In praise of praise: Employee recognition

Knowing that employee recognition is not just about money could save your company a lot of, well, money.

Employee-recognition programs are often in-house jokes. Just ask anyone who has received a company-branded crystal figurine for 10 years of service. Or coupons for fast-food joints, like some companies hand out. Or, worse, had her photo taken for the dubious honour of being “employee of the month.” Such efforts are done with the best of intentions to improve morale, but frequently have the opposite effect. There’s no doubt that employees want to be recognized for their work, and while cash is always good, it’s not everything. “The buck is not the be-all and end-all,” says Peter Hart, CEO of Rideau Inc., a Montreal company that designs corporate recognition systems. “If it was, I’d be in serious trouble,”

All kidding aside, Hart says employees also want a little extra attention that cold, hard cash can’t provide. As psychologist Abraham Maslow pointed out, people have a hierarchy of emotional needs that, in the workplace, can be partially met by being recognized by their colleagues and superiors. Such appreciation is also good for employers. At their best, formal recognition programs pay for themselves through reduced turnover and increased employee satisfaction. It costs a Fortune 2000 company roughly US$6,000 to hire a single employee, so keeping their current high-performers happy is important–even more so today with the squeeze on human capital as baby boomers start retiring. “Retention is directly tied to recognition,” says Hart. “People join companies, but they quit their managers.”

Don’t think it matters? In a 2004 study, Northwestern University in Evanston, Ill., found direct links between employee satisfaction, customer satisfaction and financial performance. Yet Gallup the same year reported 65% of American employees received no recognition for their efforts. No doubt that’s why so many workers feel disconnected from their workplace, a disconnect that Gallup says cost the U.S. economy roughly US$300 billion in 2000 alone.

The trick is figuring out how to make recognition meaningful and rewarding for both sides. “The real good recognition programs don’t just recognize achievement; they recognize people’s behaviours and activities that lead to achievement,” says Hart. Tacky trinkets just don’t cut it. But before throwing iPods at everyone, managers have to figure out what behaviours they want to reward and establish a benchmark of employee attitudes before starting a recognition program. Then, and only then, can they judge whether the programs are effective.

It’s also important to remember that different types of employees value different things, says Michael Mullarkey, CEO of Workstream Inc., a provider of human resources software and services in Ottawa. For example, he adds, engineers or technologists “value training and investment in their existing education more than a gold watch,” so reward programs should be tailored to meet those needs. Two other common pitfalls companies often fall into is to offer rewards in one division but not others, or offer rewards of varying value. Recognition programs should be consistently applied across the company, Mullarkey advises.

But recognition doesn’t stop with a nice gift. Employees also want a proper presentation by their managers, says Hart. The best award he ever received wasn’t a cruise or an iPod. It was a stone. That’s right, a stone–just your regular garden-variety stone–from Telus Corp. Hart didn’t need a paperweight, but the presenter made it memorable. “I will never ever take that stone off my desk, because every time I look at it I remember how she spoke to me and what it meant to me,” says Hart. “Even if the value of the award isn’t very much, a manager can take that all away by saying, ‘Hey, this is not a lot, but it is a token of our appreciation.'”

For those of us with a more material bent, companies such as Rideau and Workstream can set up points programs that can be redeemed for such products as electronics, gift cards and vacations, even cruises.

If a company is too cash-strapped to spring for the goods, there are a number of less expensive ways to show appreciation (see sidebar), from positive reviews to holiday cards to taking an employee for lunch. Remember: a little recognition goes a long way.

Pat on the back

Reward programs don’t have to cost much. Check out Peter Hart’s Top 10 ways to honour your staff.

1. Send and personalize holiday cards by including a reference to an especially important accomplishment from earlier in the year.

2. Give an employee a day off to cater to his favourite charity. Invite him to report on it for the company newsletter.

3. Surprise your staff with a home-cooked meal.

4. Take an employee to lunch at his favourite restaurant and ask him how business can be improved.

5. Write a thank-you note, but be specific. Mention three things that make you appreciative that employee works for you.

6. Organize a day of thankfulness that allows colleagues to honour the service of up to three of their peers with gifts.

7. Announce a program to match your employees’ charitable donations, up to $100 each.

8. Bring in recreational experts–such as a golf pro, eBay power seller or decorator–to teach employees new skills.

9. Have a gift related to your employee’s favourite hobby inscribed with a personal message. Sign and date it.

10. Give employees a positive review telling them what’s great about what they do. Make it 15 minutes long–and mean it.