4 Ways to Start Recognizing Employees

Recognizing employees doesn’t always have to be a formal, stringent process.

We recently had two people at our company organize a surprise baby shower for another team member. They took the initiative to communicate (secretly) with colleagues, collect money from those who wanted to contribute, order food and purchase gifts. All for someone who had only been with us for 2 months at that time.

When one of the “co-conspirators” led the soon-to-be-mother into the room and the lights came on, she was completely surprised (success!). As we gathered around to unwrap gifts and share baby name suggestions, she teared up thanking everyone for the gesture. After grabbing a slice of cake, we were all engaged in conversation about family, kids and more. It was a powerful experience for everyone and we all left feeling recognized and connected as a team.

Recognizing employees, making them feel appreciated at work is one of the requisite ingredients for high employee retention, engagement and performance. It’s why companies spend hundreds of billions of dollars annually (an estimated 1%-2% of payroll) on material incentives–gift cards, trips, merchandise–that fuel most employee recognition programs today. But how much does your company spend on surprise baby showers for employees? Probably much less than individual employees do for each other.

Related: Why Your Company Should Invest in Peer-To-Peer Praise

The fundamental flaw with most employee recognition programs today is that budget allocations largely ignore the informal social systems that successfully power human motivation, including feelings of appreciation. Instead, they spend billions on extrinsic incentives which in fact create transactional relationships with target behaviors rather than sustainable motivation.

Recognizing employees contributes to human motivation, which is where the term “employee engagement” stems from. There are countless definitions, but all would agree that engaged employees exhibit a variety of positive traits and behaviors–a few examples include cooperation, investing discretionary time and effort, and sharing new ideas. How many engaged employees do you think are exhibiting these high-performance behaviors because they’re incentivized every time they do so?

All of them.

I know what you’re thinking. An engaged employee is someone who is intrinsically (inherently) motivated to help colleagues and spend extra hours on a project. Not someone who is doing so for some transactional incentive (i.e. extrinsic rewards).

The truth is, engaged employees are acting for rewards too–just a very different kind. For engaged employees, their intrinsic motivation is driven by chemical “rewards” released by our endocrine system in response to certain behaviors.

As hunter-gatherers, chemicals like dopamine, serotonin, and oxytocin enforced critical survival behaviors by creating feelings of achievement, pride and belonging. While we may not be hunting for survival, these chemicals are still just as visible and crucial.

In their rightful pursuit of driving target behaviors and intrinsic motivation amongst employees, organizations have developed recognition programs built primarily around extrinsic rewards– which, unfortunately, have the opposite effect.

An analysis of 128 studies examining the effects of extrinsic rewards on human motivation concluded that these rewards significantly undermine free-choice intrinsic motivation. And when an established extrinsic incentive is removed, it “become[s] a negative reinforcer” of a target behavior.

In other words, target behaviors become increasingly dependent on extrinsic incentives over time–which can be costly. Wells Fargo employees, for example, created 2 million fake customer accounts in largely because of its extrinsic incentive system that rewarded this behavior. This costed the company $185M in fines, and negatively impacted the brand and its employees.

This is not to say that extrinsic rewards are not useful; they just aren’t as important as many make them out to be. Each of us is motivated differently, but research suggests that remuneration is one of the least powerful. Timothy Judge’s analysis of more than 90 studies with 15,000 total participants showed a 2% correlation between job satisfaction and pay. Another study by Kronos and the Workforce Institute found that compensation ranked 10th out of 11 as a reason for an employee resigning, whereas not feeling appreciated ranked 1st, with 60% of respondents citing it as the key factor in their decision.

So how can companies begin recognizing employees to foster this intrinsic motivation?

1. Fund micro-recognition for personal achievements and milestones

Small get-togethers and celebrations, surprise thank-you gifts or support for an employee going through a challenging time are some of the many ways employees are already recognizing one another. These “micro-recognition” systems are built on informal social interaction and are the primary source of appreciation employees experience daily. Imagine how much more impactful these efforts would be with corporate financial support. Making it a “match” contribution ensures employees are investing alongside the company.

2. Offer opportunities for employees to connect

Double down on activities which support employees self-organizing around shared interests and passions. From the intramural softball team to employee resource groups, activities are natural breeding grounds for cooperative behavior, performance opportunities and micro-recognition. Companies must view these as investments in motivation (not just employer branding).

3. Invest in leadership alignment and training

Company leaders set the tone, which means their engagement in micro-recognition behavior is essential. Leaders must be empowered to proactively look for opportunities to acknowledge someone at the start of a meeting, give a high-five to celebrate an accomplishment or organize employees to support a colleague, and reinforce these behaviors within their teams.

4. Pursue digital reinvention

Today’s employee recognition platforms are designed to support macro-recognition programs–managing reward rule sets, administering awards and creating a space for employees to publicly acknowledge one another through content and social badges. However, these “point solutions” are too siloed to effectively support micro-recognition – they are used by employees solely for recognition, and therefore lack the spontaneity and informality required to support micro-recognition. Macro employee recognition systems must become part of a broader employee engagement platform that employees use for a variety of purposes. 

An edited version of this article was originally published on Training Magazine under the title “4 Ways to Create an Intrinsically Motivated Workforce.”