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.
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.
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.
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.
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:
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.
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:
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.