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How to Create an Employee Recognition Program: Tips for SMBs

Worker receiving recognition from colleague in office setting surrounded by coworkers.

Quick look: A whopping 30% of those who quit a job within six months of being hired say that they would have stayed longer if their former employers had recognized their efforts. However, properly recognizing employees’ hard work may not be as simple as it seems. Here, explore the business benefits associated with thanking your staff, four tips on how to create an employee recognition program, and how a PEO can help.

The secret to retaining valuable talent during the ongoing labor shortage may be right under your nose: showing genuine appreciation for your employees’ contributions.

According to recent research, when they feel “meaningfully recognized,” nearly two-thirds of workers would reduce their desire to job hunt, and almost 60% would be less likely to take a call from a recruiter if they felt recognized.

A carefully crafted employee recognition program that encourages staff to excel by rewarding them for their dedication can help achieve this. A successful program sets high behavior standards, provides workers with motivation and feedback, and publicly praises high performers. In summary, a proper employee recognition program allows business leaders, managers, and peers to thank other employees for their effort and accomplishments.

Benefits of an employee recognition program

Of course, commemorating hard work is a good thing, but the business benefits associated with doing so may surprise you. The advantages of an employee recognition program are multifaceted and include:

  • Reduced turnover: Data shows that 30% of workers who left a job within the first six months said being recognized more for their unique contributions could have encouraged them to stay longer.
  • More cohesive operations: Having a well-defined employee recognition program, instead of showing appreciation in ad hoc ways, can help organizations:
    • Streamline and trace spending on rewards
    • More easily quantify return on investment (ROI)
    • Reduce waste and increase security by eliminating one-off gift card purchases
    • Establish a common currency for rewards opportunities across all departments
  • Increased employee engagement: Receiving public recognition encourages employees to connect with coworkers and the company’s values and mission.
  • Cost savings and retained knowledge: As mentioned, employee recognition programs can help organizations retain staff and avoid the hefty cost associated with replacing a worker and potentially losing institutional knowledge. Administering regular, lower-value rewards may also be less expensive than less frequent, large ones and more strongly support a culture of recognition.
  • Hiring advantages: Today’s top talent wants to know their hard work won’t go unnoticed. Sharing your employee recognition program with potential employees can increase your chances of hiring the best.

4 steps to creating an employee recognition program

To take advantage of all the benefits that employee recognition programs can provide, employers must first take the time to carefully design an impactful plan. From choosing the right rewards to aligning the program to your company’s priorities, here’s how to develop a comprehensive strategy.

1. Determine what employees want

There is no one-size-fits-all reward that will appeal to every employee. Some workers prefer a gift card, while others simply desire a public shoutout.

However, with the right research, business leaders can determine which reward options best match their workforce’s preferences. One way to do so is by administering an employee survey to identify which reward options make the most sense for your organization to distribute.

Some common reward occasions and tactics include the following:

  • Years of service award: Helps tenured employees stay engaged and encourages new hires to remain dedicated to their roles.
  • Customer service award: Designed to reward employees in customer service roles when they receive positive customer feedback.
  • Employee appreciation events: These can include company-hosted lunches, team outings, annual holiday parties, and more.
  • Social media shoutouts: Leadership can encourage employees to praise each other on platforms like LinkedIn, or the company can highlight high performers on its corporate account.
  • Employee of the month: Encourage peers or managers to vote for an exemplary employee and explain why they’re voting for that person.
  • Peer-to-peer acknowledgement: Enable employees to recognize each other’s accomplishments and contributions in person or via email, your organization’s collaboration tools, or a performance management platform.

2. Align the program with your company’s goals and values

At its core, an employee recognition program rewards staff members who positively impact the company. To do so, the program should revolve around the business’ goals and values and how individuals’ achievements contribute to them.

When rolling out the program, business leaders should clearly outline which core values or corporate goals they are looking to reward. Additionally, the program should be measurable and specific so that everyone can clearly understand why recipients are selected and their impact on their team and the overall organization. By sharing quantifiable results, the program gains more meaning.

The Society for Human Resource Management (SHRM) suggests creating a written policy outlining the program that includes:

  • Employee eligibility requirements
  • The approval process
  • The types of awards that will be provided
  • The frequency of award presentations
  • The performance goals that will be measured
  • The thresholds for awards

3. Identify peer and management recognition tactics

Employers should incorporate both peer-to-peer and manager-to-employee recognition tactics as they build their employee recognition programs. In particular, manager-to-employee methods should be a focus so there is no risk of it appearing that leadership doesn’t appreciate their staff’s efforts. Many companies offer peer recognition programs, encouraging employees to recognize their teammates for going above and beyond.

Recognition can be given through email, phone or video calls, instant messaging, an employee engagement platform, or public shoutouts during meetings.

4. Encourage regular recognition

Thanking employees for their hard work doesn’t make much of an impact if it rarely happens. The more workers are recognized for their efforts, the more likely they are to feel appreciated, engaged, and motivated.

Business leaders should encourage staff to regularly recognize each other’s accomplishments, whether it’s on a daily, weekly, or monthly basis. And that regularity can pay off. Gallup reports that a 15-30-minute weekly meeting between managers and their employees that includes a moment of recognition is the habit that develops high-performance relationships more than any other leadership activity.

To ensure a culture of recognition is cultivated, the employee recognition program should be discussed across every layer of the organization, from leadership meetings to new hire training sessions.

Properly saying “thank you” just got easier

Acknowledging your workers’ efforts may sound simple, but it takes careful planning to reap all the benefits an employee recognition program can provide. And with so many tasks on their plates, small- and medium-sized business (SMB) leaders may not have the time to hone their strategies to maximize improved employee engagement, retention, and attraction rates—things that are especially important amidst a continuously competitive labor market.

A professional employer organization (PEO) can help. For example, in addition to comprehensive HR, benefits, and risk and compliance services, ExtensisHR, a nationally recognized PEO, provides businesses with:

  • Dedicated HR managers to help develop employee recognition strategies
  • Affordable access to 15Five, an industry-leading performance management software that facilitates public and private recognition and 1-on-1 meetings where feedback and acknowledgement can be shared
  • Training sessions focused on team building, management skills, teamwork strategies, and more

Are you wondering how to create an employee recognition program, or looking to improve an existing one? We can help—contact the experts at ExtensisHR today.

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