Feature Article - July/August 2018

Make an Impact

Why Recognition Is Important … Today!

By Rick Dandes

Recognition in the workplace can be an effective component of an overall corporate strategy that motivates and engages employees and increases productivity, while at the same time optimizing employees' sense of accomplishment, making them feel valued for their work.

When you ask why recognition matters today, Mike Ryan, senior vice president, client strategy, Madison Performance Group, New York City, suggested you should "look at how the modern, global workforce is changing as a result of technology and workforce demographics, and how different segments within the workforce want different things out of a job."

Millennials, Ryan explained, want a chance to contribute, a chance to lead, to be taken seriously and listened to. Baby boomers or more senior employees want recognition as a way of reiterating that they still matter—that their wisdom and counsel have value.

Recognition is also effective in the so-called "gig economy," another evolving shift in today's workforce, where temporary positions are common and organizations contract with independent workers for short-term engagements. A study by Intuit predicted that by 2020, 40 percent of American workers would be independent contractors.

Recognition is core to ensuring positive work experiences for all employees, explained Derek Irvine, executive vice president, Strategy & Consulting Services, Globoforce, Framingham, Mass. (North American headquarters). "Workers at companies with no formal recognition program are three times as likely to say their overall experience at work is negative," he said. "Additionally, workers at companies with values-based recognition—where employees are recognized and rewarded for behavior that exemplifies a company's core values—are four times more likely to say they passionately believe in their company's core values, versus workers at companies with recognition not tied to core values." More surprisingly, Irvine said, 61 percent of workers at companies with no formal recognition program are not even aware of their organization's core values.

Rick Buer, CEO, GC Incentives, of Omaha, Neb., agrees. "We know that one of the core principles of psychology is that recognition is a powerful driver of behavior," he said. "We all want to be recognized for our accomplishments in a way that is meaningful to us. If a reward or incentive is attractive enough and given out under the right circumstances, it can change behavior. But more so, rewards show appreciation, and creating a culture of appreciation can go a long way toward increasing company morale. As companies focus more on overall engagement and well-being of their employees, we see them working to align programs across disciplines to create a more cohesive and comprehensive offering that includes performance, wellness and other incentives and recognition initiatives."

The primary use of recognition and reward programs is to combat employee disengagement and align employee behaviors to organizational values, Buer added. "Employees of today's workforce," he said, "have high demands placed on their time and energy. They can struggle with balancing work and home concerns, long commute times, rigorous schedules, unhealthy eating habits, poor sleep, financial challenges and more. These contribute to poor work-life balance and disengaged employees who don't feel like their companies care about their well-being. In fact, many studies have shown that up to 70 percent of employees have reported they are disengaged in their work."

Who Needs Recognition?

Whether you go up or down the organizational hierarchy, recognition is important, said Ryan. "At the senior level, it helps to drive productivity and engagement. But managers need it as a tool to help guide their employees to achieve localized results. When you think about it, this is one of the only compensation tools that a manager really has."

Recognition in the workplace can be an effective component of an overall corporate strategy that motivates and engages employees and increases productivity.

Everyone associated with your organization should have the ability to be recognized, said Mike Donnelly, president, Hinda Incentives, Chicago, agreeing with Ryan, "that is, if you want them to feel proud of your organization, continually strive to meet the company's values and continue to be an important part of your organization," he said. "And that includes employees in sales, marketing, operations, call centers or accounting. Recognizing your own people communicates your values, creates heroes and clarifies their purpose. Recognizing your vendors shows them you're a partner. And recognizing customers, whether they are channel partners or end users, creates loyalty and differentiates your brand."

Employees also need a way to recognize one another, to stay in touch, to thank another employee for helping them out in a jam, and to build those types of relationships that reinforce organizational core values. So, recognition is key across the corporate constituency. There is no one particular individual within an organization that a) does not need to be recognized, and b) can't benefit from having recognition of others at their disposal.

Irvine added that employees today are looking for more than just a paycheck. Only by creating an engaged workplace environment can people thrive and do their life's best work.

"According to our research," he said, "47 percent of HR leaders still cite employee retention and turnover as their top workforce management challenge. We are all inspired to do our very best if we feel validated and recognized by our peers for what we accomplish, both in the workplace and in everyday life. An organization's feedback environment is more likely to be supportive when human-centered approaches like recognition tied to core values are adopted."

Employees need recognition because it makes them feel more appreciated, prouder of their work, more satisfied with their job, happier at work, more engaged and more committed to the companies they work for. Along with recognition, an organization's feedback environment is more likely to be supportive when human-centered approaches such as ongoing peer feedback and frequent performance reviews are adopted.

All this leads to bottom-line benefits, according to an analysis by Aon Hewitt in a 2013 report, "Trends in Global Employee Engagement." Research shows that low engagement results in a 33 percent decrease in operating income and an 11 percent decrease in earnings growth. Absenteeism costs American companies nearly half a trillion dollars annually. On the other hand, companies with engaged employees outperform those without by up to 202 percent. And for every 1 percent increase in employee engagement, you can expect to see an additional 0.6 percent growth in sales for an organization.