Employee recognition is a fundamental element in the modern workplace, allowing employers, managers, and stakeholders to deliver transparent feedback to workers. These and other forms of recognition have deliberately helped to encourage employees, translating into better productivity, retention, and lower levels of absenteeism. 

The benefits of employee recognition programs are vast, but for the majority of employees, these programs facilitate the ability to be rewarded by an employer or manager. Through these tactics, companies can improve employee morale, boost engagement among workers, and establish a more robust sense of company loyalty. 

As of 2021, employee engagement has decreased after experiencing positive growth for several years. Between 2020 and 2021, employee engagement in the workplace declined from 36% to 34%, respectively. Among the many factors that influence employee engagement, a growing number of workers cite low levels of recognition and career development opportunities as their reason for decreased engagement. 

Increased Employee Morale

Employees who experience some form of workplace recognition are often more loyal to their jobs and employers. One study by the Society for Human Resource Management found that 79% of employees tend to work harder, due to recognition programs in the workplace. 

This mindset not only sees improved employee productivity but can actively help boost workplace morale, creating a more positive and engaging environment. 

Successful Employee Recognition Programs 

Companies often implement effective employee recognition program to help increase their retention and lower absenteeism in the workplace. Some of the more common employee recognition programs that have evolved include monetary compensation, written recognition, verbal praise, or group recognition programs such as office parties or office get-togethers. 

The success of these recognition programs will largely depend on the size of the company, executive management, and how employees receive these rewards. On top of this, it’s important to note that often recognition programs are based on employee needs rather than what an employer may want. 

Combining company prospects with the development and growth of employees will help better understand how well recognition programs will be received and whether it’s in the best will of the workers. 

Improved Employee Retention

The short and simple answer – is yes – employees tend to stay longer in their current job if they are more likely to be recognized and rewarded for their work. A Gallup/Workhuman survey found workers 56% less likely to look for a new job or employment if their current employer makes recognition a priority. 

Keeping employees for longer not only makes it easier for the company to grow alongside their current tenure staffers, but it can also lower the costs of sourcing and onboarding completely new employees each time. 

The Financial Benefits of Having a Low Turnover Rate

The actual cost of filling an open position depends on a wide variety of factors, but typically includes elements such as salary and the size of the role that needs to be filled. In the event that multiple employees quit or resign, it will cost companies more to replace these individuals, than simply keep them satisfied and engaged. 

Additionally, production costs can also be factored in, as fewer hands in the office could mean the increased capacity for other employees, leading to lower levels of productivity and quality of work. There are also administrative costs, recruitment costs, and operation costs that will need to be considered. 

For corporate behemoths, these costs are offset by larger quantities of employees. Unfortunately, this isn’t possible for smaller firms and organizations that carry the burden of hiring and onboarding new recruits. 

Increased Productivity

As already mentioned, employees tend to work harder and have increased productivity when they enjoy recognition programs and initiatives within their current workplace. This has been proven by research from Deloitte, which found engagement, productivity, and performance tend to be 14% higher in companies that have some form of recognition or rewards system. 

Additionally, these programs have also helped increase profit and revenue. The same research by Deloitte indicates that a 15% increase or improvement among employees can help boost margins by 2%. For the small business operating on a month-to-month basis, a two-percentile increase could mean better products, more variety, or even better wages. 

Employees work harder, and more efficiently when they have been recognized in the workplace. Simple pleasures such as written or verbal praise, or even a once-off bonus could make all the difference to employees who have endured months of hard work and overtime.

Check Out How To Increase Employee Productivity In The Workplace:

Better Customer Service

Employees are first and foremost the people customers engage with. These are the people that are on the ground, working with clients, helping them through the sales funnel, and providing them with the right services and products they require. 

It’s possible to think of employees as the face and voice of any business, especially those that require person-to-person engagement with customers to survive and turn a profit. 

For any employer, customer service can mean a host of things, and the better a customer is received, the higher the chances of them returning or recommending the business to someone else. 

Again it’s possible to look at research that shows us how 35% of businesses and organizations that have some recognition program in place have experienced increased customer satisfaction. This clearly shows that although many places of work may disregard the importance of employee recognition, the lack thereof will directly be seen in customer satisfaction levels. 

Importance of Customer Service

Customer service is an important element throughout the entire sales funnel, and for small, new, or growing businesses, a few bad customer reviews can easily tarnish their reputation. While it’s not possible to control every customer-related query and resolve issues immediately, it’s essential to ensure that employees are equipped with the right tools and knowledge to resolve recurring issues. 

It’s easy to understand how customers may perceive a company or business when employees are unhappy, unsatisfied, or feeling unrecognized. While you as an employer may not think these traits are visible to the public eye, the real delivery can be noticed in the quality of engagement and work employees deliver. 

Regardless of the business and the model it operates on, customer service is a crucial stepping stone for any organization that wishes to expand and thrive. Having a recognition program that encourages employee recognition and helps with employee retention can already be seen in how engaged employees portray company culture, the employee experience, and employee feedback. 

In an increasingly competitive marketplace, customer service is one of the best places where any business can set itself apart from the competition. The best place to start is by looking after your employees and ensuring they receive the recognition they deserve.

Employee Recognition vs. Employee Rewards

While both employee recognition and employee rewards can be used interchangeably, depending on the situation, some factors help you to differentiate between the two. 

Employee recognition: This is the act of positively encouraging employees and teams with rewards related to their work. Employee recognition is a direct message communicated to a team member, either from an employer or their manager, that helps to encourage them in the workplace. Furthermore, recognition is part of the process that rewards employees for their work and has a larger impact on how employees will perform in the near and long term. 

Employee rewards: This can be considered as the result or outcomes of the employee recognition efforts, which see employers or managers giving workers either a verbal, written, or monetary reward. 

Depending on the level of recognition, these rewards can be anything related to the employees and can oftentimes come in the form of employee development schemes or programs, group activities, or even physical gifts. 

Both these elements can be seen as positive and healthy workplace attributes that can drive meaningful impact within the organizational structure. On top of this, it’s important to consider how these programs can benefit not only employees and their teams but also the output of the company and its performance within its marketplace. 

4 Types of Recognition for Employees

We’ve briefly discussed the types of recognition for employees in the aforementioned, and in the following section, we will now dive a bit deeper into what each of these can do for employees and how they work. 

There is a large quantity of employee recognition efforts that can be used in the workplace, and often these can be used in partnership with another. It’s common to see companies give employee recognition with a prize giving this way, they both recognize and reward their staff members at the same time. 

Social or Peer-to-peer

This is the most basic form or type of employee recognition and sees employees or fellow colleagues recognizing one another for their work and dedication. The peer-to-peer type of recognition typically involves either two or more employees or an employee and a member of the managerial team. 

Companies can make peer-to-peer recognition among employees, as this will help motivate them, and increase their social engagement in the workplace. Additionally, it helps to strengthen the connection, build team spirit, and establish a more positive working environment for everyone. 


As the name would suggest, informal recognition will see unplanned and unstructured forms of employee recognition being given in the office. This type of recognition is straightforward in what it sets out to do and can help increase motivation, employee morale, and performance. 

Typically employers and managers will either give verbal or written recognition, which can be both formal or informal, but in most cases, the result is the latter. Informal team recognition could be an unscheduled meeting before the day starts or a breakdown at the end of the week where employees are recognized for their performance throughout the week. 


Monetary recognition is perhaps the more sought-after type of employee reward or recognition as there are typically financial incentives connotated to it. Monetary recognition can come in the form of a bonus, an extra paycheck, a salary increase, financial incentives, or commission.

Monetary recognition is typically used in the workplace to help keep employees motivated, as they know they will be incentivized for their performance and productivity. Even more, this type of form can boost team communication and spark creative ingenuity. 

There is a lot of good and bad that can come with monetary recognition, but it’s almost certain that employees will work harder and do more if there is any form of money on the table being offered. 


The final type of recognition that can be used in the workplace is the formal recognition approach. This is usually when companies organize a prize-giving event for their employees and reward them with different types of rewards such as “Employee of the Month” or “Best in Sales” and so forth. 

Formal recognition can also be an employee of the month wall that displays the company’s highest-performing staff members. It’s essential to know that these formal recognitions are usually measured using some sort of key metric, and should help encourage other employees, rather than making them feel as if they are less likely to be recognized. 

It should be understood that formal recognition requires additional planning before any rewards can be given. 

Importance of Recognizing Employees

The best way to understand employee recognition is to consider the effect it will have on the business, customers, and overall team performance. 

Employee recognition can help workers feel more motivated and can boost their morale. It helps to encourage team communication, which can mirror improved engagement. Every aspect of employee recognition, whether it’s formal or informal, monetary, or perhaps peer-to-peer can make a bigger difference in both the short and long term. 

To lower absenteeism, and also employee turnover, employers will need to consider the importance of their personnel and the impact they have on the company and customers.


Are Employee Recognition Programs Effective?

Yes, several research projects and initiatives have revealed that sophisticated recognition programs can have a direct effect on employees and the entire company. These programs help to boost company spirit and can establish a healthy, and thriving work environment that can help to keep employees more motivated and engaged.

What Are the Benefits of Rewards and Recognition Programs?

Some of the most common benefits that can come from rewards and recognition programs include:

– A healthy work environment. 
– Encourage healthy competition among employees. 
– Helps to improve productivity. 
– Boost performance and employee output. 
– Creates a sense of positivity. 
– Encourages employee communication and comprehensive engagement. 
– Can establish team spirit. 

Final Thoughts

With employee reward and recognition programs, it’s hard to decipher how much of an effect they can have on both the company and the employees. Although it’s proven to boost company performance, these programs can keep employees more engaged, and help bring them closer as a team. More so, it can bring them closer to their employer and help them thoroughly understand business objectives and goals. 

Considering what form or type of rewards and recognition program to implement depends largely on the company, employer, and manager, but also employee requirements. If employees see more value in career development programs, then it’s best to consider how this will help motivate them and boost their careers. 

These and other aspects of recognition programs bring teams closer, help motivate them, and can be seen as a tool to increase margins and atop-line performance – a crucial element for any new or functioning business. 

Sabine Ghali

Kelly Murphy


Certified Meeting planner with 20+ years of event management experience, founder of ConferenceSource, expert in meeting facility sourcing & contracting in North America, Europe, South America and Asia. Kelly will manage your budget as if they were her own, negotiating the best possible rate and hotel contract to benefit and protect every client and exceed all expectations for all planning aspects for sales meetings, educational meetings, product launches, incentive trips down to a small board of directors meeting. We make meetings easy understanding your meeting objectives and delivering meeting matched components.