Jo Stubb

Friday 6th March is Employee Appreciation Day, an unofficial celebration day that started in North America in 1995 and has been growing in popularity worldwide ever since.

It’s a day for companies to thank staff for their hard work and is a prime opportunity for managers and HR professionals to remember the importance of appreciating their workforce.

A survey by Reward Gateway  found that 90 per cent of HR managers agreed that an effective recognition and reward programme helps drive business results and 91 per cent said recognition and reward has a positive effect on employee retention.

However, the research also found that only one in five (22 per cent) managers strongly agreed their company provides them with the tools and understanding that enables them to recognise colleagues effectively. And almost two in five (38 per cent) said they don’t agree that their current recognition and reward programmes are as effective as they could be.

The impact of recognition

Recognition – praising people for the good things they are doing – can have a significant impact on employee motivation and engagement, increasing performance across the organisation. It can range from managers saying a simple “thank you” for a job well done, to formal company-wide recognition schemes.

Recognition is not about setting targets and rewarding people for achieving them; it is about recognising the great things people are doing. It influences how engaged employees feel at work. If they don’t feel they are being recognised, this can lead to low levels of engagement and a negative impact on turnover. Employees who feel their efforts go unrecognised will be inclined to move on.

Recognition can also have an impact on organisational performance. Employees who are recognised for positive behaviour are likely to continue with that positive behaviour, boosting the organisation’s performance.

While organisations often take a formal approach to recognition, sometimes it is the simple day-to-day recognition that has the greatest impact for the lowest cost.

Objectives of a recognition scheme

The approach an organisation takes to recognition should be driven by its values and strategic aims. The approach needs to fit with the organisation’s culture and the organisation needs a clear understanding of what it wants to achieve through its recognition programme.

Being clear from the start of the process what success will look like will help ensure the correct design of the scheme as well as clarity about how its impact will be measured. This enables the organisation to create a baseline against which change can be assessed.

For example, success could be measured by increased productivity or a reduction in absenteeism, or increased engagement as measured through an employee engagement survey. The clearer and more precise the scheme’s objectives, the better, as this makes it easier for people across the organisation to understand its purpose.

Considerations when developing a recognition scheme

As with any initiative, building a business case for having an employee recognition scheme will usually be required. External research on what other organisations are doing in relation to recognition will feed into this, as well as what recognition scheme providers can offer. Internal research will be important too – even without a formal scheme in place, some line managers will already be recognising positive behaviours within their team, and anything that already works well can be built on going forward.

Organisations need to build a scheme that is appropriate for their needs and budget. This could be anything from a low-cost, day-to-day scheme involving simple thanks or a small award, to a high-profile corporate annual award scheme and event.

It can be effective to approach designing the recognition scheme as a project, particularly if it will be operating on a company-wide or national basis. Typically the team will be made up of people from different roles and levels within the organisation, with terms of reference set by senior management or HR.

The criteria for the recognition programme need to be straightforward and easily described and understood. There has to be consistency in the behaviours that merit recognition, so setting standards is important, even where the scheme is relatively informal.

Consistency in how behaviour meriting recognition is identified is also important. In formal recognition schemes there is often a nomination process, and potential nominators and assessors all need a good understanding of the criteria. In less formal schemes, it is often line managers who identify the behaviour, and simple guidelines can help ensure a consistent approach, although it may not be possible to completely remove a tendency for some managers to use recognition more than others.

As with any initiative, the right launch will be critical to its success. Organisations introducing an informal, local approach based on manager recognition may be best doing a soft launch without publicity, with the change in management behaviour speaking for itself. More formal schemes will benefit from being actively promoted both before and after recognition with a clear communications plan.

Even if the chosen recognition programme is informal, having someone coordinate its smooth running is generally preferable. They can act as the point of contact, oversee the processes, and order any awards, gifts or certificates and ensure the relevant employees receive them.

Organisations must also understand the tax implications of their scheme for employees. A gift or anything of financial value awarded as a result of employment will be taxable unless it is considered “trivial”. HM Revenue and Customs (HMRC) currently define trivial as something that does not cost the employer more than £50 (including VAT) per employee per event.

Finally, organisations should review their scheme regularly, particularly in the early days. This could be done after three and six months, and then annually. If a clear set of objectives is set at the start of the recognition programme and a baseline identified at that time, the impact of the recognition scheme will be easier to measure.