the entire company, a gift certificate for dinner for 2 and a nice plaque. A very inexpensive program.

    The executives of companies need to get on board with good recognition programs and truly support the teams.

  • Employees will stay and work where they are appreciated, otherwise they move on. One of the greatest, forward thinking recognition companies is OC Tanner. They get it, they are very creative and thoughtful in their approach to putting together recognition programs.

  • Eric

    I agree with Beth, Cindy and Julie. This is not about bonuses, and should not be tied to profitability. Particularly in an economy like today, there is no direct correlation between profitability and hard work, and in actuality, many employees are working harder in the face of decreased profitability because of staff reduction. These employees need to be recognized. Personal recognition by individual supervisors is good, public is better. It does not have to be much, but like Cindy’s example, try not to leave any deserving employees out.