Every employee working at your workplace – from a simple technician to a richly experienced manager expects you to recognize his/her work and appreciate the efforts he/she puts in day after day for the success of your business. Employee recognition and rewarding is a process through which employers or business owners make a conscious effort to reward and award your employees not just to acknowledge their work but also to motivate them to continue with the same passion.

How to Recognize & Reward Your Employees

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This article explores in detail 1) what employee recognition is, 2) tips to start a formal employee recognition program, 3) formal recognition examples, and 4) informal ways to reward your employees.


There is absolutely no one in the world who doesn’t like being rewarded and recognized for the hard work they do and the same holds true for employees of your workplace as well. Employee recognition is the acknowledgment of an employee’s efforts, hard work and behavior at the workplace that have contributed to the organization’s success and objectives in some way. Both things are very important: recognizing and acknowledging these efforts, as well as rewarding employees for their fruitful efforts. Here are some ways in which you as an employer or business owner can recognize the efforts of your workplace and reward them accordingly:

  • Day-to-day recognition – It is important to motivate and encourage employees to perform well on an everyday basis and not just on a periodic level. For example, small words of praise, little words of encouragement and constant motivation are highly important to make your employees feel encouraged for their efforts and to maintain a positive flow of the workplace environment.
  • Informal recognition – Informal recognition is the kind of recognition which includes gestures of encouragement and appreciation. A pat on the back or a word of praise in front of the team can go a long way in boosting the morale of the employees.
  • Formal recognition – Formal recognition is usually in the form of rewards for service, contribution, and achievements. These recognition forms also include events held for the celebration of achievements. Formal recognition often has some legal and policy requirements.

Importance of Employee recognition

As an employer or business owner, it becomes your responsibility to make sure there is a proper employee recognition program in your organization. Such program offers many benefits and, hence, is of high importance. To know what the various benefits of such a program are, you can go through the following given information:

  • Encourage engagement – One of the ways in which recognition of your employee’s efforts or hard work can benefit is by encouraging or inspiring further engagement and boosting overall performance. When one gets some praise or pat on the back, he/she automatically tries to give the same level of performance and improves efforts further.
  • Encourage better business results – The simple gesture of praising or rewarding your employees at work can have a direct impact on your bottom-line and can lead to better overall results that are a consequence of better individual performances.
  • Increase loyalty & Retain the best talent – When one is recognized for his/her hard work, he/she tends to be more loyal towards you and the work he/she is doing. This is something that can help to retain important and skilled employees in the long run.
  • Build a supportive work environment – The more your employees feel encouraged and valued, the more will they be supportive to your cause, hence building a supportive and active work environment.
  • Encourage a sense of ownership of the place in employees – When an employee hears a word of recognition or receives an award for his/her services, he/she begins to feel a sense of belonging and ownership for the workplace, which further improves performance and infuses a sense of positivity in the environment.

Guidelines for an effective employee recognition program

Now that you know how important an effective employee recognition program or reward system is, you must consider creating a strong and effective one for your workplace. It is a fact that organizations that make recognition a priority are highly successful. In order to come up with an effective and well-designed recognition program, you can follow the given basic guidelines:

  • The program must be clearly defined and planned.
  • An effective recognition program must be capable of opening up communication channels.
  • It must be able to improve the retention level of the best employees.
  • It must take into account the important achievements of each worker or employee, no matter how small or big the work position is.
  • It should improve confidence and self-worth among the employees.
  • It must help in improving and increasing the overall productivity of the workplace.
  • The program should have a mix of both informal and formal ways to reward.
  • It must be upgraded or changed regularly to avoid saturation or predictability.
  • It must be valid as per the policies and legal specifications.
  • It must be highly unbiased.


A formal employee recognition program is a kind of a program which is aimed to reward your employees formally either in terms of bonuses or awards handed out at the month of a time cycle. These programs are well-planned and designed to improve work place performances, boost morale and confidence among employees and achieve overall organization goals with a positive workforce. If you still haven’t started an employee recognition program at your workplace, then it is important that you take steps to do so. For your help and reference, we have come up with a well detailed process to create a program of this kind.

STEP 1: Identify the Goal of Your Recognition Program

The first step to setting up a reward program is to come up with a long term goal or objective. You must identify and define what you want to achieve from the program. The objective must be appropriate and meaningful to your company and should not violate company policies in any way. In order to identify the goal of a strong recognition program, you can follow the given below points and tips:

  • Talk at the management level – Make sure you sit down with your top managerial executives and list down all the possible objectives of the program. Take their ideas and make sure there is a higher purpose and a clear vision for the program.
  • Talk to employees – Besides taking opinions of the managerial staff, it is also important to talk to employees and take their take on the matter. Every employee is different; while some may just like a quiet and personal appreciation note, others may prefer to be recognized a little more publicly. This is why, talking to employees can help you figure out their temperaments.

STEP 2: Establish a Budget

Now that you have set up the goal of the recognition program, it is time to establish a budget keeping in mind the financial position of the business and reserving a practical amount for awards or rewards. For this, talk to the finance or accounts department and figure out the amount that you can afford to spend on such a program every month or year. It is important to know that such programs can run on either no cost or little costs as well. However, keeping aside some money for cash rewards, coupons, gift cards and other rewards too may be a good way to differentiate between levels of recognition and awarding. Make sure you do not overstep the budget just in order to strengthen your program as this can eventually lead to a loss rather than major profits.

STEP 3: Set a Committee

The 3rd step in this process is to set up a committee and appoint a few employees or managerial level executives to handle the functioning of the reward program. Try not to form too huge a committee in the beginning and include only a few recognized employees in it. The committee can then be given the responsibility to handle everything related to the program including the formation of formal awards; creation of new reward types every month or quarter and interesting ways to promote the program internally. Doing so will help you get a more streamlined approach to the program that does not leak out among the employees and remains a surprise for them.

STEP 4: Set criteria and guidelines

Every successful and effective employee recognition program has a set of guidelines and criteria on the basis of which it functions and goes on smoothly. It is important for you too to create core values and guidelines so that it remains fair and unbiased. Make rules, discuss exceptional cases of recognition and have a list of points according to which an employee will be recognized or rewarded. The following are a few guidelines that you can follow.

Potential criteria for assigning a reward:

  • Length of service;
  • Excellence in performance;
  • Peer-to-peer communication and association;
  • Leadership qualities;
  • Personal accomplishments;
  • Team accomplishments;
  • Milestones crossed;
  • Number of points earned according to point system;
  • Attendance, punctuality, results achieved.

Rules about setting criteria:

  • Be fair and unbiased in your approach to setting up the guidelines;
  • Be clear and transparent about the rules;
  • Make the criteria strictly applicable on not only top or medium level executives but also on entry level staff or technicians and other workers.

STEP 5: Select the rewards

Rewards that you give to your employee doesn’t necessarily have to be expensive. At the end of the day, it is the appreciation and recognition of efforts that matters the most to employees and hence the formal reward can be nominal in cost. The reward must be chosen in such a way that it suits your budget and is given keeping in mind the needs and interests of your employees. While selecting an award or a reward, you can get as creative as you want but it should be tied closely to the goal of the program. Some good examples of possible rewards can be:

  • Gift coupons;
  • Gift cards;
  • Cash rewards;
  • A short vacation opportunity;
  • Insurance-related benefits;
  • A pen/gadget;
  • A free lunch/dinner with family/friends;
  • Free pick up and drop off facility for a month;
  • Redeemable gold points;
  • A hotel stay.

STEP 6: Communicate with Your Employees

Once you have figured out the entire program and worked out each of its details, the next step for you is to tell all your employees about the idea or initiative. You can send a mail to the entire workforce, put up bulletin notification or send promotional materials across the workspace for everyone to be aware of such a program. If employees know and understand the program and the way it will work, they will be encouraged to pump up their performance. This will encourage them to be at the top of their game and may automatically improve the overall performance. Moreover, this helps to create a trust factor in their minds and makes them feel like their efforts count.

Make sure the communication material or method explains the various factors on which employees shall be evaluated so that they can consciously work on those areas and know that the process is unbiased and fair for all.

STEP 7: Maintain and Repeat Recognition Program

The key to running a successful recognition program at your workplace is to make sure it runs continuously and keeps adding more creative awarding ideas to maintain the fun element and interest among the workforce. You must make sure that you define the frequency of the rewards, for example – weekly, monthly or yearly, etc. Also, ask the recognition committee to keep changing the criteria and technique of selecting candidates and awarding them every now and then so that employees look forward to performing better through each cycle. Only when the program will run for a long time will it become truly a part of the corporate culture.


Example 1: Monthly hero from Zappos

Zappo’s has an extremely effective formal recognition method that it calls ‘Monthly Hero’. In this program, every employee of the company is given $50 which he/she is supposed to give to another worker or employee for his/her efforts or excellence in performance. The managers or executives then pick one name among the employees who have received the $50 from others and name him/her ‘Monthly Hero’. Then a mini-parade is held to announce to everyone who that Hero of the month is. The hero then receives a $150 gift card, a cape to wear and a covered parking space as a reward.

Example 2: Learn from your employees as well

Another amazing example of an effective formal recognition program is the ‘Giraffe Award’ which is awarded by an agency to those employees who stick their neck out by taking risks, accepting challenges and inspiring others to follow suit. The whole idea behind this award is to encourage high performance and contribution from employees and to create a sense of ownership of the place among the workers.


Besides the formal ways to award and reward employees and recognize their hard work, there are endless informal ways or gestures that can say and express that you are proud of the way an employee has performed and encourage the efforts. But since these methods are merely gestures, you and your managers must make sure that they in no way are out of the bounds of the workplace culture and policies. They must be polite, subtle, suitable to the interest of the various employees and not bothersome or out of line in any way the following are some of the informal ways to recognize the well-performed job/tasks of your employees:

  • A well-meant and simple thank you to your employee on a job or task that has been performed well is enough to say that you are appreciative of the efforts. Say thank you often and mean it each time you say it.
  • Sending a personal note or an email can also prove to be a great gesture and may infuse a lot of confidence and gratitude in the employees.
  • If your employee receives positive comments from clients or seniors, do make sure that you let him know about it to boost his morale and motivate him to perform well in the future also.
  • Create a monthly or weekly employee honor roll in the office and paste pictures or names of employees who have worked particularly well during that time period.
  • Praise the employee who has performed well in front of the team to encourage not just him but also others to perform well.
  • Take your team out for lunch or dinner after they have accomplished a particular deal or finished a project successfully.
  • Allow employees who work hard and perform well to attend special meetings or give them special tasks as a gesture for their excellent contribution.
  • Set up a point system for loyalty, punctuality, team work, attendance and other such factors and start rating employees on a per month basis. The employee who scores the maximum can be sent a small treat, coupon or a goodie bag to encourage everyone at the workplace to aim for the highest score.
  • Give examples of the achievements of the few hardworking employees to others in front of them to indirectly praise them and boost their morale and reputation in the office.
  • Allow the employee to take long lunch breaks once in a while or sanction a leave as a recognition of good work on other occasions.
  • Create titles like ‘most hardworking employee of the month’, ‘most punctual employee of the month’ and ‘the most reliable employee of the month’ etc. and distribute these titles with a small pack of chocolate etc. at the end of each month to boost performance and encourage individual skills and qualities.
  • Always thank or appreciate employees for their ideas and suggestions that can help the organization even in the smallest of ways. This boosts a feeling of giving opinions among employees and reduces the hesitation that one might feel at the workplace as far as speaking up in front of other workers is concerned.
  • Always appreciate those who stay back long hours to complete their work, irrespective of whether that was required or not. This avoids unnecessary frustrations and resentment for you or the workplace in general among employees.
  • Always greet employees at the starting of the day or whenever you encounter them in the workplace. An employer who is cold or doesn’t respond well to the employees’ greetings may be seen as unappreciative, and this can have a negative impact on workers.

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