3 Steps To Building An Effective Employee Recognition Framework

Last month, we released some tips and tricks to effectively gain executive buy-in for your new recognition program. Obtaining buy-in is critical in allowing you to move forward and get one step closer to an engaged and committed workforce. If you haven’t, check out last month’s blog for the critical first step in getting started with your recognition program! 

This month, we are excited to equip you with the tools and knowledge you need to begin designing the program. 

May is Mental Health Awareness Month, so we knew it was a perfect time to show why setting up an effective recognition program is crucial for the overall well-being of your employees. Your people are the most important parts of your organization – by far. Ensuring they feel valued and appreciated instead of burnt out is the only way to be successful in your business. Make them the heart of your mission and treat them as such.

Let’s dive right in!

 

Understanding the Importance

Understanding the WHY will help you as you begin planning out your design. Did you know that 90% of HR professionals say that an effective recognition program can drive business results and 91% say it helps with retention?

The verdict is in. Without an effective recognition program in place, it will be nearly impossible to create a culture conducive to top performance and retention. 

You may be wondering why we are still seeing a constant revolving door of talent if HR professionals understand how to stop it.

Unfortunately, even with the best of intentions, the efforts of many organizations often fall flat. The amount of money spent on employee rewards annually would shock you. Are you ready? 

$97 billion. Ouch.

You’d think with this amount, employee disengagement would be non-existent, right? Well, think again.

Approximately 85% of employees are disengaged, costing about $7 trillion in lost productivity. So where is the disconnect? Find out how much this issue is costing you with our free ROI Analysis Calculator

Unfortunately, a crucial piece of the puzzle is missing in most organizations: personalization. We discovered that there is a secret recipe for meaningful recognition and it contains 3 elements:

  1. The Right Time

  2. The Right Way

  3. The Right Reward

Without these elements, organizations will continue spending money on employee rewards that do little to nothing for employee retention. 

Begin with the end in mind! Before we get on the individual level, it’s important to start building a basic framework.

 

Building the Framework

Now, before we dive into structuring the foundation for your recognition programs, it’s important to get crystal clear on what you are building. This starts with clarity. Knowing the difference between appreciation and recognition will be critical to the success of your program.  

Do you know the difference between recognition and appreciation? Most think that Recognition and Appreciation are synonymous. Though they go hand in hand, understanding the differences is important for the success of your recognition program. 

Appreciation is continual, it is the “attitude of gratitude”, so to speak. It is informal, it has more to do with feelings and expression to show someone they are valued while recognition is calling attention to something special or specific achievement. The key is seeing that both are valuable in their own right, and understanding that both are necessities to create a workplace culture that keeps employees loyal and engaged. 

Do you know how you feel appreciated in the workplace? Knowing your own Appreciation Style, as well as the Appreciation Styles of your fellow coworkers will help create an environment of personalized recognition. Take the Quiz now!

While knowing this is very important when you are building the framework for an effective recognition program, you need to initially zero in on recognition. The purpose of recognition is to reinforce specific behaviors and celebrate specific achievements that align with organizational goals. 

So, what are your big goals, both short-term and long-term? Aligning HR initiatives with strategic objectives and goals is what recognition programs do best. 

 

Identify the Right Programs 

It’s time for some spring cleaning! Let’s evaluate what programs you want to keep and those that haven’t been effective or no longer align with your organization’s goals. 

It’s time to revamp and re-energize your recognition program for the post-pandemic workplace. 

 

Step 1:  Make a list of all your existing recognition programs 

That’s right, all of them. Let’s get focused. The goal is to identify 3 to 5 programs for easy adoption and a strong rollout to increase user adoption. 

There are recognition programs that will most likely be applicable to every organization, like birthdays and work anniversary (aka Workiversaries). Most organizations currently have something in place for these milestones, and rightfully so. 

Employee Retention Tip: Statistically, the one-year mark is the most important time to check in with each employee. Individuals are more likely to turn in their letters of recognition on or around their work anniversaries. 

You will probably also have programs unique to your organization; these are some of my favorites! It may be related to your core values, special monthly nominations, employee referrals and more. Get them all down on paper. 

 

Step 2:  Select 3 - 5 programs you want to keep

When you are reviewing which ones you want to keep, here are a couple of quick questions to help select the right ones: 

  1. How successful has this program been with participation? 
  2. Is it generating results and incentivizing the right behaviors for success? 
  3. How is it aligning with our organizational objectives and goals? (If it’s not, say “goodbye”).
  4. Who is excited about this program, if anyone? The executive team, employees, a department, etc.  

 

Step 3:  Identify the new programs you want to add 

Once you comb through your existing programs and determine which ones need to be kept, you are ready for the next step. Remember, beginning with a small amount will help everyone on the team get used to participating and will not overwhelm but invigorate the team. Think about what is most important to your employees and the organization as a whole and build from there.

Setting a Budget

Once you know what accomplishments or behaviors you want to recognize, how are you going to incentivize and motivate your employees to want to achieve them? I’m sure dollar signs are inevitably flashing through your mind. Fear not, you will find that having a successful recognition plan in place is more affordable than you think.

Some organizations spend upwards of 10% of payroll on employee recognition, but the average budget is usually around 2% and the median is 1%.

There are a few common ways to budget for your recognition program; Fixed, Variable, and Allocated.

  • Fixed: In this budget type, a dollar amount is set for the program for a specified period of time, usually 12 months. A fixed budget helps control costs and stays within the confines of that specified dollar amount.
  • Variable: This budget type is based on outcomes, using a performance-based framework. These are usually determined by financially defining the outcomes and what they are “worth” to the company. If properly designed, this framework can yield greater business outcomes. Think “sales forecast”!
  • Allocated: With this budget type, each division, VP, location, or manager is allocated a budget for a specified period of time. The budgets are based on stated criteria, such as a per-employee amount based on a percentage of payroll, a flat amount allocated to an organizational group, or a predetermined amount per employee (e.g. $200 per employee per year). 

Now that you know what type of budget you are working with, it’s time to weave in your rewards. Let’s incentivize! 

 

Types of Rewards

The more diverse your reward types are, the better you will engage the modern-day workforce.  Everyone is motivated differently, so let’s check out all the different ways you can reward. 

Rewards come in 4 primary forms:

Cash: This one is self-explanatory; cold, hard cash!

Tangible: This reward has a financial value but isn’t a cash reward, i.e. incentive travel, gift cards, or company merchandise.

Intangible: This reward type is often overlooked but is just as important as the others - it’s the experience and should always be included. It doesn’t have a financial or tangible value; it could be a written note or a public shout-out during a team meeting.

Recognition is split into two categories; Formal and Informal and they are equally important. Informal is less structured and more spontaneous. Maybe Sally did something you want to celebrate at the spur of the moment! Formal recognition exists within an organized program and often has a structured approach.

Company Perks: These are a great way to bring your unique culture to life! They are any advantages provided in addition to an employee’s salary and may or may not have cash or tangible benefit. They can be a combination of all three. For example, PTO, bring your pup to work day, 90’s dress-up day, early release Fridays, etc.

 

Conclusion

We hope you found that high-level framework for designing effective recognition programs.  Remember, recognition events + rewards + budget = a dynamic and effective recognition program.

You have all the tools you need to begin, but don’t worry, we will be back next month to help you Implement your programs.

As we mentioned earlier, your people are the most important parts of your organization. You may know this already, but do they? 

Creating a dynamic and effective recognition program will show your employees how valuable they are to the organization; they will reciprocate with high engagement and reduced turnover.

We guarantee it. 

Now that you have some additional tools in your toolbelt, you may be curious about the different ways each member of your organization likes to be recognized. Take the Sparck Appreciation Style Quiz to find out and make the deepest impact! 



    

Do you know what your employees really want? We do!

Find out today with our FREE statistically valid #BeHeard Engagement Survey. Click below to see how engaged and equipped your employees are today.

Learn More

No credit card or contract required.

Stay in the Know, on the Go!

Sign up to hear about innovative ways to personalize your employee experience and increase your business results.

Related articles for this topic: