Article Summary
- Why employee recognition is a powerful tool in maintaining engagement, performance and resilience—especially during tough economic times.
- How to create low-cost, high-impact recognition strategies that feel authentic and align with organisational values.
- The importance of manager-led and peer-to-peer recognition in building a culture where people feel valued and motivated.
The UK’s Employment Rights Bill, heralded as the most significant overhaul of workers’ rights in decades, presents new challenges for businesses. With implementation costs estimated at £5 billion annually, according to government analysis, the bill will hit smaller businesses particularly hard, affecting the 13 million workers they employ. Add to this the recent rise in employer National Insurance contributions and organisations are finding themselves under increasing financial strain.
Amid these pressures employee engagement and morale remain critical to organisational success. Yet with budgets tighter than ever organisations must reimagine how they reward their employees. The answer lies in recognising and appreciating employees in ways that are meaningful but not financially burdensome. Non-financial recognition, when done authentically, has proved to significantly boost satisfaction, motivation and retention.
Research by Teresa Amabile and Steven Kramer in The Progress Principle shows that celebrating small wins creates a positive feedback loop where employees feel valued, inspired and empowered to perform at their best.1 As they say: “Of all the things that can boost emotions, motivation and perceptions during a workday, the single most important is making progress in meaningful work. And the more frequently people experience that sense of progress, the more likely they are to be creatively productive in the long run. Whether they are trying to solve a major scientific mystery or simply produce a high-quality product or service, everyday progress – even a small win –can make all the difference in how they feel and perform.”
Similarly, a 2018 Bersin by Deloitte study found that high-performing companies are 1.7 times more likely to embed elements beyond compensation, benefits and wellbeing, such as frequent recognition into their core business strategies.2 For HR leaders the challenge is to build a culture of employee recognition that is authentic, aligned with organisational goals, and impactful, even when financial resources are limited.
Why recognition matters more than ever
Recognition is about more than boosting morale, it’s a powerful driver of employee engagement, performance and retention. In today’s climate of rising costs and regulatory changes it also serves as a critical tool for maintaining organisational resilience.
Research of 786 HR leaders by SHRM and Workhuman (then Globoforce) finds that employee recognition programmes help with employee experience (89%), employee relationships (86%), organisational culture (85%), employee engagement (84%) and organisational values (83%). It concludes that well-structured recognition programmes foster supportive feedback environments, reduce turnover and improve recruitment outcomes. Employees who feel appreciated are more likely to stay committed, work harder and advocate for their organisation.3
Meanwhile, separate Bersin research finds that companies with a “recognition-rich culture” vastly outperform others – and only 17% of the respondents fit into this category. In particular, the top 20% of these companies have a 31% lower voluntary turnover rate.4
Employee recognition also aligns with fundamental human needs. People want to know that their efforts are valued and their contributions make a difference. When these needs are met employees are more likely to feel connected to their work, their team and their organisation’s mission. This connection is especially important in times of uncertainty, as it helps employees remain engaged despite external challenges.
An investigation by Rusin and Szandala into whether peer recognition points (PRP) systems, whereby employees are given points each period which can then be awarded to co-workers to show appreciation, genuinely satisfy employee needs for appreciation. It concludes that such systems significantly boost employee engagement and motivation by fulfilling the psychological need for recognition. Organisations with robust PRP programmes experience lower voluntary turnover rates and higher employee satisfaction.5
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Recognition without breaking the bank: Strategies for success
Creating a culture of recognition doesn’t require large budgets. What matters most is that recognition is meaningful, frequent and aligned with organisational values. Below are practical, low-cost strategies HR leaders can use to foster a culture of appreciation:
#1
Empower managers to lead employee recognition efforts
Managers play a pivotal role in creating a culture of appreciation. When recognition comes from a direct supervisor it carries more weight, because it acknowledges the employee’s specific contributions to their team’s success.
Actionable tip: Train managers to provide timely, specific and genuine recognition. Encourage them to praise employees during team meetings or one-on-one check-ins. Bersin research discovers that the highest performing companies are much more likely to train their people on feedback and give them guides and tools to make it easier.6
#2
Celebrate small wins
Teresa Amabile and Steve Kramer’s research emphasises the importance of celebrating incremental progress. Recognising small achievements helps employees feel that their efforts are noticed, building momentum and morale.
Actionable tip: Incorporate a ‘win of the week’ practice in team meetings to highlight individual or group successes.
#3
Encourage peer-to-peer recognition
Peer feedback is often perceived as more authentic, because it comes from those who work closely with the individual being recognised. Incorporating peer-to-peer recognition enhances camaraderie and creates a more supportive work environment. SHRM’s research finds that an organisation’s feedback environment is more likely to be supportive when human-centred approaches such as ongoing peer feedback, frequent performance reviews and recognition tied to core values, are adopted.
Actionable tip: Implement simple tools, such as virtual kudos boards or employee recognition apps, where colleagues can share positive feedback and celebrate each other’s contributions.
#4
Tie recognition to organisational values
When recognition is linked to the organisation’s core values it reinforces desired behaviours and strengthens cultural alignment. Employees are more likely to feel that their work contributes to a shared purpose.
Actionable tip: Create awards that reflect organisational values, such as Innovation Champion or Collaboration Star. Publicly celebrate recipients to reinforce the importance of these qualities.
#5
Celebrate personal milestones
Recognising life events, such as work anniversaries, birthdays or personal achievements, helps employees feel valued as individuals. These gestures show that the organisation cares about their wellbeing beyond their professional role.
Actionable tip: Use personalised messages or small tokens of appreciation, such as handwritten notes or team celebrations, to mark milestones.
Avoiding the pitfalls of inauthentic recognition
While employee recognition is powerful it must feel genuine to be effective. Employees can quickly spot insincere praise, which can do more harm than good. To build a culture of authentic recognition:
- Be specific: Avoid vague comments like “good job.” Instead, explain exactly what the employee did well and why it mattered.
- Be consistent: Recognition should not be reserved for special occasions. Incorporate it into daily practices to create a culture where appreciation is the norm.
- Be inclusive: Ensure that recognition efforts are fair and equitable. Avoid favouritism by acknowledging contributions from employees across all levels and teams.
Linking recognition to organisational goals
Effective employee recognition programmes don’t just boost morale, they also advance business objectives. Research shows that frequent, values-driven recognition can enhance key outcomes such as productivity, retention and innovation. By aligning recognition with organisational goals HR leaders can create a culture where employees feel both valued and motivated to contribute to the company’s success.
The We invest in people framework indicator of Recognising and Rewarding High Performance provides a valuable framework for achieving this alignment. High-performing organisations:
- Involve all stakeholders: People are involved in designing the organisation’s approach to recognising and rewarding people
- Have a culture of appreciation: The organisation’s culture fosters appreciation, and people feel valued and recognised for their efforts and performance
- Develop and implement tiered recognition programmes: High performing people and teams received greater financial or non-financial rewards.
Conclusion
Employee recognition is one of the most cost-effective ways to build a positive work environment and enhance employee satisfaction. When done authentically it creates a culture where employees feel valued, engaged and connected to their organisation’s mission. By adopting these principles HR leaders can create meaningful recognition programmes that align with organisational goals and support employees’ wellbeing, proving that rewarding high performance doesn’t have to come with a high price tag.
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Sources
- Amabile, Teresa M., and Steve J. Kramer. The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work. Harvard Business Review Press, 2011.
- Deloitte Insights form Impact 2018 https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/audit/ca-audit-abm-scotia-insights-from-impact-2018.pdf
- Designing Work Cultures for the Human Era https://www.businesswire.com/news/home/20180124005549/en/SHRMGloboforce-Survey-Reveals-Human-Centered-Approaches-in-the-Workplace-Help-Organizations-Better-Recruit-and-Retain-Employees
- New Recognition Research: A Hidden Secret to Talent Management https://joshbersin.com/2012/06/bersin-launches-new-recognition-research-a-hidden-secret-to-talent-management/
- Rusin, N. and Szandała, T. (2024), “The power of peer recognition points: does it really boost employee engagement?”, Strategic HR Review, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/SHR-06-2024-0040
- The Performance Management Maturity Model, Bersin, Deloitte Consulting LLP / Kathi Enderes, PhD, and Matthew Deruntz, 2018.
