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Why Your Business Needs an Effective Employee Recognition Program


An essential component of a human capital management strategy is retaining your best employees through talent management. It isn't just about hiring well; it's also about keeping employees once they’ve been hired. One way to help improve staff satisfaction and retention is to make sure they're recognized and appreciated for their contributions. A formal employee recognition program can help reduce attrition and provide management with an ongoing means of identifying top contributors. Finding ways to improve employee retention can positively impact your company's bottom line. Here's a closer look at determining how an employee recognition program can help your company achieve its goals.

Recognition Tied to Values

A Society for Human Resource Management's 2015 employee recognition study revealed that 80% of companies have employee recognition programs. Overall, respondent companies noted that recognition programs improved employee happiness and engagement, while the biggest improvements came from companies where recognition programs were tied to the company's values. For example, one company's core value might be to provide an extraordinary customer experience. An employee recognition program that offers rewards and praise for going above and beyond when serving customers reinforces that business' core values while recognizing employees for high value activities.

Promoting Fairness

It's important to frame an employee recognition program in such a way that it doesn't inadvertently have a negative impact on work culture. In some cases, programs such as "employee of the month" or "employee of the year" can create feelings of favoritism or negative competition. Instead, consider recognition programs that all employees can qualify for based on performance. If your program follows the "nominee" route, consider opening up the program so that staff and managers nominate people. The best programs recognize contributors throughout the organization and motivate all staff with the possibility of recognition.

Determining Adequate Rewards

A majority of companies with employee recognition programs offer some kind of reward beyond verbal praise. Rewards could range from a certificate of achievement to gift certificates and cash bonuses. It's important that the level of reward be deemed sufficient for the acts recognized. For example, a five-year service reward is going to have a different and likely lower monetary value than a twenty-year service reward. The values will vary from company to company, but it's important to have a consistent system in terms of internal equity.

Performance and Service Anniversary Program

Two common formats for employee recognition programs include performance-based recognition and service recognition programs. Performance programs recognize staff that have met their workforce goals or have been recognized for extraordinary contributions. Service programs recognize employees on specific anniversaries with the company directly in relation to their time of service. Each kind of recognition program works in tandem to promote employee loyalty.

While some employees will come and go, a strategic focus on retention may greatly reduce turnover. Employee recognition for both service and performance can play an important role in talent management and a successful human capital management strategy. The right HCM solution can make it easier to track and act upon helpful information such as productivity levels and upcoming service anniversaries.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.