29 years ago, Dr. Bob Nelson, a founding member of Recognition Professionals International, created Employee Appreciation Day. Nelson’s doctoral work focused on how the creation of a “culture of recognition” 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.
2024 will be a critical year for recognition given worker anxiety surrounding our mixed economic picture, the U.S. Presidential election cycle, and continuing layoffs, including the threat of AI-driven job cuts. 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 compensation when determining how likely employees are to stay in their current positions.
The Link Between Recognition and Motivation
Alarmingly, nearly 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 rewards are key drivers of employee engagement and retention. Whereas rewards may come at a higher cost (e.g., increased salaries, bonuses, stock awards, etc.), employee recognition has a comparatively lower cost but generates a high impact.
The First Step: Create a Culture of Recognition
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 do make a difference. Employees who are regularly rewarded or recognized for a job well done are more engaged and more productive.
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. 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.
One important first step is to 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 yet attainable 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 achievement of challenging goals is regularly followed by formal recognition — such as references in company newsletters or other communications — as well as informal communication like mentions in team meetings, employees see that their company not only values them but has a strategy in place to consistently recognize their efforts.
A Closer Look: Perceptyx Research on Employee Recognition in Healthcare
In the healthcare industry, the pandemic-related disruption that rocked this sector between 2020 and 2023 has demonstrated just how much the employee experience (EX) impacts the patient experience (PX). 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 by 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 by detracting from the altruistic satisfaction of going above and beyond for one’s team or organization.
What Our Behavioral Science Research Tells Us About Recognition
Members of our behavioral science team have also conducted research into the dynamics of workplace recognition and its impact on organizational performance. The insights they’ve gathered further underscore the profound effect that effective recognition strategies can have on an organization's culture and its employees' overall work experience:
- Peer recognition elevates job satisfaction and engagement: Our findings reveal that employees who have given recognition or appreciation to a peer within the last two months exhibit significantly higher levels of job satisfaction — in other words, immediate satisfaction following the act. These individuals are more likely to recommend their company as a great place to work, identify as highly engaged, and report a more positive overall work experience. This suggests that fostering an environment where peer recognition is encouraged can contribute to a more vibrant, committed, and satisfied workforce.
- Optimal recognition strategies for performance improvement: In small groups, we discovered that recognizing a third of top performers led to a more substantial overall performance increase compared to either recognizing all employees or only the single best performer. This indicates that a targeted recognition approach, which highlights top achievers without overlooking the contributions of the broader team, can optimize performance and motivation levels across the board.
- The impact of the recognition source: Interestingly, our research also indicates that being recognized by a peer has twice the positive impact on an employee's morale and motivation as recognition coming from a supervisor. This insight challenges traditional top-down recognition models and suggests that peer-to-peer programs could be more effective in boosting employee morale and engagement while also improving overall team dynamics.
- Recognition as a key driver of employee retention: Across five different analyses for five different customers, recognition and appreciation consistently emerged as one of the top three drivers of employees' decisions to either leave or stay with an organization. This underscores the critical role that recognition plays in retaining talent, especially in competitive job markets like healthcare where employees have ample opportunities to seek out environments where they feel more appreciated and organizations aren’t able to increase other predictors of turnover, such as pay.
Incorporating these findings into your recognition strategies offers a roadmap for enhancing employee engagement, satisfaction, and retention. By prioritizing peer-to-peer recognition, adopting targeted recognition practices, and acknowledging the significant impact of recognition on employee loyalty, organizations can cultivate a more positive, productive, and stable workforce.
Recognition Tips from the Healthcare Industry
Drawing on Perceptyx’s industry-specific work in healthcare, here are several 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 in rounding huddles.
- Encourage work-life balance: Healthcare workers often work long and demanding hours, and it's essential to encourage work-life balance given the 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.
- Foster a recognition-rich environment right on the frontlines: Equip frontline and customer-facing teams with easy-to-use recognition tools and set clear goals for regular peer-to-peer acknowledgments, while training leaders to offer genuine, specific feedback. Celebrate team achievements publicly to normalize and emphasize the value of collective effort and shared successes, embedding a culture of appreciation at all levels.
Make Recognition Work for Your 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 challenges of employee burnout and attrition, Perceptyx can help.