What is employee recognition?
Employee reward and recognition programs are special incentives set up by companies to recognise staff for their contributions to the success of the business. The companies with the best employee recognition programs typically not only manage to hire and keep more top talent than other businesses, but they also ensure that their employees feel appreciated and are highly motivated to work towards achieving the shared corporate goals.
Types of reward and recognition programs
Employee reward programs typically cover three broad categories:
- They celebrate career milestones, such as five, ten or 20+ years with the company.
- They reward achieved targets or outstanding measurable results.
- They acknowledge good work and encourage the employee’s ongoing efforts and dedication.
Benefits of employee recognition programs
A Gallup analysis has shown that only one in three employees surveyed reported that they received praise or recognition in the seven days preceding the survey. Such lack of recognition, whether real or perceived, can lead to demotivated, disengaged employees. But to be successful, you want your team to be at their best and motivated to show up and do well. According to a Harvard Business School researcher, feeling appreciated is more important to employees than cash. So let’s look at some of the benefits of having an employee recognition program in place:
Drives employee engagement
Employee engagement is crucial to your company’s success. Decades of Gallup research have come to the conclusion that engaged employees produce better business outcomes than disengaged ones, and this is true regardless of industry, company size or the current economic situation. Any staff member who is engaged with the work they do will naturally perform better. And increased employee performance means employers can reach their goals faster and provide higher-quality products or services.
Lowers absenteeism rates
If your staff are happy, they’ll gladly come into the office every day. A dissatisfied workforce, on the other hand, is more likely to feel stressed or overwhelmed and seize every possible opportunity to stay away from the office. Absent employees obviously cost money and make your business less productive. That’s clearly something you want to avoid at all costs! Employee reward programs will help you do just that.
Excellent ROI
Some employers may be reluctant to spend money on employee reward programs when their staff are already paid a salary in return for their work. But in light of the increased motivation, productivity and employee performance that employee recognition programs can trigger, your return on investment (ROI) will likely be high, albeit not instant. You will find that, in the long term, employee recognition programs are low cost but high impact.
Strengthens your employer brand
If you offer attractive rewards and your staff feel appreciated, word will get around that you are a great company to work for. This will boost your employer brand and attract fresh talent. Related: 4 Ways to Build Your Employer Brand Without Breaking the Bank
How to set up an employee recognition program
Guidelines
As an employer, you should provide clear written guidelines defining the goals and rewards of your employee recognition program. Your staff should know, for example:
- what requirements they need to meet to be eligible
- what types of rewards there are
- how often rewards will be presented
- which objectives will be measured as the basis for the rewards
- the threshold they need to meet to qualify for a reward
Company culture and budget
When it comes to choosing the right employee recognition program for your company, there is no one-size-fits-all solution. First of all, you need to decide how much of your budget you are willing to set aside for your employee reward program. Naturally, different companies will have different amounts to work with. But being well funded certainly makes a reward and recognition program much more effective than if you invest too little in it and the rewards are unappealing. Next, think about your company culture and corporate values. What types of rewards and recognition do you feel would be a good fit for your business? If your firm is more conservative and you have an older workforce, a skydiving voucher may not be the most appreciated reward, for example.
Public or private recognition
The best employee recognition programs don’t have to feature only public rewards! While it’s true that many employees will appreciate having their achievements recognised publicly, some may want to stay out of the spotlight and prefer private recognition. In those cases, a handwritten congratulatory note, a simple handshake as a personal thank you, or a box of chocolates sent to their home address could be good ideas.
Communication
It’s important that you communicate clearly what conduct and what targets will lead to being recognised with a reward. It’s recommended that you offer your employees rewards on a predictable, regular basis as prompt rewards have been found to increase intrinsic motivation. That’s because from a psychological point of view, good behaviour in the workplace is rewarded and the employees are therefore more likely to repeat the desired behaviour.
Related: Tips for Business Communication During the COVID-19 crisis
Top 7 employee recognition ideas
Now that you’re clear on how to go about setting up your program and what to consider, here are our top 7 ideas for effective rewards your staff will appreciate:
1) Company award
A company award is a great way to show your appreciation. Awards can range from official certificates to wall plaques or, for extraordinary achievements, perhaps even a trophy engraved with top achievers’ names to show off in your foyer. Such prizes could be awarded weekly or monthly and will give your staff a special incentive on an ongoing basis.
2) Social media shout-out
Social media is a must-have for any company today, and it comes in especially useful if you want to brag about something. Post about your staff member’s achievements on your company’s social media channels like your Facebook page or Instagram profile. Include their photo (providing you have obtained their consent, of course) and show off their good work to the world! This also enables them to easily share your posts with their own friends and family members for extra clout.
3) Special event voucher
Tangible rewards are always a popular choice. Try to be as creative as possible, and your employees will thank you! Reward them with a scenic helicopter flight, get them tickets for that major sports event everyone is talking about, or treat them and their spouse to a meal at a gourmet restaurant. Your options are endless here – but the more thought you put into the reward, the more your employees will feel valued and appreciated.
4) Financial bonus
At the end of the day, everyone will appreciate a financial reward. Surprise your top performers with an unannounced bonus payment or make a set bonus part of the targets set out in your reward and recognition program.
5) Press release
If one of your employees has completed an especially complex project or signed a deal with a major new client, it might be worth considering putting out a press release. Not only will this raise this staff member’s profile and get their name out there, but your company as a whole will also gain exposure. A win-win situation!
6) Surprise gathering
Give your top achievers the afternoon off and organise a surprise party. Arrange a picnic outdoors or hire a meeting room for the whole team – fully catered, of course! Treat them to treats and delicacies and perhaps a glass of champagne to celebrate their achievements.
7) Fun team activity
Paintballing, bubble soccer or a spooky escape room – group activities like these are not only fun but also allow your staff to get to know new people or strengthen existing relationships. Team-building exercises are fun for the awardees and also benefit your company overall since the participants are likely to get to know and trust one another. And, as an extra perk, you can take the whole team out for drinks afterwards! These ideas should get you started but, of course, there’s no limit to your creativity. What’s more, you can – and should – adapt your reward program to fit in with your unique corporate culture.
Culture of recognition
Recognition gives rise to more recognition. When a manager recognises staff members, they act as a role model. And when their employees see their leaders behave in this way on a regular basis, they internalise it and eventually expect it. Recognition becomes a way of doing things and part of your corporate culture. In the end, it’ll be normal for workers to recognise each other’s achievements as well, rather than just relying on top-down recognition from the managerial team. This will also contribute to a positive state of mind among the workforce, which is especially vital in challenging times.
Follow up
After you have rewarded your employees, make it a point to follow up with them. Seek out their feedback – for example, in an employee satisfaction survey – and find out what they think about the program, its requirements and the actual reward or type of recognition they received. This will allow you to evaluate your reward and recognition program on an ongoing basis and continually improve it.
Tax implications
It’s worth bearing in mind that, according to the Australian Taxation Office (ATO), some employee rewards and bonuses might be considered fringe benefits and be taxable. Fringe benefits are non-salary perks you provide to your employees. But from a tax perspective, these rewards may fall under the ATO’s description of fringe benefits and can therefore be subject to tax (FBT). For this reason, it’s important that you carefully consider your overall employee engagement strategy and choose your non-salary rewards with care. If in doubt about whether or not a certain reward is subject to tax, always refer to the ATO website for the latest information.
Final thoughts
As we’ve seen, there are many different ways you can reward your employees. Recognising employees for their contributions at work makes them feel valued and appreciated. This not only encourages positive behaviour but also boosts employee engagement, increases productivity and ultimately reduces staff turnover. Be clear on what type of recognition program you want to set up, and provide your staff with transparent guidelines and expectations. Then read up on how to avoid potential tax pitfalls, and you’re ready to reward!
Please note that none of the companies mentioned in this article are affiliated with Indeed.
