Employee rewards are a popular HR tool used to recognise individuals for a job well done. But do they actually make employees happier? And do they boost the bottom line?

Here we look at the good, the bad and the future of employee recognition programmes.

More and more companies today are building strategies to be considered the best place to work, and employee recognition programmes are at the centre. According to Globoforce research, 73% of organizations currently have an employee appreciation initiative.

However, another study found that 82% of employees don’t think they are recognised adequately or frequently enough for their work.

The good

More engaged employees

Recognising a job well done is vital to help increase employee morale and engagement. It is also considered one of the ways a company can prevent staff from deciding to quit their jobs.

Motivator for performance

It is well known that engaged employees are significantly more productive, work efficiently and proactively in order to do a good job. And as recognition and praise boost employees’ happiness and positivity towards the company, they are again more likely to perform better. Employees who feel appreciated often also have higher self-worth so they believe they can contribute more to the company.

It’s no surprise then that research shows 69% of employees say they would work harder if they felt their efforts were better appreciated.

More productive

It is suggested that as human beings we need to be shown appreciation for our efforts. So when employees are recognised for their contributions, their motivation increases and so does their productivity.

So it seems clear that effective employee recognition programmes benefit both employees and employers alike. Employees stay with the company for longer, are more engaged and productive, and performance is higher. But the key word here is effective. When recognition programs go awry the results can be quite the opposite.

The bad

Can feel arbitrary

One of the prevailing issues with certain types of employee recognition programs – like the often-used Employee of the Month award – is that the criteria are often unclear. Often it isn’t even made public and, in some cases, managers aren’t even precisely aware of the metrics involved. Unfortunately, this makes the award feel arbitrary and meaningless.

Creates competition

Awards like Employee of the Month can also create somewhat of an unhealthy competition in which your employees feel pitted against their own team members for rewards. Unsurprisingly this can foster poor team dynamics, which can result in an employee’s focus shifting from working together effectively to get the job done well to instead focusing on their own individual merits and efforts in a bid to look good to management.

Values individualism over teamwork

Speaking of which, focusing on one employee – rather than a team – is not a good fit for most companies. In many cases it is the hard work of a team of people, as oppose to one individual, which results in the desired business outcome. Picking just one person out of the team and singling them out for the reward feels unfair and can actually demotivate the other members of the team.

The way forward

  1. Foster a culture of recognition

Ultimately, to be successful, an employee recognition programme needs to be strategic and more meaningful than a once-a-month arbitrary affair. For employees to feel frequently recognised for their efforts you need to establish a culture of recognition within your workplace. This doesn’t require much financial investment, just a shift in approach. Everything from a simple handwritten thank you note to team outings can be used to recognise employee’s efforts and reward them appropriately.

  1. Peer-to-peer recognition

An increasingly popular option amongst modern workplaces is peer-to-peer recognition. It’s not hard to see the appeal – peer-to-peer recognition is 35.7% more likely to have a positive impact on financial results than manager-only recognition.

The benefits of peer-to-peer recognition is all in the name – it is often colleagues and team members who notice and see the daily effort employees put in. This is an opportunity for that work – which might otherwise go unnoticed – to be acknowledged. This type of programme empowers employees to choose who deserves recognition, which can be more meaningful in some instances.

  1. Instant recognition

Thanks to the increasingly digital era we are now living in, we are accustomed to constant real time interactions, and employees now expect the same approach when it comes to recognition at work.

So, whilst having formal awards – such as long service awards – can certainly be beneficial, and they have their place in many employee recognition programs, it’s a good idea to mix these with less formal and more frequent ad hoc options.

To do this effectively you will need to have a reward process in place so that recognition can be given quickly and easily. This means employees aren’t waiting for the Christmas bonus season, rather their hard work can be celebrated now. These methods of recognition could vary from a sincere thank you, after work team drinks or marking the end of a tough project with a party. The key here is making sure you cater to the different demographics and personalities within your workforce.

In conclusion

Employees are the foundation of any business. Recognising their efforts in helping you achieve your business goals is a must if you want your workforce to remain engaged, loyal and productive. Introducing a strategic employee recognition program is a great way to achieve this and boost employee morale. While formal awards and bonuses have their place, informal recognition is important to and together they will help establish a culture of recognition within your workplace that benefits employees and employers alike.

Do you have a rewards scheme at your company? If so, let us know how it works and how your employees respond to them on LinkedIn or Twitter using #employeerewards


About Benenden Health

Benenden Health is a not-for-profit health and wellbeing organisation, offering award winning employee healthcare, an extensive range of onsite health assessments and a business health cash plan. 

To find out more about our products and how we could help your business, visit www.benenden.co.uk or call  0800 278 8405.

This content originally appeared on Benenden’s Health workplace hub where employers can find a range of related articles to help with their health and wellbeing strategy.