What Is The Recommended Ratio of Recognition to Rewards?

Setting up business rules in the design and program strategy stage for a new recognition program can very interesting. I often get asked what ratio to set up for the usage of their recognition to rewards in their programs. 

My answer is always the same. It all depends. 

The thing is the answer really depends on the industry you are in and the need for using rewards or not, and many other factors. For example, a major Silicon Valley technology company will have a significantly higher ratio of rewards to recognition expectation than would a healthcare organization in Texas. 

Here are a few guidelines to follow that might help you.

What ratio is right for you?

I have written before about the challenges experienced when rewards predominate programs. It’s the reason I advocate for openly calling combined programs, recognition and reward programs, and not the other way round. You recognize behaviors and reward results. Let that be the focus in escalating from behaviors to outcomes as to what you use.

This issue is usually the reason the question comes up about the usage ratio of recognition to rewards.

Diving into each tool may help you decide on the direction to take. 

  1. Recognizing Behaviors Programs 

Typical recognition programs have as their purpose the ability to express appreciation, praise, thanks, and giving of recognition to employees for doing amazing work well every single day.

The primary function of recognition programs is to acknowledge and value people. You people for their personal effort, positive behaviors displayed, or contributions made on the job. These programs are a tool to help people practice giving recognition to others. If you see someone do something positive, you give them positive feedback.

Recognition programs give you the opportunity to recognize someone in the moment of hearing about their positive actions.

Social recognition programs allow you to express comments of appreciation and recognition addressed to specific people that will appear in the social newsfeed. Like Facebook, you can like another person’s comment and I always recommend liking and as well as adding a personal comment.

These programs also allow you to choose a themed ecard to match with recognition, thanks, milestone anniversaries, and other special occasions or categories. Some organizations choose to have ecards associated with their organizational values.

Nearly 50 percent of organizations have social recognition programs. These programs have a newsfeed displaying ecards people send, along with written posts in the feed, or liking what a colleague has said. 

Another recognition opportunity is to send people social badges to recognize them. Companies use digital, graphic icons designed to represent each of their organizational values. By sending someone a social badge it appears in the social newsfeed along with your personal comment. These social badges appear on employee profiles on the recognition program. Social badges become something to aspire for and give a positive image to others.

Other recognition programs that touch on rewards are nomination programs. This is where you can nominate a peer or a manager nominates a staff member for a specific award that is given monthly or quarterly. You honor an employee by nominating them for an award. It does not mean they will receive the award but the fact that you feel they merit receiving it is an act of recognition.

Recognition programs are tools to express recognition and appreciation for people who do positive things and live the organizational values and culture. A majority of companies use recognition programs to communicate and reinforce the display of splendid work done well, like amazing customer service practices, good safety behaviors in the workplace, and acknowledging wellness and healthy lifestyle behaviors. 

We have reviewed the practices of our clients for several years. On average, the percentage ratio of recognition to rewards is approximately 40 percent usage of recognition programs. 

2. Rewarding Results Programs 

I tell clients a simple way of looking at things if they struggle with recognition and the element of using rewards. When you give people recognition, you do not have to give them a reward. But whenever you give a person 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 done 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 as the top salesperson, where they had the most sales in a specific 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 is 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 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 observed from several of our long-term and short-term clients, the percentage ratio for reward programs hovers around the 60 percent range. 

Only from this sampling of clients can I give you the overall percentage ratio of program usage of recognition to reward programs as approximately a 40%:60% mix. 

Keep in mind that the range of ratios is quite broad in generating this average. Like I said earlier, some organizations rely heavily on reward programs compared with recognition, and they obviously have the income to maintain that reward consumption.

Other organizations will have nowhere near those budgets and depend more on nonmonetary recognition programs. Plus, the type of industry dictates what programs get used when and to what degree.

I also suggest that you test out percentage ratios and see how it works for six months to a year. You can always adjust your percentage ratios for the following year.

Which only leads me back to my original answer to the question of what ratio of recognition to rewards I would recommend. It all depends.

Recognition Reflection: What percentage ratio of recognition to rewards usage works best for your organization?

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