Company Culture
September 14, 2021

Why Employee Recognition Program is Important

Employee recognition is critically important for every company regardless of the industry. But, unfortunately, many companies fail to implement a successful employee recognition strategy. It’s never too late to start, and the world’s greatest companies continually evolve their employee recognition programs. 

The world is constantly changing, and what motivates your employees will also continually change. That’s why the world’s most exemplary leaders will tweak their employee recognition program to continue to get the best results. 

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What is employee recognition? 

Employee recognition is when a company shows appreciation for the excellent performance of its individuals. 

Contrary to what some people believe, monetary compensation doesn’t always act as a good reward. In fact, employee recognition can come in many, many ways. 

Companies should reward employees for the following things:

  • Going above and beyond expectations 
  • Showing excellent behaviors
  • Hitting targets 
  • Helping others
  • Milestones such as tenure 

In truth, the list is endless.

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Why does employee recognition matter so much to a company?

Do you remember being a child and your school teachers or parents praising you? It felt good, right? We’re humans, and we naturally crave appreciation for the excellent work that we do. But also, do you remember the feeling of working hard and failing to get the deserved recognition? That sucked, right?

Recognition matters. In fact, it matters so much. Companies need to recognize the excellent work of their employees for the following reasons:

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1. Companies will retain their best talent 

An effective employee recognition scheme will attract and keep the best talent. Is there anything worse than losing an excellent employee because they didn’t feel valued enough? It happens. 

Here are some troubling statistics on employee turnover:

  • The cost of replacing an employee can range between one-half to two times the employee’s salary
  • A company with a high staff turnover and an average salary of 50,000 dollars per year could face replacement costs of 2.6 million dollars. 
  • 28 percent of employees who left a business said poor company culture was the main reason 
  • Turnover due to poor company culture, such as no employee recognition schemes, could have cost businesses 223 billion dollars in the previous five years. 

You get the point. High staff turnover is dreadful for any business, and not recognizing the superb work of your employees will drive your staff away. Many companies do have an excellent company culture, and they do focus on rewarding their employees mentally, financially, and emotionally. If your company doesn’t — you’ll face issues. 


2. It’ll encourage a high performance and growth mindset 

Let’s face it; there’s nothing more important than a high-performance from all employees and a successful growth mindset. That said, it’s not always as straightforward as it sounds. It can be pretty hard to get the best out of your employees. 

Having a successful employee recognition scheme will go a long way. Remember, it’s not always about money. If you make your employees feel valued and purposeful, you’ll begin to see high performance and a growth mindset. That’s another reason why employee recognition program is important.

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3. It’ll increase employee engagement 

Employee engagement? Now that’s definitely important. You’d think that every employee was engaged, right? After all, in their interview, they sounded so optimistic and ready to perform? Wrong. Unfortunately, employees quickly become disengaged when your company has infective leadership and lacks employee recognition. 

Here are some statistics on employee engagement:

  • In the United Kingdom, the employee engagement rate is only 50 percent
  • 13 percent of employees are actively disengaged with their employment 
  • Companies with a higher employee engagement have 17 percent more productivity 
  • Just one disengaged employee can cost a business 3,400 dollars in lost productivity 

In short, you need employee engagement. Otherwise, your business will suffer huge downsides, and that’s why employee recognition program is important.

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4. A successful employee recognition program will boost productivity 

There’s nothing more important at an organization than employees who are productive. In fact, productive employees benefit their companies in numerous ways. Companies with higher productivity than others have 30 to 50 percent higher margins than those who don’t.

Here are some statistics on the importance of high productivity:

  • Productivity increases by 20 to 25 percent at companies with connected employees 
  • 53 percent of employees only give the minimum effort need and will leave fast if they receive another offer 
  • Employees only spend 60 percent of their working day being productive 

Recognized employees are happy employees, and happy employees are more productive. That’s why every company needs an employee recognition program. 

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5. Recognized employees are happier 

You must create a workplace that promotes happiness and mental health. Even more so in the previous 18 months when the world has had to endure the COVID-19 pandemic. You need to ensure that your employees feel happy in the workplace and feel happy when they go home. 

Here are some statistics on the importance of positive employee mental health:

  • 1 in 6.8 people currently experience mental health problems in their workplace 
  • Depression and anxiety causes a loss of $1 trillion from the global economy 
  • Women in full-time employment are almost twice as likely to suffer from mental health problems as men
  • In the United Kingdom, 12.7 percent of absences come from mental health conditions 

A company needs to make its employees safe and comfortable in the workplace. Poor mental health leads to weaker productivity and engagement. However, recognizing the consistent hard work of your employees will go a very long way to making them feel happy and boosting their mental health. 

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Why you should develop the case for recognition 

One of the first things your company should do is develop the case for an employee recognition program. Therefore, you should show your leadership team why employee recognition program is important. 

Unfortunately, too many leaders don’t know the value of a successful employee recognition program, and until they do, it’s going to be hard to implement one. 


Firstly, you should state the main reasons for the program:

  • It reduces turnover massively. For example, companies that successfully implemented a recognition program had 31 percent lower voluntary turnover
  • The programs are cost-effective, and 81 percent of companies that have an employee recognition program spend less than 1 percent of their budget on it
  • The business will save money from high staff turnover, lower productivity, and poor team morale 
  • It will improve employee engagement, which will boost the whole business 
  • Your employees will feel a sense of purpose and take more pride in their work, and over 57 percent of young Americans said they want to be a part of something that’s enjoyable 

Employee recognition programs work, and it shouldn’t be hard to convince your leadership team. Once your leadership team is on board, things will start to change. 

But, how do you create a culture of recognition? Stay tuned. We’re about to tell you!

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The keys to a successful employee recognition program 

Creating a successful employee recognition program is different at every company. However, the following traits are important characteristics of an effective recognition program:

  • Frequent 
  • Timely 
  • Visible 
  • Specific 
  • Inclusive 
  • Values-based 

Now let’s look at these characteristics in more detail!

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1. Deliver recognition on time 

Do you remember the feeling when you’re a child when your teacher praises you after you’ve achieved something? It feels excellent and encourages you to continue achieving your potential. However, what about when that recognition comes months after the event?

It doesn’t feel the same. You need to ensure that you deliver your employee recognition on time. Otherwise, the impact on your employees will be weaker, and you’ll lose the chance to encourage the same pattern of behavior. Various companies only give their employees recognition at their annual review. Yes, that’s once a year, and yes, that’s not enough. 

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2. Give frequent recognition 

Following on from the previous point, your company must deliver frequent recognition. As a result, your business will enjoy more employee engagement, better business results, and less employee turnover. 

Don’t wait to recognize your employees because it might be too late. Did you know that 71 percent of highly engaged employees work for companies that recognize them on a monthly basis? That’s only monthly, and many employee recognition programs are weekly or even daily. Can you imagine the results if your company has a daily recognition program?

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3. Make the recognition visible 

Some employees prefer private feedback, and other employees enjoy public feedback. That genuinely depends on the individual and their personality type. That said, public recognition has various additional advantages over private feedback. 

  • Sharing recognition with a bigger audience helps everyone learn about the work the team does around the organization. It can also inspire other team members to make the same positive contributions to the workplace. 
  • If you conduct all feedback in private, various solutions and processes may go unnoticed with your wider team. Therefore, you’ll fail to encourage positive reinforcement in the workplace 
  • Public feedback can also encourage discussions within the team and prompt innovation, creativity, and better team morale. 

All in all, private feedback has its place, but public feedback can benefit the entire team. Either way, without a successful employee recognition program that offers frequent recognition — you’ll lose out on all those team benefits. 

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4. Provide inclusive recognition 

When you implement an inclusive recognition scheme, you’ll foster a sense of belonging, psychological safety, and equity among your team. Therefore, leaders should prioritize showing employees that they belong in the team. Leaders will also need to analyze what the company recognizes the most. 

One of the best ways to ensure that recognition is inclusive of the entire team is diversifying the parties responsible for giving out recognition. If your company gives out recognition from all levels, it will provide more opportunities for employees to appreciate the recognition. 

Furthermore, a 360-degree employee recognition plan with a foundation of peer recognition gives a better understanding of what the team finds valuable. As a result, it will remove the bottlenecks imposed by top-down recognition and help to break down any team siloes. 

Your business needs to spread recognition through every leader and team member. That way, your business has a better chance of including everyone in the feedback. 

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5. Create a value-based employee recognition program 

What are the values at your company? It’s a critical question that every leader, manager, and HR staff member should be able to answer. The benefit of implementing a value-based recognition program is encouraging the entire team to work towards the same vision. 

If your business has a robust company culture that the company has built on a set of shared values, leaders should reinforce those values through the praise and recognition they give to employees. It should become a deep-rooted habit at your company. 

Furthermore, an employee recognition program that’s based on values will tie tangible actions to the organization’s foundation. As a result, it will become meaningful and spread a sense of purpose around the company culture. But first, you’ll need to remember and recall your company’s values.

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6. Make recognition specific 

An employee recognition program needs to make recognition specific. For example, you should help the employees understand how their actions benefited the team and the overall business. Some leaders will just say, “Oh thanks, good job.” However, the leaders won’t make the details specific. 

Unfortunately, that type of recognition comes across as insincere and not clear, and the recognition loses its power. Of course, quick feedback isn’t useless. It can help employees feel appreciated, but it also prevents the recipient from receiving crucial feedback. It’s challenging to create excellent habits when employees aren’t aware of exactly what they did well. 

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Final Thoughts 

The need for recognition isn’t a modern phenomenon. It’s quite the opposite. Throughout history, humans have always desired recognition from leaders and society. The world’s most outstanding leaders, although sometimes demanding to work with, have always understood this. 

An employee recognition plan isn’t going to break a company’s budget, and it’s going to add incredible value to the team. Your employees and leaders will build stronger bonds, and the company will prosper because of it. 

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