28 years ago, Dr. Bob Nelson — a founding member of Recognition Professionals International — created Employee Appreciation Day. Nelson’s doctoral work had focused on how the creation of a “culture of recognition” in an organization can improve employee retention, performance, and the ability to attract talent. Observed on the first Friday in March, the day serves as an opportunity for employers to develop this culture by giving thanks or recognition to their employees. It also provides an opportunity for organizational leadership and HR professionals to reflect on how recognition fits into their employee value proposition and overall business strategy.
2023 is a critical year for recognition, given how anxious and uncertain many employees might be due to a number of seemingly negative economic trends, such as mass layoffs in certain industries, rising inflation, and a looming recession that could slow down the entire global economy. Recognition can provide these worried employees with a sense of belonging as well as optimism regarding their roles in the future of the organization — two factors that Perceptyx research has found are more important than mere compensation increases when determining how likely these employees are to stay in their current positions.
The Link Between Recognition and Motivation
Alarmingly, one-third of all employees are unhappy, unmotivated, and staying put in their roles — a concerning state of affairs that costs organizations more than $6 million for every 1,000 employees. Most companies struggle with high employee turnover rates. One of the main reasons for this is a flawed recognition culture. 79% of people who quit their jobs cite “lack of appreciation” as their reason for leaving.
Our people analytics team has repeatedly found that recognition and reward is a driver of employee engagement and retaining top talent. Whereas rewards may come at a higher cost (e.g., increased salaries, bonuses, etc.), employee recognition has a comparatively lower cost, but carries a high impact.
The First Step: Create a Culture of Recognition
Obviously, all people want to feel valued and respected, and not just on Employee Appreciation Day. It should also come as no surprise that research proves employee recognition efforts make a difference. Employees who are regularly rewarded or recognized for a job well done are more engaged and more productive. In fact, recognition increases employee engagement, productivity, and performance by 14%, and 92% of workers are more likely to repeat actions when they receive praise for doing them.
Interestingly, many organizations understand the importance of rewarding their employees but don’t do it frequently enough. Nor do they have a formal process to guide their leaders on when, where, or how to do it well. In today’s job market, where in-demand talent has more employment choices than ever, a culture of recognition is essential.
Recognizing employees and celebrating their hard work should be an integral part of your organizational strategy and needs to be supported by leaders, especially given the bottom-line implications. However, research shows that 87% of recognition programs only reward based on tenure with the organization. This means a lot of great work goes unrecognized. More importantly, companies noted to have a “recognition-rich culture” have voluntary turnover rates that are 31% lower than other companies.
One important first step is to find a way to clearly link well-defined goals with constructive feedback and recognition. In a seminal 1968 article on goal-setting theory, Edwin A. Locke demonstrated that employees are motivated by challenging goals. These challenging goals require employees to work hard and develop their skills, but also yield more positive feedback and recognition when completed.
If the completion of challenging goals is regularly followed by formal recognition — such as references in company newsletters or other communications — as well as informal communications like mentions on team meetings, employees will learn that their company not only values them but has a strategy in place to consistently recognize their efforts. AI coaching tools like Perceptyx’s Cultivate can aid managers with this process, utilizing machine learning to let them know whether the tone of their communications with team members is positive or negative and reminding them when they haven’t regularly interacted with or recognized certain team members.
A Closer Look: Perceptyx Research on Employee Recognition in Healthcare
In the healthcare industry, the pandemic-related disruption of the past three years has underscored just how much the employee experience impacts the patient experience. As more healthcare systems focus on patient-centered care, they, too, must strive to understand this link, and develop appropriate strategies to ensure they have created cultures of recognition for their workers.
Perceptyx research on the healthcare employee experience has found that 3 in 5 employees feel recognized for their contributions to their organization. One group with a notably less favorable experience is Black female clinicians, where only half feel recognized. For one healthcare customer, our people analytics team uncovered that Black employees averaged 12 percentage points lower on employee survey response rates than White employees, and Black employees were also less likely to be highly engaged — a gap that has been widening over the past half-decade. By connecting employee listening data with employee recognition data, we found that receiving electronic recognition (such as e-cards) during the pandemic from one’s manager not only increased the response rate, but also raised overall engagement for Black employees.
For another healthcare customer, we found that receiving an average of five “thank you” e-cards from one’s manager increased the likelihood of being highly engaged by 4% and reduced the likelihood of turnover by 1%. For the average healthcare organization, that saves $270,000 annually in nursing turnover costs alone.
Surprisingly, we found that e-cards that were tied to a monetary reward had a backfire effect: these employees were less likely to be highly engaged and were more likely to voluntarily leave the organization. Digging a bit deeper, we analyzed the content of the thank-you cards using natural language processing and found that monetary e-cards were more likely to have an “I’m sorry” tenor: “I’m sorry you had to work that extra shift. Thanks for going above and beyond — I owe you one.” When e-cards were accompanied with a monetary reward, it was often an indicator of burnout and higher turnover. Research in employee motivation may have predicted this outcome, as positive feedback often enhances intrinsic motivation but tangible rewards can significantly undermine it.
Recognition Tips from the Healthcare Industry
Drawing on our research in healthcare, there are several clear best practices that can be utilized to help create an organizational culture of recognition:
- Provide regular feedback and recognition: Regular feedback and recognition can help healthcare workers feel valued and appreciated. Managers should make a point to consistently engage in dialogue with their employees to acknowledge their hard work, and provide constructive feedback to help them improve.
- Offer professional development opportunities: Healthcare workers welcome opportunities for growth and development. Offering training and development opportunities beyond required training for specific roles and licenses will allow healthcare workers to enhance their skills, feel invested in and advance their careers. Perceptyx research has shown that professional development is a key driver of employee retention, ranking ahead of other drivers like compensation.
- Celebrate achievements: Managers can publicly acknowledge healthcare workers who have achieved notable milestones, such as in public hospital-wide meetings or showcasing stories in meetings, on intranet pages, or rounding huddles.
- Encourage work-life balance: Healthcare workers often work long and demanding hours, and it's essential to encourage work-life balance given unprecedented stress from the pandemic. Organizations should offer flexible schedules and benefits that support work-life balance, such as telecommuting or child care assistance, in addition to pay-for-performance such as incentive pay.
- Provide resources and support: Healthcare workers face unique challenges, such as burnout and stress. Organizations can show their appreciation by providing resources and support to help healthcare workers manage these challenges, such as employee assistance programs or mental health services.
Make Recognition Work for Your Own Organization
If you want to understand the impact of your employee recognition and reward program, or how your current program could be improved to combat the growing challenges of employee burnout and attrition, Perceptyx can help. Please reach out to schedule a meeting or to learn more about our employee listening approach.
