Research /Toolkits / Budgeting for Recognition Toolkit, Section 2: Design Factors for Recognition Programs

Budgeting for Recognition Toolkit, Section 2: Design Factors for Recognition Programs

by Incentive Research Foundation

People want sincere appreciation for doing a good job. The challenge is finding the right recognition strategies to express appreciation. Once basic needs are met, recognition can be an even more powerful motivator than compensation. In one of the most influential books about recognition in recent years, The Carrot Principle, the authors state that:  

  • Workplaces where employees are recognized for their contributions also rank high for “customer satisfaction, employee satisfaction, and retention.” 
  • Nearly 95% of employees who report being happiest say that their managers excel at giving recognition. 
  • Recognition is so vital that nearly 80% of employees who quit their jobs do so mainly because of a lack of appreciation. 

Employees appreciate their managers’ attempts at recognition. But they also concede that the recognition can ring hollow and lack true sincerity, if given or presented inappropriately, or if the parameters of the program have not been communicated effectively. Thus, recognition program design is critical. Consider the following elements in designing a formal broad-based employee recognition program for your organization: 

1. Establish recognition program objectives tied to values, mission, and concrete goals 

Think first about why you want to create a recognition program – your corporate objectives and desired culture. Make your reasons clear and direct. Most organizations create recognition programs to drive higher employee engagement and to create a culture of appreciation. These are worthwhile objectives for your program but are a little vague when it comes to measuring program impact. Use recognition programs to reinforce your firm’s values and help it achieve strategic goals but also think about specific measures you can track. For example, clear targets for better engagement scores and lower attrition. ROI techniques can help you credibly attribute gains in these areas to your recognition program if you establish clear targets and collect the necessary data. Remember too that what you recognize sends a powerful message about the behaviors and actions you most value. 

2. Give everyone an opportunity to be recognized  

If you recognize people frequently, employees will anticipate recognition, which on its own often stimulates engagement and effort. Avoid the perception of favoritism by aligning your reward program with the firm’s core values and by looking for ways to appreciate more employees more often. People performing even the most routine and basic work deserve recognition. When you link your recognition program to your values, employees in any position performing any type of work can be acknowledged. Consider giving leaders, managers, and employees the tools and authority to recognize others. Doing so extends appreciation exponentially and may allow you to achieve a culture of recognition sooner.  

3. Communicate the criteria for recognition with crystal clarity 

Though your recognition program should touch as much of the workforce as possible, as often as warranted, recognition should not be given without good reason, otherwise it loses credibility and meaning. Take the time to articulate the behaviors, actions, and the impact that warrant recognition in your firm. Where you aim to encourage behaviors tied to values, use examples. When you recognize tenure, specify the parameters. Encourage managers and those who recognize others to share their specific reasons for appreciation with the recipient and then to document those reasons. This best practice makes recognition more meaningful and instructive to the recipient and others, and it helps administrators gauge adherence to criteria.  

4. Determine how recognition will be made and presented 

Many firms use recognition platforms that let managers and employees recognize each other digitally. These tools also permit points rewards to accompany appreciation that can be collected and redeemed for tangible items and experiences. You might also stage recognition events to appreciate people and teams publicly, send email or written notes, use spot rewards, or simply thank people privately. While simple appreciation and “employee of the week” type recognition work well, firms should consider the scale of employees’ efforts and contributions when determining the degree of appreciation warranted. Where merited, tangible noncash rewards should accompany recognition. Points, gift cards, and time off, as well as choice of assignments, additional autonomy, or flexible work options represent just a few of the noncash recognition options available. Err on the side of variety so that your program appeals to as much of the workforce as possible. Think about your objectives, your culture, individual preferences, and budget in making these design choices. 

5. Budget adequately 

Use the tools and advice in this toolkit to aid you in establishing an annual budget for your recognition program. Many organizations follow the standard benchmark of 1.5 – 2% of payroll for employee recognition programs. This might cover the costs of administration and token points or rewards, but not vital peripheral components, such as communications, technology, measurement, and training. Take into consideration the total cost of your program when determining your budget. 

6. Assign responsibilities 

Identify who will be responsible for designing, administering, and measuring the program. These could be internal resources in HR, compensation or, in large firms, performed by the incentives, rewards, and recognition group. Alternatively, you might outsource all or a part of design, administration, award vehicles, and measurement to an external consultant. 

7. Identify metrics or key performance indicators to track and measure the success of your program 

Don’t forget to track your progress. Determine what data you need to collect to measure impact and identify who is responsible for collecting and analyzing it. This might include metrics such as the number of people recognized, frequency of recognition, recognition by manager or team, reasons for recognition, and data against the goals you established for the program, such as overall employee experience, impact on engagement and retention. 



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