The Right Balance of Recognition to Reward Programs

One of the many challenges in managing a recognition and rewards program is figuring out how to steer the course of your programs to maximum impact. 

And one repeated concern I see is when program owners inherit a program, they call recognition, but it’s been almost a total rewards program. Getting rid of the rewards mindset that triggers entitlement, expectations, and “more please”, is hard to unlearn. 

Providers, compensation and benefits associations, and non-profit business research organizations give good estimates on how much money to spend. They draw upon a percentage of your payroll budget or the average dollar spent per full-time equivalent (FTE) of employees. 

But what’s missing is how much to spend on the different programs. Is there a perfect balance between recognition specific programs and reward type program? How do you advocate budgets based on how people use the different types of programs? 

Looking At Recognition and Reward Program Types 

There are three broad types or categories of recognition and reward programs I like to group programs by. Organizations use each type of programs for different reasons and produce contrasting results

1. Celebrating Employees Programs 

Each organization will have some degree of celebratory programs set up to honor and praise their employees. If it wasn’t for the wonderful employees who come to work every day, your organization would not exist or achieve its overall purpose.

Leaders, managers, and staff should give 100% focus to celebrating and honoring people for who they are, their amazing contributions, and the happy and sad occasions that happen in their lives. 

Celebration programs tend to follow the career pathway of the employee experience by recognizing a new employee at onboarding and celebrating them when they leave the organization at their retirement. 

Imagine showing up on your first day and receive a small box with branded swag items inside and a welcome letter from your senior leader. Depending on the job, you might have received this welcome package at your home. 

And when employees retire from an organization, it’s time for former and present colleagues to honor and pay their respects to the individual by sharing memories together of the positive contributions they’ve made and the difference they were in being a part of the organization. 

Nearly 90 percent of organizations celebrate an employee’s length of service with an organization by honoring their career milestones every five years with some form of service awards, gift, or framed certificate. Senior leaders must hold their direct reports accountable for representing the organization and thanking employees for their loyalty and service on their anniversary every year, and especially on milestone years. 

Some organizations have an annual or more frequent employee appreciation day with activities to express gratitude and thanks to all employees. This can be as simple as small refreshments being served with the presence of senior leaders in attendance, to nicely catered events or noon-hour barbeques and potlucks. 

Organizations can host other more formal recognition programs at the recognition celebrations and award events. Ceremonies for recognizing people with prestigious organizational awards, whether earned or nominated for, are a great way to celebrate exemplary employees.

You may also have in your organization the celebration of personal events such as marriages, births, adoptions, and other positive happenings. Leaders and managers may also show care and concern when employees go through more tragic life events such as illness, divorce, death, or other significant losses from people to pets. 

I do not include celebration type programs in with the recognition and reward programs. Celebration programs do not drive behaviors and results. They do not occur because of actions of employees. Organizational leaders drive them as a way for your leaders to express appreciation to all employees, no matter their position in the organization.

2. Recognizing Behaviors Programs 

Probably the most common and most important of recognition and reward programs is the ability to express appreciation, thanks, and recognition for the amazing staff doing splendid work every single day. 

Recognition programs have a core focus to recognize people for positive behaviors they have shown on the job. They can be small actions or major contributions, but they are behavioral. You saw something and now you want to acknowledge them for it. 

These online, offline, and in person recognition practices, have their sole purpose as appreciating people for who they are and recognizing them for what they do. They are very much about recognizing “in the moment” and giving recognition right away.

The typical recognition programs available to most organizations start off with being able to send ecards for all kinds of occasions from thanks and congratulations, acknowledging people for living the organizational values, milestone achievements, all the way to special life events and holiday greetings.  

Nearly 50 percent of organizations have social recognition programs where there is a newsfeed displaying ecards people send, along with writing posts in the feed, or liking what a colleague has said. Similar to Facebook, staff can add comments to one another’s posts. 

An emerging trend within today’s recognition programs are giving people social badges. These are digital, graphic icons that represent each of your organizational values or specific strategic goals. You can post these visual images on employee’s profiles and motivate people to aspire to receive and collect them. They become a status symbol and give a positive reputation to those who achieve them.

Most recognition programs started off being a tool for managers to recognize their employees. But recognition is not just a top-down behavior, it should be multi-directional. So no surprise that these programs have now opened up to become peer-to-peer. 

Recognition programs can recognize individual staff in departments, by work units, or in teams. 

Recognition programs are tools to express recognition and appreciation for people who live the organizational values and culture. They are highly popular for communicating and reinforcing the display of customer service practices, safety behaviors in the workplace, and acknowledging wellness and health behaviors. 

In examining the practices of our clients and reviewing best practice award nominations for several years, it would appear that organizations use recognition programs at a percentage ratio of approximately 40 percent in compared to reward programs.

3. Rewarding Results Programs 

When people are looking for a straightforward way to separate out recognition from rewards, I remind people that when you give recognition, you don’t have to give them a reward. But whenever you give people a reward, you must always accompany it with recognition.

Another reward guideline for you to remember is that you reward people for achieving outstanding results or going above and beyond. Recognition is for acknowledging and calling out people for doing positive behaviors and doing amazing work very well.

Rewards can use any currency medium that an organization wants to use. Some organizations still give cash, others use gift cards, level-based value awards, or give redeemable points where employees can accumulate, bank, and redeem them for merchandise or experiential items from a catalog.

You can also give rewards for reaching specific performance milestones, such with the top salesperson where they had the most sales in a given time period. By achieving these performance levels, they essentially “earned” the reward. 

If a manager observes someone going above and beyond, reward programs are available to give an instant, on-the-spot reward, either through online sending of redeemable points with a message of recognition in an ecard, or by giving them a pre-printed card that shows a certain reward value and they can handwrite a note of appreciation. 

Other ways in which managers and peers alike can give rewards, are by sending a nomination for someone and expressing why you felt they deserved to receive the reward. Depending on the business rules set up for each program, lower reward values may not need manager approval. Once someone suggests a higher reward amount, a manager must approve the nomination before they publicly display it and they release the reward to the employee.

In customer facing services such as retail banking or fast food services, employees can receive rewards individually or as a team when they reach certain productivity metrics or targets.

As stated above, the percentage ratio for reward programs hovers around the 60 percent range. This makes the overall percentage ratio of program usage of recognition to reward programs to be approximately a 40%:60% mix. 

While I would love to see the percentage ratio become a 70%:30% level, I think we have a long way to go before we reach those kinds of numbers. 

Here are some guiding principles to keep in mind with weaving the right blend of recognition versus reward program usage.

#1. Each program must have a very clear and understandable purpose.

#2. How your organizational culture dictates use of recognition and rewards.

#3. Make sure you explain and teach the differences between recognition and rewards.

#4. Educate everyone on when to use recognition and when you use rewards. 

#5. Establish ideal percentage ratios for your recognition and reward programs.

#6. Conduct regularly scheduled reviews of your programs and usage ratios.

#7. Hold leaders and managers accountable for the percentage of program usage.

#8. Budgets will always be a check and balance for what rewards you can afford.

#9. Keep in mind the size of your organization and the number of employees you have.

#10. Different industry sectors and professions will require different ratios than others.

Recognition Reflection: Have you established percentage ratios for the recognition and reward programs in your organization?

Roy is no longer writing new content for this site (he has retired!), but you can subscribe to Engage2Excel’s blog as Engage2Excel will be taking Roy’s place writing about similar topics on employee recognition and retention, leadership and strategy.