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Employee recognition

Original authors: Michael Rose and Chris Wilson

Consultant author: Michael Rose

Summary

  • Recognition is about praising people for the great things that they are doing, rather than an incentive for reaching targets. (See Recognition and recognition schemes)
  • Recognition schemes range from the very informal, where managers concentrate on saying "thank you" to employees, to more formal corporate programmes. (See The recognition continuum)
  • A recognition scheme should be consistent with the culture of the business and the business's stated policies and values. (See Aims and objectives)
  • Engagement surveys and other business measures can be used to identify the starting position and then measure the impact of the recognition scheme over time. (See Developing the business case)
  • In designing its recognition scheme an organisation will need to decide, for example, how formal it wishes the scheme to be, the appropriate recognition criteria, and how nominations will be made and assessed. (See Designing the recognition scheme)
  • The type of recognition award on offer will depend on the nature of the scheme being run, but the impact should be through the recognition itself and not the award. (See Recognition awards)
  • Any recognition scheme will need to be branded, promoted and marketed to optimise success. (See Communicating the scheme to employees)

Overview

This section of the XpertHR good practice manual discusses employee recognition. It explains the importance of building a recognition culture, as well as providing guidance on introducing both informal and formal employee recognition schemes.

Recognition and recognition schemes

Recognition is "acknowledging or giving special attention to a high level of accomplishment or performance, such as customer care or support to colleagues, which is not dependent on achievement against a given target or objective" (Rose, 2011). Recognition is not about setting targets and rewarding people for achieving them; it is simply about recognising the great things that people are doing.

A recognition scheme formalises the act of recognition through a (typically) centrally managed and controlled process, often with nominations and tiers of awards.

If an organisation is serious about recognition, having a specific recognition scheme will be only part of building a recognition culture within the organisation. It will be important for the organisation to cultivate a management style that sees basic recognition as being part of effective management. As a matter of course, managers should be thanking employees for good work and contributions, and saying "well done" when it is merited, rather than commenting only on the negatives. This should be built into relevant training programmes, reinforcing for managers the power of positive encouragement.

Recognition and incentive

Recognition is the act of praise or thanks that leads someone to feel recognised for what they have done. This is quite different from an incentive that seeks to motivate an individual to do something. An incentive must be of value to the potential recipient, otherwise it will not incentivise. Recognition, on the other hand, does not require a high-value award, or indeed any award, although awards are common in recognition programmes.

The recognition continuum

Recognition can occur in many different forms and may be looked at as a continuum, as shown below (Rose, 2011).

Recognition continuum

Organisations often think it is necessary to take a more formal approach to recognition, and so start with a formal scheme. However, the day-to-day end of the continuum can have the greatest impact for the lowest cost. This can be achieved by ensuring that managers are aware of the importance of a simple "thanks" and recognition of employees, and that this forms part of the organisation's management training and development. As one moves to more formal recognition, there is a greater cost and more infrastructure is required.

The importance of recognition

The importance of recognition on employee motivation and engagement is well documented (Wagner & Harter, 2006 and Rose, 2018). It can be significant in how engaged employees feel at work, and a lack of recognition can have a detrimental impact on labour turnover. An employee who feels that their efforts go unrecognised is more likely to move on, potentially resulting in the loss of a valuable member of staff. Conversely, employees who have been recognised for their positive behaviour are more likely to exhibit those behaviours again, leading to further performance and/or productivity improvements for the organisation. Ensuring that employees are recognised will help to create a positive working environment, meaning employees want to come to work and make an impact.

Aims and objectives

The approach that an organisation takes to recognition should be driven by its values and strategic aims. As with any other initiative, simply introducing a recognition scheme is unlikely to have much impact unless it fits with the culture of the organisation.

It is fundamental that the organisation has a clear understanding of what it wishes to achieve by introducing the programme. Understanding what success will look like from the start will help the organisation to focus on the design and the measurement of the impact and success of the programme. This will enable the organisation to create a baseline against which it can judge and assess change. For example, success could be as simple as increased productivity or a reduction in absenteeism. Often it is to increase the recognition score in the engagement or employee opinion survey.

The clearer and more precise that the scheme's objectives are, the more likely it is that the scheme will be well understood by both employees and managers, and viewed as having merit. Backing and support from the top of the organisation will assist with the programme's success.

While recognition is important to most people, the format will need to differ according to the culture of the business. The following four themes reflect the most common ways in which recognition can have an impact, and are often the basis of the aims that are set.

Recognition and engagement

Many organisations have found that there is a strong link between employee engagement and a number of corporate financial metrics; there is also considerable research that supports this. Therefore increasing the level of engagement among the workforce is an important part of improving organisational performance. Recognition is a component of engagement and many organisations seek to raise levels of recognition as part of their desire to improve employee engagement.

Organisations may choose to include one or more questions on employee recognition in their employee engagement survey. This can provide both the rationale for introducing a recognition scheme and the means by which its impact can be reasonably measured.

For more information see Employee engagement surveys.

Recognition and values

Many companies have developed a set of corporate values to help reflect the culture and behaviours that they see as important. However, it can be difficult for organisations to turn the "values on a page" into real change in the way in which people behave. A recognition scheme can help by linking recognition and the values so that the scheme reinforces behaviours exemplifying the values.

One of the benefits of this approach is that it should allow the organisation to capture stories of things that people have actually done for which they have been recognised. These stories can be important in helping everyone to see what the values actually mean. A recognition scheme may, therefore, have as an objective helping to clarify what particular behaviours look like and so encouraging a behaviour or a change of behaviour among employees, linked to a business value or desired culture.

If a scheme is built around an organisation's business values, it is important that the senior managers of the organisation actually demonstrate and live the values themselves, or the programme is likely to fall into disrepute.

Recognition and creativity and innovation

Encouraging creativity and innovation is vital in most organisations nowadays. Research shows that incentives are more likely to limit thinking and reduce creativity. However, recognition can play an important part. Research found that recognised employees can be 33% more likely to be innovative and generate more ideas than those not recognised (Rose, 2018). Some organisations have taken this further and have recognition specifically where an innovation was tried but was not successful. For example, one global conglomerate has a "Dare to try" award.

Recognition and cross-working

As the complexity and range of products and services has grown, organisations have become more complex and flexible. There is a greater than ever need for interdependence and cross-working between different teams and departments. The effectiveness of inter-team or inter-department working is commonly covered in engagement surveys. Encouraging recognition between teams can help build cross-team cooperation, hence better organisational performance. Where this is one of the objectives of a recognition scheme, changes can be monitored through the employee engagement survey.

As an example, in a sales-driven organisation, the individuals from outside the sales team who have contributed most to the success of the salesforce could be invited to join the sales team at that year's sales celebration.

Recognition and customers

It is common across the service sector, for example in restaurants and hotels, for customers to be given the opportunity to give feedback on the service received from members of staff. However, other organisations could also consider what customers would want to recognise. An aim of a recognition scheme might therefore be "to improve customer service", which can also cover internal customers.

Developing the business case

As with any initiative, it is likely that a business case for an employee recognition scheme will be required. Before starting to build their business case, organisations should carry out both internal and external research.

They should assess what recognition is already taking place within their organisation. Even without a formal recognition programme there are likely to be managers undertaking good practice in recognising employees; they may be able to provide guidance on what is already effective, which could be leveraged going forward.

They should also look at what other organisations are doing around recognition, as well as what recognition scheme providers offer (see External providers).

A business case for a recognition scheme should cover the following:

  • Introduction/purpose: Include a short summary of the purpose of the paper and any driving issues that need to be addressed, such as those identified by employee engagement survey results.
  • What recognition is: Clarify that recognition is not the same as incentives. It is about changing behaviour rather than another form of reward.
  • Aims: State the aims of introducing the recognition programme. What is the purpose and what should change if it is successful? State the measures to be used.
  • Proposed approach: State what the programme will look like, which could be informal or more formal. The intention might perhaps be to start with an informal approach and build up to a more formal scheme over a longer period. If so, state the time frame.
  • Costs and benefits: Set out the costs. If the organisation is establishing a more formal programme there may be supplier costs as well as the costs of awards. Even if the programme is informal, there will be a time cost associated with developing communication materials and conducting employee briefings. Set out the benefits. These will be based on the aims, and could include higher engagement levels, better customer satisfaction or lower employee turnover.
  • Project plan/timetable: State when the programme will be launched and the steps needed to get to that stage.

Designing the recognition scheme

The characteristics of different types of recognition schemes are set out in the table below.

Types of recognition scheme
Day-to-day Informal Formal
Features Simple thanks, and possibly small gifts, to individuals and teams, primarily from the manager recognising behaviours, actions and outcomes. These should reflect business culture and values. Local or divisional, with awards. May involve nominations. Likely to be a high-profile corporate, division or site based scheme.
Cost Nil to low. Low. Medium/high.
Budget Likely to be a small local budget for managers to spend. Limited budget based on frequency. Set budget, normally at corporate level.
Time frame Frequent and any time. Periodic, typically monthly or quarterly. Often annual award, sometimes half yearly or quarterly.
Award Possibly just the thanks: oral, letter, certificate, email or intranet. Symbolic item such as cup, low-value gift such as flowers, bottle of wine, etc (value < £25). Possibly certificate/letter but also higher-value gift. May be able to choose from list or acquire through points system (value < £100). Higher-value awards (value > £100).
Ceremony May be in private, but ideally public, for example at a team meeting. Presentation at team, department or company-wide meetings. May feature in local newsletters, intranet and noticeboards, etc. Awards often made at major business event to maximise impact and publicity.
Process Locally managed but within simple guidelines and policy. Possibly some central system to enable gifts to be procured simply and quickly. May be nominations from peers or other stakeholders. Likely to be assessed locally by small group. Commonly formal nominations from peers, managers, customers, etc. Often escalated from local awards. May be multiple awards covering different behaviours, and individuals and teams.
Communications Normally none. May be local publicity to prompt nominations, and set out deadlines and behaviours to be recognised. Considerable publicity to stimulate nominations and raise profile of programme, desired behaviours, etc.
Administration Very little, if any, administration. Records may be required for gifts to ensure compliance with tax requirements. Coordination of nominations and scheduling of awards and local events. Records must be kept for tax purposes. Considerable coordination and administration required. Records must be kept for tax purposes.

Organisations need to ensure that they build a scheme that is appropriate for their needs. They should therefore consider the following in relation to their scheme design:

  • Why does the organisation want to introduce a recognition scheme?
  • Is the organisation ready for a recognition scheme? If there is a lot of negativity or cynicism or a lack of trust among its employees, other actions may need to be taken first to address these issues; they are unlikely to be solved by a recognition programme alone and the programme may fail.
  • How will the organisation benefit?
  • What pockets of good practice already exist in the organisation and how might these be leveraged?
  • How are employees likely to react to the programme, and what is likely to work in making them feel recognised and valued for their behaviours and contribution?
  • How can the programme be kept as simple as possible? Over-engineering the processes is likely to put people off.
  • How ambitious should the scheme be? A scheme can develop and grow over time if it is successful, but withdrawing or reducing the programme could have a negative impact.
  • How can the organisation ensure that the programme is affordable, and that there will be a return on the investment? Any administration cost should not outweigh the anticipated benefits to the organisation.

In addition to the main objectives of the recognition scheme, which might include, for example, increased engagement and better cross-working (see Aims and objectives), the scheme may be designed to offer other opportunities. For example, does the organisation want to be seen as being in touch from top to bottom? If this is the case, involvement of senior management in the recognition process may help. This could entail, for example, a personal email or letter/certificate indicating that the employee's behaviour has been recognised at a senior level, or the chance to attend a lunch with members of the senior management team.

In designing their programme it is important for organisations to consider what other initiatives they have in place for incentivising and encouraging behaviour. They should ensure that there is no conflict or contradiction between programmes or reward mechanisms in what is being encouraged or recognised, as this may result in both programmes being undermined.

Project team

It can be effective for an organisation to approach the design of its recognition scheme as a project, particularly if the scheme will be operating company-wide or nationally. The team responsible for this should consist of a mixture of individuals from various levels within the organisation, who are tasked with developing a proposal, probably under the guidance of HR. As recognition should be part of the training of line managers and others, a representative from the learning and development function should sit on the project team. This will ensure that the importance of recognition, and how to do it, is built into the relevant training and development programmes. The terms of reference should be set by HR/senior management to ensure focus, and clear objectives and timescales.

Understanding the expectations of the target community will be very important. Often individuals think they know what will engage a particular population without actually asking the target group. Small focus groups or a questionnaire may, therefore, be helpful.

The final proposal can be put to a senior management "supervisory board" for review. Senior management endorsement is likely to be a key factor in the success of the programme. However, the organisation must be committed to implementing the programme before the project team is formed. Forming the team will raise expectations among the workforce, and if the programme is not subsequently implemented this may work directly against the increased engagement sought.

If the programme designed by the project team is adopted, the team can become scheme advocates and champions and help with promoting and explaining the scheme and its goals.

Consideration should be given to launching the scheme as a pilot, perhaps in one location or division. This will enable an evaluation of the scheme's effectiveness and allow any procedural issues to be smoothed out. This will be important if expensive publicity and materials to support a major business-wide launch are planned.

Setting the recognition criteria

The criteria for the recognition programme should be as straightforward and as easily described as possible. Even in informal schemes, it is important that there is a degree of consistency in the behaviours that merit recognition, so setting standards is important.

Setting the criteria and the "qualifying level" for recognition schemes can, however, be a challenge. Successful formal schemes tend to be ones where the award commands respect and the nominee feels chosen from the crowd. However, if the criteria are too hard to satisfy this may result in few or no nominations, and the scheme may be discredited and forgotten.

In informal schemes it is often line managers who identify the behaviour and decide on the recognition. However, in more formal schemes there is often a nomination process, and the understanding of the criteria needs to be wider, covering both nominators and assessors.

It should be clear to both nominators and assessors what sort of behaviour or results meet the criteria for an award. Clear written guidelines detailing the criteria for awards should therefore be drawn up and made available.

Frequency and spread of awards

A number of different approaches can be taken to the timing/frequency of awards. Day-to-day and informal recognition should be encouraged all the time, as immediate recognition can be the most powerful. Recognition itself must not be limited to a quota; the culture of recognition needs to be emphasised rather than the focus being on awards.

With formal schemes, ideally everyone who demonstrates the criteria set should qualify for the designated award. However, this could be very difficult to manage and budget for. With such schemes it is therefore often necessary to have a process in place to select who will receive an award. This approach requires evaluation and perceived fairness and equity, so can be slower and more bureaucratic. If possible, all those meeting the criteria should receive some recognition even if this is only a personal "thank you", or a mention on the intranet or in a meeting. Low-value awards can be used to increase the number of awards that can be made.

One approach that satisfies both the need to recognise all those who meet the criteria and the desire to have high-profile successes and awards for some is a tiered approach. All nominations meeting the criteria receive a low-value/non-cash award, and there is then an evaluation process at the next stage. There may be, for example, bronze, silver and gold, or quarterly and annual higher awards. In this way the best submissions potentially receive greater recognition and possibly multiple awards. This approach can recognise all those satisfying the criteria, generate interest across a wide cross-section of the business and create exemplars of the desired or targeted behaviours.

An alternative approach to consider is using some form of draw or online gamification. In such a scheme, rather than simply receiving an award, an individual who has been recognised will be eligible for entry into a prize draw or to play an online game to receive a gift. This has a number of advantages, including the following:

  • Evidence suggests that the anticipation of winning a prize can be as positive as directly receiving an award.
  • People may see this as more equitable as many more can be given the chance to play the game rather than a perceived select few receiving an award with others feeling left out.
  • Even with low-value awards, the costs can mount significantly where they are widely used. However, using this approach means that budgeting can be done exactly.
  • A draw can add an element of fun and does not diminish the value to the individuals as the emphasis remains where it should be - on the message and not the award.

Making recognition nominations

Many schemes will want to recognise positive behaviour everywhere, meaning that nominations could come from the individual's line manager, peers, other managers, customers, other third parties like suppliers, or any combination of these.

Where an organisation wishes to seek nominations for customer service from customers, clearly the customers need to be made aware of this and encouraged to make a nomination, including details of the behaviour that merited recognition. In restaurants this is often done with a tick box form when the bill is presented or via a weblink to a form. Other organisations encourage customers (or service users, clients, etc) using posters and an email address. It is common for call centres to refer callers to an automated survey at the end of the call, or send follow-up emails. In some organisations communicating with customers and motivating them to act may be more difficult. This can be overcome by offering an incentive to customers to provide feedback, for example entering the customers into a prize draw.

The nomination process should be as easy as possible, and require the minimal information needed to make a fair assessment. Long forms requiring the behaviour to be described in great detail will deter all but the most committed, and could lead to the wrong individuals being rewarded if some nominators give up. Guidance should be prepared so that it is clear how the nomination process works. It may also be necessary for the organisation to make clear that self-nominations are not permitted.

In some programmes, nominations are made behind closed doors, for assessment by senior managers. Often there is no prior publicity for these awards and they can have a very profound impact. For the individual it comes as a complete surprise but means that what they have done/achieved has been recognised at a senior level within the business, which can have a real impact on their engagement.

In relation to a formal recognition scheme, nomination submission deadlines may be required if awards are to be made at key events or on a time-driven basis, such as quarterly or annually, and these deadlines will need to be clearly communicated.

The type of workforce is likely to influence how nominations and the associated processes are managed. If there is a diverse workforce distributed widely, or home based, a different approach may be required than where all the employees are office based, online and in one location.

Assessing nominations

It is important for organisations to consider who will make the assessment of recognition nominations. Schemes can be most effective with spontaneity and decisions made quickly at line management level; the recognition comes close to the action of the individual and is current in the minds of peers.

Where their scheme has a high profile and involves valuable awards, many organisations set up a panel to undertake the evaluation of the nominations. This often consists of senior managers. However, to give greater credibility to the process the panel should involve individuals from various levels in the organisation, including previous award recipients. These individuals can also act as champions to promote and communicate the scheme.

The individuals undertaking the assessments will need to receive guidance and training on what to look for and a standard to follow to ensure reasonably equitable treatment of the nominations.

The formal recognition scheme process

Where a formal scheme is adopted, the recognition scheme is likely to follow the process shown below.

Possible formal award

External providers

There are many third-party providers that can operate and manage recognition schemes for organisations.

If a recognition programme involves making awards or gifts of some value, deciding what to award employees can be a challenge. It can also be difficult to choose items that will be perceived as having value for the individuals concerned. Many organisations therefore turn to outside providers to manage the supply of recognition awards, as they will have access to a wide range of gifts. In some schemes, the employee is awarded credits or points or an amount that they can spend or to which they can add to obtain a gift of choice from a wide range of options provided by the supplier. Organisations should also consider whether or not they want a provider to have a suitable gamification model that would meet its needs.

One benefit of using an external provider is that there should be good reporting available within the provider's system, which will assist with tax compliance (see Taxation). Using an external provider can also help to reduce the amount of time spent internally on sourcing suitable awards. However, using an outside provider does require management and often has a cost associated with it. It is important for organisations to choose a provider carefully and test thoroughly any portal or system for reliability, user friendliness and accessibility. Any provider should have alternative arrangements for members of the workforce who are not online.

If an external benefits portal is adopted it is important that "spending" of the award is monitored, particularly if the website operates an expiry date for awards, as some recipients take considerable time to make selections and may need reminding.

Recognition awards

It is important for organisations to remember that the impact of recognition is through the recognition itself and not the award. For the day-to-day and more informal arrangements there may be no tangible award, just a "thank you" delivered in the most appropriate way, ideally in public. Such spontaneous demonstrations of recognition can be built on by having a special "trophy" that is passed on to the next successful individual.

Even if recognition takes a tangible form, this need not necessarily be a gift. A letter or email from a board member, a desk trophy, a framed certificate, or displaying the winner's photograph on the noticeboard for a defined period of time can all be effective. Giving the successful employees or teams something that can be displayed in the workplace can give additional public recognition. Research suggests that these symbolic awards of no financial value can have much greater long-term impact than a gift that is soon forgotten.

Where a gift is given it should not be cash. This is to differentiate recognition awards from salary and bonuses, for both managers and recipients. One company reported that the use of its £500 cash recognition awards went up significantly when the annual pay review was cut, suggesting that the awards were not being used as intended. Small cash awards have little, if any, impact as they are easily absorbed into everyday spending.

Non-cash gifts can also have more memory value. If chosen well they can be more personal and have a higher perceived value. For example, for a highly paid employee, a cash bonus of £100 might not mean very much. However, a bottle of good champagne with a note of thanks would be entirely different. That £100 of cash would have been converted into something appreciated.

Even where tangible awards are used, it does not mean that they need to be given to everyone (see Frequency and spread of awards).

One award option that is now common is to enable individuals to nominate a charity to receive a donation from the company as an award. This can be particularly effective for team awards. It is also likely to reduce any allegations of "favouritism" towards particular employees, while still giving significant recognition. In addition, it can assist with the employer's corporate social responsibility agenda.

If the organisation wishes to promote role models, presenting awards publicly will assist with this. Where the recognition programme is informal, this could entail a presentation at the weekly or monthly team meeting. This can be particularly effective where employees value the recognition of their peers.

Who to recognise

The objectives of the scheme and the culture of the business will usually determine who is going to be eligible for nominations and for recognition. Schemes focused on external customer contact will, for example, limit the eligibility to those who have external customer contact.

All employees should be recognised for the great things that they do. However, the form of recognition may well differ by level in the organisation. For example, many organisations limit the nominees under a formal scheme to more junior staff, as they consider that senior employees have a higher profile and do not need recognition in this public form. Where a scheme encourages peer recognition, the employer may choose to allow anyone to nominate anyone else, and powerful recognition may occur when employees nominate their manager.

Some organisations take an open-to-all approach, allowing even senior staff to be nominated for their formal scheme. When assessing if recognition is merited, the assessor needs to take account of the individual's position and what is normally expected of a person in that role. A scheme that appears disproportionately to recognise senior employees will soon fall into disrepute. Recognising a junior employee who proposes a minor change to working practices may have a more positive impact than recognising a senior manager who finds a way of saving a significant amount of money.

In line with their objectives, many schemes recognise teams as well as individuals. They sometimes incorporate cross-functional or cross-departmental awards to encourage the breakdown of internal barriers and effective working between departments or sites, or overall business efficiency.

Care needs to be taken when recognising teams, as it can be difficult to determine where a team starts and finishes, particularly in relation to large projects or informal fluid teams. Leaving some people out can cause resentment and undermine the positive outcomes.

Communicating the scheme to employees

As with any major corporate initiative, the publicity and communication around launching a recognition scheme will be critical to its success. Organisations introducing an informal, local approach based on manager recognition are best doing a soft launch without publicity. Where such an approach is adopted, the change in manager behaviour should speak for itself.

More formal schemes will need to be actively promoted both before and after recognition with a clear communications plan. Posters, flyers on desks and payslip inserts are traditional forms of promotion of a recognition scheme, while promotion of the scheme by senior managers in team meetings and general corporate communications will illustrate their support for the plan. Social media, company intranets, email, online payslips and self-service portals are also all low-cost and effective methods of promotion.

The scheme design and the budget available will also shape the focus of the communications. No publicity is really required in relation to a simple scheme run by local managers spotting behaviour that deserves recognition with a small award or voucher.

Most organisations that are managing a major launch will want to "brand" their recognition programme, so that it develops its own personality and enters the language of the organisation. Many will want to incorporate a fun element and the branding should reflect the culture and behaviours that the organisation wishes to promote.

Recognition schemes usually require communication across the organisation. The communication will serve two purposes: promoting the launch of the scheme, and reinforcing the importance of the behaviours and actions being put forward as the trigger criteria. This will help employees to be aware of the desired behaviours/values, and assist managers and other employees in recognising the behaviour in their colleagues.

To encourage and publicise the nomination process, organisations could consider providing a benefit for nominators during the first few months of their scheme. For example, all nominators could be entered into a prize draw, a token award could be given to the nominator of the winning submission, or the name of the nominator of the winning submission could be publicised.

One challenge of recognition programmes is that the publicity needs not only to launch the scheme, but also constantly to remind individuals of the award criteria. As the scheme will often run throughout the year there will need to be frequent reminders, so that the programme is regularly brought to the forefront of people's minds. Running countdowns to nomination deadlines on a company intranet is an easy way of drawing attention to the scheme.

It can be helpful if examples of the desired behaviours or values that are likely to be recognised and merit an award are used in the communications. It may also be useful to include examples of completed nomination forms.

The successful candidates can be one of the best forms of publicity. For example, their awards could be presented at team, department or company-wide meetings or other company events, and their achievements recorded in the company magazine or on the intranet.

Publicising the winners will give the programme transparency regarding who won and why. Telling the story behind the achievement will demonstrate the benchmark against which others can assess the level of behaviour or contribution that is likely to result in future awards, and will help to attract future nominations. It will also make the scheme real for those who know or work with the winners. Many organisations capture the stories behind the nominations to demonstrate what a particular value looks like in reality.

Managing the recognition scheme

Administration

Even if only a very informal recognition programme is introduced, it is wise for the organisation to appoint someone to coordinate the programme. The scheme administrator/coordinator can be the point of contact for information about the scheme, oversee the processes, potentially order the awards, gifts, vouchers or certificates as appropriate, and ensure their delivery, as well as keeping records. Additionally they should have an overview of the assessment of nominees to ensure a common standard, and train and guide evaluators if appropriate. The more formal the scheme, the more important it is for the organisation to appoint someone to coordinate the programme, carry out the administration and manage the budget.

Taxation

A gift or anything of financial value awarded as a result of employment will be taxable unless it is considered "trivial". HM Revenue and Customs (HMRC) currently define trivial as a gift that cannot cost the employers more than £50 (including VAT) per employee per event.

Giving someone a gift and then deducting the tax from their pay can be demotivating and is likely to undermine the purpose of the scheme in recognising excellence and achievement. The tax and national insurance contributions payable on minor items can be paid annually through what is known as a PAYE settlement agreement (PSA), which will need to be set up with the tax office annually. In order to operate a PSA, an organisation will need to record who received the award, the value and date of the award and the marginal tax rate applicable. From this information an assessment can be made and the appropriate tax paid to HMRC with no impact on the employee.

Further guidance on the tax exemption for trivial benefits is available on the HMRC website.

Reviewing the scheme

Organisations should review their scheme regularly, particularly in the early days. This could perhaps be done after three and six months, and then annually.

If a clear set of objectives is set at the start of the recognition programme and a baseline identified at that time, the impact of the recognition scheme will be easier to measure.

In reviewing their scheme organisations should consider the following:

  • How many nominations have been made? Too few may indicate that there are barriers to making a nomination easily or that the criteria for recognition are too demanding. Too many may indicate that the criteria are too weak or ill defined.
  • Have any individuals or teams won more than one award? This may be an indication of some underlying issues. Are there individuals who nominate too often, which may indicate that more training is required and/or that others need to be encouraged to make nominations?
  • Who are the nominations for in terms of location, level, department, etc? The organisation should seek to identify trends and bias and whether or not the message about the scheme has been consistently presented across the business. Is recognition reaching all employee groups, particularly those who are not office based or who have little or no access to computers?
  • What has the cost of running the programme been, and what is the perceived and measured impact on the business?
  • What has the impact been on employee survey feedback, both about the scheme itself and about the behaviours that were targeted to be recognised?
  • What is the view of managers on the impact of the scheme and potential improvements?
  • Is there any other data, including productivity data, absence statistics and exit questionnaires that can help assess the impact of the recognition programme?
  • Are the awards still appropriate? Do the award values need to be changed to reflect, for example, inflation?
  • What are users' experiences of the scheme? The organisation should collect feedback from award winners, other nominees and the nominators. Nominators can be asked if they found the process easy and how it could be made simpler, as well as whether or not they felt the evaluation process was transparent, fair and equitable. Where their nomination was not successful they should be asked if they understand why this was the case. Nominees can be asked how they felt about being nominated, and whether or not being nominated influenced them to change their behaviour or way of working, as well as their views on any award received.
  • Are the objectives of the programme still appropriate for the business? Over time, the organisation's objectives and priorities may change.

However successful a recognition scheme is, after it has been running for a while, it may start to appear "tired" and lose impact, meaning that it needs to be refreshed and re-promoted. This can be done by making changes to the frequency or nature of awards, or rebranding. For example, where recognition has been introduced through local informal schemes, greater interest may be stimulated by adding additional higher-profile tiers.

Case study

Read how Creed Foodservice introduced an employee recognition scheme, and the subsequent impact it had on areas such as staff turnover and recruitment.

Key references

"A guide to non-cash reward", Rose, M, Kogan Page, 2011
"The elements of great managing", Wagner, R and Harter, J, Gallup Press, 2006
"Reward management", Rose, M, Kogan Page, London, 2018 (2nd edition)
"The 1001 rewards & recognition fieldbook", Nelson, B & Spitzer, D, Workman, 2003
"The carrot principle", Gostick, A & Elton, C, Free Press, 2007
"365 ways to motivate and reward your employees every day with little or no money", Podmoroff, D, Atlantic, 2005