*Editor's Note: This article has been updated with the latest trends and insights in the industry, as well as more recent sources to support the information present.
Previously, we’ve released some tips and tricks to effectively gain executive buy-in for your new employee 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 yet, check out this blog for the critical first step in getting started with your recognition program!
Now, we are excited to equip you with the tools and knowledge you need to begin designing a successful employee recognition framework.
Creating an effective employee recognition program is crucial for the overall well-being of your employees. Your people are the most important parts of your organization. Ensuring they feel valued and appreciated is a key factor of success. In this article, we’ll cover the three steps needed to choose the right programs, have a reasonable budget for those programs, and more.
Understanding the Importance of Employee Recognition
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?
Without an effective recognition program in place, it will be nearly impossible to create a culture conducive to top performance and employee 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 is exceedingly high – $97 billion.
Even with such a high budget, 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 your business with our free ROI Analysis Calculator!
Unfortunately, a crucial piece of the puzzle is missing in most organizations: Personalization. We discovered that there are three key elements for meaningful recognition:
The Right Time
The Right Way
The Right Reward
Without these elements, organizations will continue spending money on employee rewards that have little impact on employee retention.
Before we move to personalizing recognition at the individual level, it’s important to start building a strong employee recognition framework.
Building the Framework
Now, before diving into structuring the foundation for a recognition program, it’s important to understand what you are building. This starts with knowing the difference between appreciation and personalized recognition, as this will be critical to the success of your program.
Many think that Recognition and Appreciation are synonymous. Appreciation is continual, it is the “attitude of gratitude.” It is informal, as it has more to do with feelings and expression to show someone they are valued. However, recognition is calling attention to something special or specific achievement. The key is seeing both necessities to create a workplace culture that keeps employees loyal and engaged.
Knowing your own Appreciation Style, as well as the Appreciation Styles of your fellow coworkers will help create an environment of personalized recognition.
Uncover how your employees feel appreciated and connect your team with this free interactive teambuilding experience.
When building the employee recognition framework, you need to initially focus 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
Let’s evaluate what programs you want to keep, 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
The goal is to identify 3-5 programs for easy adoption and a strong rollout to increase user adoption. Learn how to implement an employee recognition program in this article.
There are recognition programs that will most likely be applicable to every organization, like birthdays and work anniversary. Most organizations currently have something in place for these milestones.
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. It may be related to your core values, special monthly nominations, employee referrals and more. Document all of them now.
Step 2: Select 3 - 5 programs you want to keep
When you are reviewing which programs you want to keep, here are a couple of quick questions to help select the right ones:
- How successful has this program been with participation?
- Is it generating results and incentivizing the right behaviors for success?
- How is it aligning with our organizational objectives and goals?
- 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 review 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.
Add Programs for Remote or Hybrid Roles
In a post-pandemic workplace, many teams are still working remotely, or have adopted a hybrid workplace setting. Leaders must ensure that their team members, regardless of location, feel appreciated and valued.
Read our 2023 Workplace Report to learn 5 secrets every employer needs to know to successfully build the people-first culture, regardless where people work!
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 achieve them?
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.
- 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 brainstorm rewards.
Types of Rewards
The more diverse your reward types are, the better you will engage the modern-day and remote workforce. Rewards come in four primary forms:
Cash: This one is self-explanatory.
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 could be a written note or a public shout-out during a team meeting.
Recognition is split into two categories; Formal and Informal,Informal is less structured and more spontaneous. 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. There are many 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 pet to work day, themed dress-up day, early release Fridays, etc.
Conclusion: Start Building Your Employee Recognition Framework
With these high-level steps to create an employee recognition framework, you’re ready to design an effective recognition program.
You have all the tools you need to begin. 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 employee turnover.
Now that you have some additional tools and ideas, you may be curious about how your employees want to feel appreciated. Learn how in less than 60 seconds with this fun Employee Appreciation Toolkit today!