Employee recognition has long been thought of as the lighter side of business management. The
notion conjures up images of office workers taking a break from the day-to-day routine to honor a colleague for many years of dedicated service with a gold watch or special dinner – a nice gesture, certainly, but nothing critical to the running of the business.

No longer. Companies large and small are realizing the
potential of employee recognition as a key component driving workplace morale, employee retention, and even global competitiveness.

For firms on the leading edge of progressive incentive and reward programs, the effort has little to do with mere ceremony. The stakes, in fact, could not be higher.

“We are on the verge of an imminent global talent crisis,” warns Christie Gibbons, executive director of Recognition Professionals International (RPI), formerly known as the National Association for Employee Recognition. “In the next 10 years, we will see a glut of people retiring. With this brain trust walking out the door, companies need to know how to retain talent.”

To do that, employers must know how to make workers feel appreciated on a level that resonates with them as individuals, experts say. This requires a multifaceted approach to employee recognition that demands more than a seat-of-your pants strategy.

“Companies must teach management to encourage effort and reward results,” says Chester Elton, co-author of The Carrot Principle, an analysis of best practices in employee recognition.

Elton cites a survey of 26,000 employees across 31 health care organizations. The study found that companies whose employees claimed the highest level of agreement with the statement, “My organization recognizes excellence,” saw a significantly higher return on equity, assets and operating margin. “Employers need to understand that recognition is good business,” he stresses
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As new forms of employee recognition expand across a growing spectrum of businesses, so do the opportunities for creative use of awards, gifts and promotional items. Far from becoming an anachronism, promotional products as a component of recognition has benefited from a burst of creativity as firms seek to recognize and encourage employees in ways that promote corporate values and goals.

Elton recognizes four primary blocks around which employee recognition programs should be built: honors for top achievers, day-to-day recognition, career recognition and special events. The creative use of products can play an important role in all of these strategies.

Rewarding the Top Dogs
Companies have long recognized the motivational power of contests and rewards – for
salespeople of the year, for instance. These types of recognition, in the form of prizes, bonuses, ceremonies or membership in “million dollar clubs,” continue to be important, even as companies discover new ways to spread a sense of achievement and reward across an entire workforce.

At Digineer, a Minneapolis-based technology consulting company, director of humann resources and recruiting Lucinda DuToit has received widespread praise for her Digineer University program, which combines professional development and employee rewards in a way designed to reach, and inspire, every one of the company’s 96 employees.

“The biggest thing for us is the intelligence and the knowledge building for our consultants,” she says. To impart loyalty and core company values, the program offers employees the chance to build up points as credit for classes attended. Point levels are posted online for comparison and friendly competition, and individuals earn prizes and rewards, such as company sweatshirts, T-shirts, camp desk chairs and laptop bags. The top prize is a $1,000 technology credit employees can use any way they want.

“They get a koozie just for showing up,” DuToit reports. “It’s to get people engaged in it right away, and to get them excited.”

“The nice thing is, because the program has been so successful, we’re now looking at the next level of gifts,” DuToit says. She is consulting with employees about what sort of prizes they would like to see.

“We’re not, as an organization, making an assumption about what’s cool,” she adds. “We’re asking what’s cool. It’s about listening to employees.”

Also listening is Renate Witthoeft, people experience partner on the HR team at 1800gotjunk.com, a Vancouver-based junk removal services franchiser.

“You really need to engage with your employees in terms of what motivates them,” she says. “We get that feedback from the sales agents. We ask them,what kind of prizes would you like? How do you want to be recognized?”

The company offers a variety of rewards, from digital cameras and iPods to trips for two to Las Vegas and Mexico, based on ever-changing criteria. Especially popular is the Mini Cooper, wrapped in the company’s logo, which top performers are given full use of (along with a primo parking space) for two weeks.

“A different component is recognized for each time,” Witthoeft says. “It could be for great customer service, most improved sales, or achievement of a personal best.”

Jenny Craig, the weight management services provider, offers employees a wide range of motivational rewards through its MOVE (Master Our Values Everyday) program. Employees earn points based on quality of customer service and clients’ success, which are tallied on a Web site. Points can be redeemed for jewelry, electronics, trips, clothing and other items, according to vice president of human resources and organizational development Chris Hilker.

The company is also proud of its peer-to-peer recognition program, whereby one employee can honor another for exceptional achievement by downloading a special certificate. The certificates can be presented directly to the worker or through their immediate supervisor, Hilker said.

At Avis Budget Group, the need to integrate new employees and re-enforce company values in the wake of Avis’ incorporation of Budget Rent-A-Car led to a comprehensive employee rewards program that has led 97% of employees to report they feel “part of the company,”
according to a study cited by Elton.

Having promotional items on hand for managers to recognize employees in a timely way is “critical” to the program’s success, Elton says, noting the company has 10 promotional items with the company logo available to managers – “practical things they can use in the workplace” like pens and calendars. Managers report success in their recognition efforts by contributing to an online program where information is shared across the company.

Good manager training is a key component of the best recognition programs, Gibbons says. Understanding this, RPI has begun a certified recognition professional program whose first class of 42 graduates was presented at the association’s annual conference in Savannah, GA, in April.

Candidates attended four intensive, all-day courses to learn theories and methods in implementing recognition systems. To be certified, participants must pass a test for each course.

Gibbons lists off a number of creative ways to recognize employee achievement, culled from a survey of the association’s membership. These include peer recognition programs, achievement bonuses, community spirit awards for volunteer work and awards for team building, innovative practices, promoting employee health or diversity and outstanding customer service.

Her key point: there’s no limit in the ways to honor people for the work they do – and no good reason not to.

Day-to-Day Rewards
This most obvious strategy for effective employee retention and moral boosting is, ironically, the one most-often overlooked. “I find companies are really good at recognizing top achievers. Where they really miss the boat is the day-to-day recognition,” Elton says. “Would you rather see a 10% performance increase in the top 2%, or a 3% performance raise in the bottom 98%? Most companies would choose the latter. The top achievers are maxed out anyway, so encourage and recognize effort anywhere you find it.”

Gibbons recommends having new hires fill out surveys, which can be updated periodically, so management knows how to recognize someone in a personal way. Someone with small children might appreciate flex time more than tickets to a concert, for instance. DuToit agrees. “Understand who your employees are and what’s important to them,” she says.

DuToit has seen first-hand the power of personalized recognition. When an employee’s overtime was putting a strain on family life and forcing her husband to pick up many more home duties, the company gave the spouse two Digineer golf shirts, hired a babysitter and sent him and his buddy out golfing for a day. In another case, to say “thank you” for working through a particularly challenging situation, the company paid for an employee’s wife and kids to sit for a special portrait, given to him as a surprise.

Of the latter gesture, DuToit said the employee’s response “gave me goosebumps. It’s simple things like that that really do a world of wonder.”

Along with such rewards, managers should also be taught to encourage employees, Elton says. This can be something as simple as thanking an employee for staying late when bad weather kept others in the office at home.

“Managers can get upside down because of the loss of a good employee, wondering how they can afford to increase pay or benefits,” says Jim Blasingame, host of The Small Business Advocate show and Web site. “Maybe all you had to do was let them know you valued their time and not take them for granted,” Blasingame says. “Every time you look at an employee you don’t want to lose, imagine there’s someone out there courting them right now. Make sure you catch people doing things right.”

Group Recognition
Companies are increasingly recognizing the power of special events as ways to promote team spirit, corporate values and a sense of pride and belonging. Brian Drum, CEO of New York-based, executive search firm Drum Associates, cites a client’s exclusive “fiscal fitness” outing, at which participants received gym bags with the company logo.

“People wind up carrying them around as a point of recognition. It shows they were invited to this boot camp.”

Another client gave out T-shirts to recognize a company-sponsored MBA executive program at New York University. For special events, such as sponsored marathons or charitable activities, firms have provided promotional windbreakers, mugs, messenger bags, computer pouches and backpacks.

“It gives a sense of belonging and ownership, and becomes a point of pride,” Drum says. “Doing something on a large scale helps everyone understand who they’re working for. All of these events need these logo-driven paraphernalia to tighten them up and help to create the right culture.”

Business events such as sales conferences offer similar opportunities. Among other items, Drum has seen the distribution of glass paperweights, hot mug holders and jars for paper clips.

“Whether it’s your company’s 30th anniversary, hitting a corporate revenue goal, a team achievement, or a holiday party, celebrations give you lots of opportunities to thank everyone and communicate ‘we’re in this together,’” Elton and Adrian Gostick write in The Carrot Principle. The authors praise a Salt Lake City firm, Intermountain Health Care, for its care in choosing a gift for the company’s anniversary. Organizers chose a custom watch displaying the corporate logo and anniversary theme, which executives believe was critical to the event’s success.

“The gift was not given as an everyone-gets-one-so-here’s-yours type of presentation,” Elton and Gostick point out. “The importance of organizational mission, values, history and quality was reinforced through the promotion of the celebration and at the actual event.”

Of course, smaller celebrations also matter as a way to show individuals and teams that you appreciate them. Bakemeawish.com runs a corporate loyalty program that makes it easy for companies to fete employees with personalized, gourmet cakes for birthdays and other events, shipping them overnight in a customized box.

The cake program “reinforces and improves brand image, employee morale and customer relationships,” company spokesperson Jenny Corsey says.

Birthdays and holidays take on special significance for the families of those in the military, and companies have stepped up lately in giving gifts to families of employee-reservists or employees with a spouse serving overseas, according to the RPI survey cited by Gibbons.

Inspiring Loyalty
Career recognition programs, which honor employees for a period of service or upon retirement, are all about loyalty. Even in today’s environment of increased turnover, with most workers staying at one company for no more than three to five years, these ceremonies still matter as a way to foster retention. In fact, some companies are finding ways to recognize employees after only a few months, or even right off the bat.

Elton and Gostick report that “welcome awards” are becoming more common, presented in tandem with interviews of recent hires that glean how the individual feels about their job. Pins with the company’s logo, an inexpensive watch, company jackets and luggage are just a few of the items used as part of these public recognition ceremonies.

“The important thing is that you can’t wait five years to show appreciation for loyalty in employees you wish to retain,” they say. “You start at 90 days.”

Longer-term recognition programs have helped companies buck the turnover trend. Jenny Craig honors employees at, 10, 15 and 20-plus years of service with points toward prizes, a recognition page on the company’s nationwide Intranet site and a special symbol worn on employee nametags: based on seniority, consultants will sport an amethyst, ruby, sapphire or diamond.

Name tags are an important part of company culture, Hilker explains, as they symbolize the one-on-one relationship employees build with clients. For many companies, symbols are an important part of reinforcing core values and making employees fell they are a key component of a firm’s success.

“Recognition engenders trust,” says Elton. Good programs make employees feel that their efforts will not only be noticed, but that they will be given due credit for them through meaningful channels, be it public recognition, a gift or symbol laden with significance, monetary rewards or a thoughtful comment from the right person.

“If your employees are happy, engaged, and know that you feel they are doing a great job, they’re going to stay,” Gibbons says. “That’s what you want.”

James Sturdivant is a freelance writer based in Pennsylvania.