How to Improve Retention with a Recognition Program

Employee RecognitionDoes your business have an employee recognition program? Do you think it makes a difference?

It’s easy for employee recognition to become a back-burner activity, and even easier to delegate it to someone else. But for employees, recognition may make the difference between staying with a given company or seeking greener pastures. Employee recognition is such a powerful tool for retaining employees and enabling team members to be more productive that companies like Apple and Google have built it into the fabric of their culture. They invest millions of dollars in providing extra paid time off, stock options, trips, bonuses, and more – all to say thanks for doing a great job.

But what about you? As a small business owner, you don’t have millions to spend on trips to Hawaii and expensive tech gadgets. Does employee recognition still work when you have a smaller budget?

Yes, it absolutely does. A Great Place to Work survey found that when employers implement recognition strategies, employees are:

  • More likely to think promotions are fair
  • More likely to say their companies are innovative
  • More satisfied with their jobs
  • More likely to do their best work

Another survey conducted by Survey Monkey and Bonusly found that 82% of employees are happier when they are recognized for doing good work. Nearly two-thirds of those who are consistently recognized say they are unlikely to look for a different job.

Those are some pretty compelling statistics. But recognition costs money, right? How can you build an effective recognition program if you’re working with a miminal budget?

Not to worry. Recognition doesn’t have to be expensive. Here are 5 budget-friendly ideas for improving retention through recognition.


1. Start with Strategy 

As with any new initiative, it’s important to define your goals, nail down a budget, and determine how to measure progress before you jump in.

  • Goals – Set SMART (Specific, Measurable, Achieveable, Realistic, Time-Based) goals so you can quantify whether your program is producing the desired results. Goals might include increasing productivity, boosting morale, reinforcing desired behaviors, or improving retention. In each of these cases, you need to identify a specific outcome you’re aiming for and create a reliable way to measure it.

    Goals should also quantify the types of recognition you want to provide. According to Bonusly, effective recognition activities should be timely, frequent, specific, visible, inclusive, and values-based. In other words, choose opportunities for recognition that support your values and that are achievable. If recognition is monetary or award-based, employees should know what the expectations are and how they can work toward the award.

  • Budget – The average budget for an employee recognition program is 2% of payroll. Some companies spend less and some spend quite a bit more. As you determine your budget, consider the kinds of recognition you want to offer and what outcomes you are hoping to achieve. Do you want to prioritize improved performance? Are you hoping to recognize tenure milestones? Do you want to plan for monthly team lunches? Budget should flow out of your goals, but it’s okay to start small and build over time.

    You will also need to consider whether your award program is subject to payroll taxes and plan for this in your budget. If you’re not sure, talk to a tax attorney about requirements in your state.

  • Metrics – Tracking key metrics is the best way to caculate ROI for your recognition program. Start with an employee survey that helps you keep a finger on the pulse of employee opnions about your recognition efforts. You can also track KPIs like turnover, productivity, and retention to see if your program is moving you toward your broader business objectives.

2. Get Managers On Board 

Strong recognition programs start at the top and flow down through the organization. If your leadership isn’t on board, your front-line employees will know it. That’s why it’s crucial to train managers on both the whys and the hows of your recognition program. Teach them how recognition benefits both the organization and the individuals within it, and give them the tools to implement recognition practices with their teams. Here are a few tips for getting started:

  • Get to Know Employees as Individuals - People are motivated by different things, and recognition endeavors should celebrate these differences. When managers take time to learn the personalities and preferences of their teams, employees will feel more valued.

  • Be Spontaneous - Stopping by someone's desk to offer a personal word of thanks can be just as effective as handing out an employee-of-the-month award. In fact, sometimes it's even more effective. Taking time for personal interaction shows team members that their manager has noticed the individual contributions they've made, and that makes them want to continue investing in the success of the team. 

  • Recognize Milestones - While spontaneous recognition is effective and valuable, it should be offered alongside more tangible expressions of thanks as well. Take the time to notice important milestones such as a work anniversary, personal goal, or project completion.

  • Praise the Person, Not the Productivity - Employees aren't cogs (popular puns notwithstanding). They are people. Praise employees for their unique skills and contributions, rather than just their output. Even if you are celebrating a productivity milestone, phrase it in terms of what that person brings to the table (hard work, determination, people skllls, etc.).

  • Recognize Various Kinds of Achievements - Not every team member will be a top performer, but everyone brings valuable contributions to the table. Take time to recognize an employee's superior reserach skills, excellent customer service, willingness to go above and beyond, and other value-add activities.

3. Consider Investing in Recognition Software 

This is especially helpful if you have a call center or you want to track productivity in a concrete, tangible way. You can use recognition software to gamify your program using leaderboards, badges, and points. You can also incorporate social shoutouts, work anniversary notifications, and peer-to-peer recognition through the platform. Here are a few things to look for if you decide to go this route:

  • Customizable Analytics and Dashboards – Be sure the software has enough flexibility to track any metrics that are unique to your company. It should also give options to customize dashboards based on roles and internal KPIs.

  • Integrations – It’s helpful to connect your recognition platform to other software such as Teams, Slack, or your HRIS. Make sure the platform you choose can integrate with what you currently use.

  • Social Features – Does the platform include a message board or chat feature? Can users “like” status updates or leave comments? Can employees leave peer-to-peer feedback for each other? These are all great tools to build recognition into the fabric of your culture while promoting collaboration.

  • Branded Storefront – If you plan to offer tangible rewards such as company swag, gift cards, or perks, look for a platform that has a “storefront” built in. Employees can use points to select their rewards online.

4. Small Gestures Count Too

If you don’t have room in your budget for fancy software and monthly bonuses, remember that small gestures of appreciation have significant morale-boosting value as well. Here are just a few ideas:

  • Write a hand-written thank you note when an employee goes above and beyond.

  • Stop by a team member’s desk to say a genuine thank you.

  • Keep a list of each team member’s favorite things. When you want to say thanks, pick something from the list (coffee, candy bar, something themed with their favorite movie or TV show, etc.).

  • Schedule team lunches every month or every quarter.

  • Celebrate birthdays with a team email or a card signed by co-workers, plus something from the favorite things list.

As you think through options, take note of how individuals prefer to be recognized. Some team members may not appreciate being asked to stand up while everyone claps and cheers, for example. They might prefer a hand-written note from their manager instead.

5. Watch Out for Potential Pitfalls

Every recognition program starts out with the best of intentions. Why is it, then, that some don’t bring the hoped-for ROI? There are several things that can keep your program from having the impact you’re looking for: 

  • Poor Leadership Buy-In – Company leaders should not only promote recognition, but also practice it. If recognition is viewed only as a tactic and not as a core value initiative, it won’t succeed.

  • Lack of Manager Participation – Successful recognition is largely a manager-led endeavor. Great managers incorporate recognition into their leadership styles. But when recognition is viewed as a burdensome task, employees will notice. That’s why it’s critical to train managers on the why behind your recognition program as well as the what and the how.
  • Lack of Recognition Culture – If the first two pitfalls have been safely avoided, this one likely will be as well. Still, it’s worth noting that successful recognition is a cultural initiative that has to permeate every department and level of your company. It’s not just for the call center or the new recruits. It’s for everyone.
  • Failure to Incorporate Peer-to-Peer Recognition – While leadership buy-in is key to successful recognition, peer-to-peer recognition is also an essential cultural component. When employees recognize each other’s strengths and accomplishments, they build stronger teams that are more likely to work well together.
  • Recognition Isn’t Meaningful – Recognition should provide something of value to team members. That something doesn’t have to be monetary, but it should support a positive work environment that helps employees feel like valuable members of the team.
  • Failure to Follow Up After the Launch – No program will sustain itself without additional investment. After you launch your program, follow up by asking for feedback, conducting an employee survey, demonstrating how you have incorporated feedback into the program, checking in with managers, and making sure no one gets left out. 
  • Recognition Limited to Outcome-Based Rewards – Everyone should have an opportunity to be recognized for their contributions, even if they aren’t the top salesperson. Look for other ways to provide positive feedback so no employee feels unappreciated or unseen.

Recognition doesn’t have to be expensive, but it does have to be intentional. By investing in a culture of appreciation and gratitude, you can create a positive work environment that helps employees feel valued. And that’s a key component of boosting long-term employee engagement and retention.


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