The Evolution of Employee Recognition and Rewards: Trends and Best Practices

BY Gail Gonzales | July 07, 2023

In 1907, the Ford Motor Company had a 700% attrition rate on its assembly line. Henry Ford decided to reward people who stayed for one, two, and five years, creating the first employee recognition format. Over 120 years later, this is what most companies are still doing today. Longevity isn’t an accurate or productive measurement of true employee engagement. In fact, “94% of organizations have employee recognition and rewards programs, yet only one-third of those are effective,” according to Merrily McGugan the vice president of brand and communications at WorkTango.

What does it mean to have an effective rewards and recognition program? We all work harder when we know we’re appreciated, morale is also better and people tend to stay longer. “Companies that excel at employee recognition are 12x more likely to generate strong business results than their peers who are not doing it,” said McGugan during her thought leadership spotlight session at From Day One’s Austin conference in June. What are some best practices companies can easily implement? McGugan offers these seven ideas.

Create a Culture of Recognition–Not a Single Event

Have you ever worked tirelessly for years just to receive a plaque and a round of applause? It can feel like way too little too late. People don’t work in years, it’s more like sprints based on project completion. Creating a culture of recognition means publicly appreciating work well done as it’s happening. “Always on recognition” as McGugan calls it rewards employees for amplifying company values and behaviors and emphasizes peer-to-peer recognition.

Decouple Recognition and Rewards

While recognition and rewards are more powerful together, in today’s hybrid and remote work world people need connection. Recognition can also mean allowing people to share a few fun moments, do some icebreakers, and check in to address any challenges.

Enable Recognition Into the Flow of Work

Recognizing someone via company wide email can feel outdated. Using Teams, Zoom, Slack, or any tool you use daily that integrates right into the systems employees are already using is much more effective, interactive, and valuable. Everyone can see it, comment, high-five and celebrate that person motivating others to do their best work in hopes they’ll be the next one cheered on.

Give Real Rewards on The Employees' Timeline

A points-based system with a platform where employees can pick out what they really want can be incredibly rewarding. An online catalog offers lots of choices on demand. McGugan shared how one employee renovated their bathroom with redeemed points while another saved up points to go visit their brother. When employees earn points for meeting tough deadlines, completing training, peer recognition, and more, it’s not just motivating. The productivity also helps support the organization financially. “It's really difficult to keep track of all the different years of service programs, ad hoc rewards, perks, and gift cards. Consolidating an annual budget into a slew of points, bringing all the programs together, and divvying them up among employees once a quarter has saved companies 20 to 30% on their rewards budget,” said McGugan.

Active Leadership and Participation

Recognition and rewards programs are meant for building culture, engaging folks, and building connections between the whole organization. If your executives don't participate, your program won’t succeed. What gets recognized gets repeated. When executives recognize an employee who's gone above and beyond, other employees will follow in their footsteps. Conversely, “When managers were not engaged in the platform, and they didn't log in and give recognitions, 91% of their direct reports were inactive or very rarely active. The managers set the tone.”

Publicize and Amplify Recognitions

For employees in warehouses or manufacturing plants who aren't working from desks or conventional office spaces, you can install screens with employee recognition to publicize their contributions. Executives, managers, and peers can also give praise and appreciation to their teams for work well done and spur more positivity.

Create a Holistic Rewards Strategy

A holistic rewards strategy means that recognition is given for exemplifying values, key behaviors, and reaching milestones. It also means that rewards are meaningful, offer choice, and are on-demand. And that incentives are provided for key areas the business wants to work on like improving customer service ratings or reducing sick days. “One of our customers got 70% of employees in the first couple of days, and ultimately 99% of employees to complete very long trainings in two weeks,” by offering points as an incentive, said McGugan.

Remember that recognition creates connection and it’s mostly about being seen, heard, and appreciated. While letting employees choose their own gifts may seem impersonal, earning points to pick out what they really want is not only motivational, it may make a tough work week a whole lot better.

Editor's note: From Day One thanks our partner, WorkTango, for sponsoring this thought leadership spotlight. 

Gail Gonzales is a writer, brand strategist, and designer based in Austin, Texas. Her boutique agency, Evolve Your Brand, helps business owners who care about the positive evolution of people or the planet amplify their message.


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