Employee recognition is an essential part of successful business operations. Many companies don’t readily invest in recognition programs because they don’t understand their potential. Meanwhile, employee appreciation goes a long way, even if it’s a simple “kudos” or “thanks.”
A well-designed employee recognition program yields excellent results for a reason. It’s human nature to crave appreciation. Psychological grounds and scientific research are behind the high ROI of recognition plans.
Let’s take a closer look at how it works.
Why Do Employees Need Recognition?
When people do their work, they want to see results. While they may be happy that the company is succeeding, employees don’t feel satisfied with their work unless they receive recognition for their efforts.
Timely and well-structured recognition ties employees closer to the company, allows them to see the results of their work, and motivates them to improve efforts in the future. In fact, 90% of employees agree that recognition makes them work harder.
Many managers mistakenly believe that a high salary is sufficient motivation for hard work. In reality, without appreciation, financial motivation doesn’t last long. Even the highest salary can’t help an employee feel a part of the team or stimulate emotional contribution.
Both employees and employers need recognition to succeed. Employers get:
- Higher retention rates
- Better productivity
- Improved company culture
- Higher satisfaction rates
All of the above doesn’t come at a high price. In fact, verbal appreciation can be much more effective than monetary rewards. Experiments show that financial incentives may even reduce employees’ motivation to work harder.
Many companies spend around 1-2% of their payroll on recognition programs. With the right recognition software, it’s possible to cut costs while automating many important processes.
Employees need recognition because it:
- Makes them feel appreciated
- Shows that the company cares for them
- Confirms the employee’s choice of employer
- Allows the employee to feel a part of the family
- Prevents the employee from looking for a new job (which is emotionally taxing)
- Drives employee success
With the right approach, recognition and appreciation plans can positively affect the entire company, including employees, managers, and owners.
The information about high-quality programs reaches potential employees as well. A successful program can turn your company into an employer of choice.
When to Give Public Recognition
Public recognition is an expression of appreciation to an employee in front of their peers. This can include “kudos” at a meeting, a note in the company newsletter, a post on the official social media channel, and more.
For many people, the public form of recognition is highly satisfactory. Meanwhile, other employees who see recognition in action feel motivated to work harder to attain the same type of appreciation.
Public recognition can be reserved for sizable accomplishments, such as a promotion. Meanwhile, spontaneous “kudos” can also be highly effective for smaller achievements.
When to Recognize Privately
Some employees don’t feel comfortable being in the spotlight. They can feel motivated when recognized privately. Private recognition includes emails, “kudos” near the water cooler, a handwritten “thank you” note, and more.
It’s a great form of appreciation for smaller achievements and milestones, such as “a year with the company” or “10 sales in one month.”
Private recognition can work well for all employees, not just those who don’t appreciate the spotlight. It has a rightful place in every successful recognition program.
Why Do Our Brains Need Recognition?
Why does employee recognition yield such excellent results? Because the human brain requires appreciation to feel joy. According to psychological studies, people need recognition for several reasons, as explained below.
Value and Validation
When a person does something significant, they need another person to validate their effort. Kids need to feel this validation in order to understand how to value themselves. They develop a sense of self-value by figuring out how others perceive them.
The same works for adults. Validation and demonstration of appreciation increase employees’ sense of self-worth. This feeling is satisfying and pleasant.
Meaning and Purpose
The majority of people are always searching for a purpose in their lives. When they do something, they want to see that it has meaning.
An employee who doesn’t receive any appreciation doesn’t get any feedback. This promotes the feeling of uselessness.
Appreciation makes employees feel they serve a purpose and contribute to something big in their lives. This encourages them to work harder to make a real difference.
Connection
Humans crave connections with other humans. In the work environment, it’s imperative. Appreciation makes employees feel connected to team members. This drives a feeling of satisfaction and belonging.
When an employee feels as if they belong, loyalty increases. This doesn’t just motivate employees to work harder, but it decreases the turnover rate significantly.
Appreciation and recognition make employees feel happy. This type of happiness can be addictive. Once recognized properly, people strive to repeat the experience.
The Chemistry of Recognition
When a person hears words of appreciation, recognition, and gratitude, the brain releases dopamine. Dopamine is a “happy” hormone that makes you experience pleasure. At the same time, it’s responsible for alertness and energy.
Dopamine is part of the human’s brain reward system. It makes you happy and motivates you to return for more pleasure.
The release of dopamine also affects a person’s willingness to work. Studies showed that successful employees had more of this hormone than others did. People with lower dopamine levels had less desire to work, even if it meant receiving less money.
Interestingly enough, the release of dopamine doesn’t just happen when you receive appreciation. It occurs when you give it as well. That’s why proper recognition can benefit the entire team, including the management.
How Long Does Recognition Last?
The effect of recognition can be both long and short-lived. This depends on many factors, including the individual preferences of your employees. In order to ensure the stability of this effect, it’s important to create a comprehensive recognition program.
Structured recognition programs yield the best results because they offer consistency. Employees understand exactly when and how they can be rewarded for their efforts. Meanwhile, managers know how and when to offer appreciation.
How Often Should You Give “Employee Kudos?”
While it’s hard to provide an exact kudos formula, praise issued can yield a 10-20% difference in productivity and revenue.
When you develop a recognition program, you need to identify the following elements:
- Goals of the program
- Budget
- Type of recognition
- Tools for recognition
- Frequency of recognition
You can start with weekly praises and see how they work.
A structured appreciation plan doesn’t mean that you should ignore spontaneous praise. For some people, an unexpected “thank you” can turn into significant motivation.
Can You Structure Kudo-Giving?
You can easily structure kudo-giving by developing a comprehensive recognition program. Each team member should clearly understand how kudos work in the workplace and what needs to be done to receive them.
The toughest part about consistent recognition is tracking it, especially if the company is big. That’s where recognition tools come in. With a versatile employee recognition platform, it’s possible to show appreciation on time, encourage peer-to-peer recognition, analyze employee data, and more.
The alternative is a manual appreciation program that doesn’t always provide proper consistency. The lack of consistency could reverse affect employee motivation, retention, and productivity.
What Is the Difference Between Recognition and Reward?
Recognition and rewards are ways to show appreciation for an employee’s achievement. However, the methods differ.
Recognition
Recognition is a non-tangible way to show appreciation. It may come in the form of:
- Verbal “thank yous” and “kudos”
- A “great job” email
- A mention in the social media post
You can recognize employees spontaneously, but it doesn’t mean you shouldn’t set up a clear recognition structure.
Rewards
Rewards are a tangible way to demonstrate appreciation and recognition. If the employee does something worthy of your attention, you can reward them with:
- Tickets to their favorite ball game
- Extra day off
- Gift card
- Training opportunity
To maximize the effect of rewards, it’s important to study your employees. One may be happy with basketball tickets, while another prefers opera. If you “misfire,” the reward can be counterproductive.
You must implement recognition and reward methods for a successful employee recognition program. The extent of them depends on your budget.
Employee Recognition and Kudos Make a Big Difference in Your Team’s Day (and Performance)
Employee recognition and kudos are the power behind your company’s success. Recognition is just as important for achieving business goals as salary or benefits. You can keep employees motivated, loyal, and productive with the right approach to appreciation.
Refresh can help you design a structured employee recognition program that drives your company’s productivity and success. Learn more about this opportunity by scheduling a free demo today.