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We all want to be recognized for our contributions. While in the past recognition often focused on big milestones—the gold watch for longtime employees, for example—today employees want more regular recognition, such as the callout in the all-hands meeting that someone signed a new client, or praise for exceeding a client’s expectations. And these moments don’t just provide personal “feel good” gains. Data show that they can also help the company’s bottom line.
New research from Workhuman and Gallup published this March shows that employee recognition could offer meaningful cost savings to organizations, on top of savings from increased retention. These come from increases in productivity and reductions in safety incidents and absenteeism.
Key findings
- Fewer than one in four employees strongly agreed that they were satisfied with the amount of recognition they receive in general. A lack of regular recognition can affect retention.
- Recognition can increase employee engagement, which has been on a decline since 2020, and productivity. Engaged employees work harder and produce higher-quality work, as judged through increased ratings of their team’s performance.
- Having a culture of appreciation creates a workplace where employees want to be instead of where they have to be, reducing absenteeism.
- This can also reduce safety incidents, the authors write: Well-recognized employees are more likely to focus on their own work and help ensure that others operate in the safest manner possible.
As Sara Algoe, a professor at the University of North Carolina at Chapel Hill’s department of psychology and neuroscience, noted to the Wall Street Journal, recognition doesn't need to be complex to be effective. It should, however, follow a few guidelines for maximal impact that the study identified.
Before offering anything to your colleagues, ask yourself whether the recognition is:
- Fulfilling: Is recognition offered frequently, at least a few times a month?
- Authentic: Is it specific, not just a general “good job”?
- Personalized: Is it planned for a context that matches how the person would want to be recognized? Not everyone wants to be called out publicly.
- Equitable: Does it reflect achievements in ways that feel balanced across the organization?
- Embedded: Are the organization’s expectations clearly shared? Are they made explicit in documentation like an employee handbook or discussed in culture conversations?
You should also incorporate these guidelines into how recognition is delivered across your organization. Ensure that your managers are trained to recognize employees effectively, and build this framework into any existing recognition systems and practices. You can save or share this checklist as a Google doc or Notion page.
What to do
You can ensure that recognition becomes a core aspect of your workplace culture by:
1. Modeling recognition with your own team members and collaborators, and seizing opportunities to make it visible. For example, you could include a “team love” section in all-hands meetings to highlight colleagues’ good work on a regular basis.
2. Sharing recognition quickly, versus waiting for a “perfect” moment.
3. Considering the audience when giving recognition—public recognition benefits the giver, the receiver, and the audience, but should also align with individual employee preference. A call out in an all-team Slack channel is one way to do this publicly while also respecting employees who may not want to be put on the spot on camera or in person.
4. Remembering that recognition can and should be about more than just what work tasks staff accomplish. Show employees that you care about them as people by recognizing other life milestones as well, including getting married, having a child, earning a degree, or learning a new skill.
Charter's take
This study frames recognition as a seeming panacea for improving mental health. The researchers note that employees who rate their mental health as fair or poor have four times as many absences as employees who rate their mental health as good, very good, or excellent. But the authors too conveniently propose employer recognition as a way to get people in that first group back to work, thus reducing work absences.
In reality, this is a much more complex area to address. Business leaders tell us that employee mental wellbeing is one of the top issues they need to address this year—and it’s one that requires a multifaceted approach.
Further reading from Charter
- Charter’s guide to the most effective way to show employees gratitude
- Expert-backed best practices for employee recognition.
Methodology
To gather these findings, Workhuman and Gallup conducted a survey of 7,636 adults, a meta-analysis of 456 research studies across 276 organizations in 54 industries, and an ROI analysis of Bureau of Labor Statistics data. The cost-savings analysis included in this study looks at the impact on a 10,000-employee organization of doubling the amount of people in the average organization who strongly agree that they have received recognition or praise for doing good work in the past week. The Charter analysis took this initial cost savings research and added onto a look at this on a per person basis to make it more broadly relevant to organizations of all sizes.
Illustrations by Daniel Lee.
Key takeaways:
Recognition can lead to substantial cost savings for organizations through increased productivity, decreased injuries, and fewer unscheduled absences.
It is key when giving recognition to ensure that it is: fulfilling, authentic, personalized, equitable, and embedded.