According to the 19th century American psychologist and philosopher, William James, "the deepest principle of human nature is the craving to be appreciated." With such insight, James would have been welcome in the executive offices of any 21st century corporation. That's because leading organizations not only understand the mission critical importance of reward and recognition, but they understand what it takes to develop and implement an effective program.  

Increasing Your ROR: Return on Recognition

According to the 19th century American psychologist and philosopher, William James, "the deepest principle of human nature is the craving to be appreciated." With such insight, James would have been welcome in the executive offices of any 21st century corporation. That's because leading organizations not only understand the mission critical importance of reward and recognition, but they understand what it takes to develop and implement an effective program. 

Studies have long indicated that reward and recognition increase engagement, productivity, revenue and employee satisfaction as well as reduce absenteeism and turnover. In fact, research has shown that a lack of praise is consistently high on the list of reasons for leaving a job. 

And yet, the annual Hewitt 50 Best Employers in Canada survey shows that the average level of the Recognition driver is just 63 percent. It's perhaps not surprising then that research by the Corporate Leadership Council into the Employee Value Proposition (July 2009) reveals that "the intent to stay among high potential employees has dropped by 21 percent between 4Q2008 and the first half of 2009." Similar research indicates that the percentage of employees exhibiting high discretionary effort has decreased by more than half since 2005. 

Indicators like these clearly reveal an opportunity to increase employee engagement through effective reward and recognition programs. 

Principles of effective reward and recognition 
Most companies understand that an effective program starts with basic guidelines. The program should:

  • Promote the achievement of an organization's goals.
  • Fit with and support an organization's strategy and structure.
  • Promote desired task behavior.
  • Be seen as equitable.
  • Comply with the law.
  • Be within the financial means of the organization.
  • Achieve these goals in the most cost-effective manner.


In addition to these basics, organizations also need to consider the following principles for implementation: 

Consistency is key when it comes to recognition. A lack of consistency can create huge equity issues among employees and have the opposite effect on employee morale and engagement than intended. Once a specific behavior has been rewarded in one individual, it must be rewarded in all -- and it must be recognized with a reward of comparable value. There must also be consistency in terms of how the recognition is acknowledged within the organization. For example, if one person's recognition is communicated to the entire company, but another's is only communicated to the team, the latter individual will feel anything but rewarded. 

Timeliness is another important consideration. If you recognize an employee for a particular achievement or behavior, you should act as soon as possible. Otherwise, you run the risk of creating resentment that no amount of recognition will erase. Here again, you must remember to be consistent. If an employee waits a month for recognition that was given to a colleague within days, it minimizes the recognition, leaving the employee unappreciated. 

Face-to-face recognition is the most effective. The up-close and personal approach -- which can have literally zero cost --can also result in the biggest return. A verbal "thank you" to an individual or group sends the unequivocal message: "I saw what you did. I appreciate it. Here's why it's important. Here's how it made me feel." 

The nature of reward and recognition 
Building on this foundation, many companies employ long-standing, formalized programs that recognize their employees on a consistent basis according to organizational values and goals. For example, Ceridian benefits from a variety of programs that include:

  • Years of Service awards acknowledging loyalty
  • President's Circle awards to top 1 percent of high performers
  • Making Great Happen Champions awards for going above and beyond (based on peer nomination)
  • "I am the Difference" discretionary bonuses or gift cards
  • Public recognition from the president or business unit leader at quarterly national recognition events, in newsletters and at local events.


Diane Cothran, leader of employee engagement at Ceridian says, "It's important to design multifaceted recognition programs that acknowledge the range of motivational factors for different personality types and different roles. The most effective recognition can sometimes come in a form we don't anticipate. Some employees respond more positively to rewards and recognition that have a higher intrinsic value and satisfy the individual's sense of self-esteem, achievement, growth and development." 

While we might intuitively think that employees will react most positively to cash rewards, the response to such rewards can be short lived. Cash rewards can be confused with salary and may not be clearly perceived as recognition. In addition to meaningful gift card recognition programs, Ceridian provides a Manager's Tool Kit as a component to their reward and recognition strategy. It is designed to empower managers to ensure consistent, timely, face-to-face recognition that is suited to each individual. 

The Manager's Tool Kit points to the critical role played by managers. The manager/employee relationship is key to reward and recognition because that relationship is a key driver of both employee engagement and retention. Also, each individual responds to different forms of recognition. Ask 100 employees how they'd like to be appreciated and you'll probably get 100 different answers. And the person who best understands each individual is the manager. 

The tool kit is literally a toolbox like the kind that can be purchased at any local hardware store that the manager stocks with a variety of items, ranging from iPods, to coffee gift cards, to dinner-for-two vouchers and certificates entitling the employee to leave early or take a day off with pay. Of course, different managers will stock their tool kit with different items, depending on their team members. Like a toolbox at home, the Manager's Tool Kit is always on hand when needed. 

The many forms of recognition

  • Thank you e-mail copied to senior leadership
  • Recognition bulletin boards
  • Announcement in company newsletter or meeting
  • Team lunch
  • Flex-time
  • Attendance at conferences or industry events
  • Trips
  • Family events such as picnics and parties
  • Profit sharing
  • Certificates, trophies, plaques
  • Sales incentives
  • Gift certificates and online reward catalogs
  • Cash or special bonus
  • Days off
  • Company advancement

Reward and recognition isn't merely about making people feel good. A well-designed recognition program is an effective way of increasing engagement and improving the bottom line. Developing a program that works requires an understanding of both human nature and the nature of business today.