Boosting Employee Performance Through Strategic Recognition

CFO asks CEO: What happens if we invest in developing our people and they leave?

CEO responds: What happens if we don’t, and they stay?

As a supervisor, manager, or member of an HR team, you may have also asked these questions, which reflect two distinct perspectives, and how we view people in organizations.

For the answer, consider the value exchange between the employer and the employees. From the company’s perspective, employers are primarily interested in what contributes to optimal business outcomes, which is often measured by individual performance. From the employee’s perspective, they desire accomplishing meaningful work, being rewarded for their contribution, creating a career path with the company, and establishing a sense of belonging.

When the expectations or values of each party are aligned, you will experience a win-win; any divergence will likely lead to lower performance, reduced engagement, and increased turnover.

But here is the reality: More often than not, employees’ expectations do not match those of their organization. This divergence causes many employees to drift away from their organization even though they are not actually leaving — think about this emerging workplace phenomenon, “quiet quitting.” A 2022 study conducted by Gallup and Workhuman, of thousands of employees across the United States, United Kingdom, and Ireland, reveals that only one in four employees strongly agree that they feel connected to their organization, and that only one in three strongly agree that they belong at their organization.

If you are responsible for managing people and their performance at work, here is a promising pathway to achieving a win-win: recognition. Ample research shows that recognition, when hitting the mark, has numerous benefits for employees.

A recent Gallup and Workhuman’s report (Unleashing the Human Element at Work: Transforming Workplaces Through Recognition“, highlights the following:

• 73 percent of employees were less likely to “always” or “very often” feel burned out.
• 56 percent of employees were less likely to be looking or watching for other job opportunities.
• 44 percent of employees were more likely to be “thriving” in their life overall.
• Employees were five times more likely to feel connected to the organizational culture.
• Employees were four times more likely to be engaged.
• Employees were five times more likely to see a path to grow in their organization.
• Employees were four times more likely to recommend their organization to friends and family.

These findings are powerful and present a strong case for the need for employee recognition.

Many organizations are missing out on the benefits of recognition, however, by not investing in or prioritizing it. The following evidence included in the same Gallup and Workhuman’s report is concerning:

• 81 percent of leaders say recognition is not their organization’s major strategic priority.
• 73 percent of senior leaders say their organization does not offer managers or leaders best-practices training for employee recognition.
• Nearly two in three leaders say their organization does not have a budget allocated to recognition.
• Only 34 percent of employees say their employer has a recognition program; and among those employees, even fewer (13 percent) consider it excellent.

Companies need to do a much better job recognizing their employees. If you have not made employee recognition one of your organizational priorities, it’s time do so. Here are a few of the many actionable steps you can take.

• Embed recognition into the organizational culture. The Gallup-Workhuman study shows that creating a culture of recognition can save a 10,000-employee company up to $16.1 million in turnover costs annually. If you are interested in return on investment (ROI), start building a recognition-based culture.
• Offer competitive total awards packets that go beyond good pay and healthcare coverage. Include additional perks such as stock options, bonuses, flexible work schedules, and generous paid leave that reflect individual performance and contribution.
• Provide sufficient and timely non-monetary recognitions, such as a verbal acknowledgement, a hand-written thank-you note, or a pat on the shoulder. These simple gestures can be just as rewarding as a pay raise or bonus.
• Provide opportunities to participate in and influence workplace actions and decisions. For example, offer entry-level high-performing employees an opportunity to present their work to the executive team. Pair a high-potential employee with a senior leader as mentor. These types of recognitions can be highly motivating.
• Equip managers with proper knowledge and skills for employee recognition. Adequate research tells us that employees don’t quit jobs; they quit managers. In fact, a high percentage of turnover (arguably up to 80%) is caused by the micro-environment a manager creates for their subordinates, rather than the organization’s climate in general. Given this, it is worth investing in training and developing frontline and mid-level managers and providing them with the tools of recognition. A manager who knows when and how to give proper, and authentic recognition for performance contributions will bring out the best in their subordinates.

When employees feel recognized, in both monetary and non-monetary terms, they will become more engaged and give more to their organization in return. With the research evidence and an action plan offered above, I hope you are ready to make recognition one of your company’s strategic priorities. Remember: to motivate your employees to perform to your expectations, make adequate financial investments in them. To empower your employees to perform above and beyond, make emotional investments in them through strategic recognition.

Jia Wang is a professor in the Department of Educational Administration and Human Resource Development at Texas A&M University. Her research focuses on international and national human resource development, organization crisis management, and learning within organizations.