Employee Recognition Strategy: Crafting solutions to shape culture and drive business outcomes

Employers face many challenges in attracting, retaining and cultivating talent to build organisational resilience in the face of changing industry trends, disruptive technological advancements and evolving customer expectations. Increasingly, organisations are striving to develop conducive workplace cultures that directly influence motivation, productivity and business performance. According to O.C. Tanner’s 2024 Global Culture Report, integrating recognition into everyday employee experiences significantly increases the likelihood of fostering a culture that enhances employees' sense of belonging, motivation for great work and desire to stay with the organisation.

But how can employers design and implement recognition solutions that address the expectations of a diverse workforce and appreciate innovation? How can strategic recognition make a tangible impact on business outcomes? More importantly, how can recognition become an unshakable part of the company culture?

To find answers to some of these questions, People Matters partnered with O.C. Tanner to host a riveting webcast discussing the importance of employee recognition in achieving business outcomes and nurturing organisational culture. With speakers Anita Guha, Talent & Growth Enabler in Transformations & Operations, IBM; Karan Bhasin, Director Sales, Recognition & Workplace Culture Strategist, O.C. Tanner IMEA; Pooja Chawla Sanghavi, Head - Performance Management and R&R, TCS and Seepika Singhal, Senior Director-Global Total Rewards, Brillio, the conversation delved into critical aspects of modern recognition programmes. 

How recognition can drive cultural and business outcomes

Employee recognition fuels passion and ignites the drive to succeed, as being appreciated for your work and effort is a fundamental human need, Pooja explains. Organisations need not just recognise people adequately but do it abundantly. Karan adds that recognition directly feeds into growth, business performance and talent retention.

According to O.C. Tanner’s research, different talent magnets attract people to organisations; one of these core values is a sense of purpose and contribution. Appreciation is the easiest way for employers to make employees feel valued and develop trust.

You can enjoy higher productivity levels and a positive organisational culture by simply acknowledging and rewarding outstanding work.

Anita says employee recognition is not an end in itself but a means to an end, as it acts as a lever to drive the behaviour change that leaders want. In other words, recognition is a powerful tool for cultural and behavioural change, as it encourages desirable actions and values. This means that recognition must be done thoughtfully and holistically, as we must design it around the change we want to see. Seepika adds that investing in recognition goes a long way in motivating and engaging employees while simultaneously resulting in higher talent retention, which brings down hiring and training costs. Hence, recognition must be tied to the organisational philosophy and business strategy.

Designing effective recognition solutions aligned with organisational values

Recognition reinforces core business values daily to create a positive environmental and cultural shift, so a conscious effort to exemplify organisational values is vital. At TCS, for instance, responsibility is a core value, and the recognition framework encourages and awards employees to volunteer in different verticals. Similarly, learning as a core value has translated into different recognition awards related to continuous learning, thereby influencing the desired cultural shifts by integrating positive values with the recognition process.

Seepika adds that balancing values with performance can help determine the right type of award to motivate people, as the goal is to drive a behaviour-oriented change. The recognition experience must also be carefully crafted, particularly for large organisations spread across different locations.

Regarding budgets, Karan suggests that different benchmarks suggest allocating anywhere between 0.2 to 1% of the total payroll toward recognition. To make recognition cost-effective, organisations can reserve a component of the appraisal or raise it specifically for recognition purposes, which can be significantly impactful in making people feel valued. Pooja adds that calculating the ROI for these costs can be counterproductive, and employers should focus on ROE or return on expectations. While some of these expectations may be quantifiable, others may require more creative implementation strategies. However, the core guiding principle must be recognising that the right people at the right time will yield the right results.

Making recognition more inclusive

Anita says that giving everyone the autonomy to recognise others and not limiting it to just the managers can be an effective way to make the process inclusive. As people recognise their peers and even leaders, it makes people realise the work that goes into it and who deserves it. At IBM, for example, they have a Blue Points Programme, where all employees receive certain points at the beginning of the year, which people can give to others as a means of recognition. These blue points also expire by the end of the year and have monetary value, and can be used by employees to claim items from the portal. 

Next, using technology to adjust the tone and emotion of your recognition so that you can communicate more effectively, along with removing unconscious bias, is essential. Seepika shares that while technology plays a vital role in making recognition more objective and personalised, the process still needs to be driven by people for it to be effective.

The top leadership must drive a culture of recognition, and specific safeguards must be in place to implement workforce segmentation for equal recognition.

The dashboards can play a crucial role in highlighting whether some employees are getting more recognition than others, which is also a nudge to reevaluate one’s unconscious biases if they exist. 

Measuring the impact of recognition programmes

Karan suggests measuring the impact of recognition on three different levels:

• Tactical Impact: Identifying how many people are actually participating in the programme and its adoption.
• Cultural Impact: Understanding changes in satisfaction scores and external recognition of cultural improvement.
• Business Impact: Correlating the effect of recognition on business parameters like revenue, growth, NPS scores and other KPIs.

Anita adds that applying the three elements of the theory of motivation, namely, expectancy, valence and instrumentality, can be an excellent starting point for managers and HR leaders. The idea of expectancy is essentially about understanding that your endeavours contribute to your performance. Instrumentality, on the other hand, pertains to how your performance connects to the rewards you receive. Finally, valence signifies the significance of these rewards to you personally. These three components can each be evaluated by seeking feedback on their effectiveness. Measuring these components can help you identify the successes and pain points of your recognition programmes. 

Furthermore, other critical recognition aspects are transparency and customisation to ensure maximum appreciation. Karan and Anita say that while many employees expect monetary rewards, research has also shown that these rewards do not drive the feeling of appreciation. The programme should be designed to account for varying expectations and needs.

At IBM, there exists a tool referred to as the "Fit for You Card," which is strongly recommended for use by all leaders within the organisation. Essentially, it comprises a checklist of items aimed at understanding employees' preferences. It extends beyond mere recognition, probing into areas such as whether an individual favours public or private acknowledgement. This seemingly elementary aspect, often taken for granted, acknowledges that some individuals may not be at ease with public praise, despite it being commonly perceived as optimal. The card also delves into preferences concerning communication styles, feedback reception, and other relevant aspects. It serves as a framework for managers to tailor their interactions with employees, serving as a significant motivator. This approach enhances visibility between managers and employees, fostering a better understanding and acknowledgement of what employees value. 

With AI technology creating tectonic shifts in the business world, HR leaders can leverage it to make recognition more personalised, gamified and automated while crucially maintaining the human touch necessary to instil the sense of value and fulfilment in employees.

Managers are and will continue to be the critical actors through which most employees will experience recognition, so enhancing their capabilities is also an integral part of the matrix.

Navigating challenges in implementing recognition

Anita shares that it’s better to err on the side of over-recognising employees rather than being overly restrained in your approach. At the end of the day, people thrive in environments where they feel appreciated, and thoughtful recognition that impacts employees sincerely is the surest way to influence your cultural, business and organisational goals.

However, one needs to be mindful of certain bottlenecks as well. Organisations must ask themselves: Are they simply implementing a program, or are they endeavouring to influence the organisation's culture? This distinction is crucial, emphasising a need for deeper consideration and thoughtfulness rather than a mere plug-and-play approach. Firstly, there's the need to delve deeper into the desired outcomes. Secondly, there's the issue of cash incentives, as touched upon earlier—a practice that doesn't yield optimal results.

Moving forward, there's a need to differentiate between compensation, incentives, and recognition. Organisations often struggle to segregate these three aspects, each serving distinct purposes that shouldn't overlap. Providing clarity on why incentives and recognition exist separately is vital; incentives are typically tied to specific achievements, while recognition is more discretionary. A common pitfall also observed is the practice of selecting employees for the quarter or month. While rewarding a select few from numerous nominations, this inadvertently overlooks or dismisses the efforts of the majority, creating a sense of disconnection or devaluation among others.

Another issue is the allocation of individual budgets versus business unit budgets for recognition. Individual budgets can lead to inconsistent utilisation, resulting in delayed or denied recognition. Moreover, there's a tendency to focus excessively on minor details during the implementation of recognition solutions, diverting attention from more significant aspects. Concerns such as developing approval processes for citation notes highlight this tendency to fixate on minutiae, potentially overshadowing broader objectives.

These pitfalls underscore the importance of maintaining perspective and prioritising key aspects within recognition initiatives. Additionally, there's a notable phenomenon where employees who receive multiple awards may develop inflated expectations regarding their performance evaluations and career progression. This misalignment between recognition and performance evaluation criteria can lead to disillusionment and feelings of rejection among employees. It's imperative to ensure clear communication regarding the rationale behind the recognition and its alignment with specific behaviours or achievements. This clarity helps prevent misunderstandings and preserves the integrity of recognition programs.

Final thoughts: The ABCDE of recognition strategies

In closing, Seepika introduces the ABCDE framework for designing effective reward programs. This is broken down into:

• Adaptability: It's important to accommodate diverse workforce demographics and arrangements, whether in-office, remote, or international.
• Benefit Perception: Rewards should be perceived as valuable by employees relative to the investment made by the organisation. Conducting surveys can help align rewards with employee preferences and perceptions.
• Customisation: The importance of customisation based on individual employee preferences and values is crucial. By offering a variety of reward options, such as cash, experiences, or merchandise, companies can cater to diverse needs and preferences.
• Delivery and Reach: Leveraging technology ensures seamless delivery and widespread reach of rewards. This includes integrating with social media platforms to enable employees to share their achievements with their networks.
• Ease of Administration: Lastly, streamlining administrative processes is essential to ensure the ease of managing the rewards program. Simplifying administrative tasks can enhance employee satisfaction and engagement with the program.

Employee recognition is undoubtedly a cornerstone of organisational success, influencing motivation, productivity, and talent retention. In a rapidly evolving business landscape, crafting effective recognition strategies will remain paramount. 

Watch the recorded webcast to learn more about the actionable strategies and best practices for recognising and rewarding your people. To dive deeper and learn more about how to strengthen your recognition culture and frameworks, please visit https://www.octanner.com/global-culture-report