How Employee Recognition Affects Your Bottom Line
June 11 2022 - As a business leader, you focus on profits. After all, most business leaders are aiming for success, and a successful business is one that earns more money than it spends. Unfortunately, in your pursuit of profits, you might overlook more than a few elements of leadership that do not directly contribute to the bottom line - like recognition.
Employee recognition can be difficult for many business leaders who prioritize reducing expenses and increasing revenues, but if you can reframe recognition as a means to a profitable end, you might find more success in the endeavor. Here are some reasons that employee recognition is a matter that impacts the bottom line and how you can manage employee recognition effectively.
Employee engagement is the emotional commitment of an employee to their organization. The more engaged your employees feel in their roles, the better for your company. Engaged workers are more likely to feel connected to the core values and goals of your business, which will motivate them to put in more, high-quality effort toward their tasks and responsibilities. What’s more, employees who feel engaged are less incentivized to leave in search of other opportunities, as they tend to feel fulfilled by their current work. The result of employee engagement is more productivity and better performance, which absolutely has an impact on your bottom line.
So, how can you increase employee engagement? There are many tools and techniques for affecting how your employees engage with your company, and recognition has proven time and again to be among the best. Regular recognition shows your workers that you are seeing and hearing them, that their effort is not going unnoticed and that you appreciate the time they devote to your organization. With small acts of recognition, you can remind your employees of the importance of their work and recommit them to their responsibilities. With larger acts of recognition, you can reduce stress levels around your workplace and develop deep and lasting relationships with your workers.
Types of Recognition
There is no one-size-fits-all type of recognition that always works to engage your workforce and boost your bottom line. You will need to get to know your workers individually to better understand what engages and motivates them best. Here are a few types of recognition you might consider utilizing throughout your organization:
Financial recognition. When you are using recognition to positively impact your bottom line, you might be tempted to skip over any type of financial reward, like bonuses or raises. However, financial recognition can be a powerful tool for connecting quality of work with value. If a worker does exceedingly well in their role and earns the company remarkable business, you should recognize that work in a way that demonstrates how valuable their success is to you and your entire organization.
Formal recognition. Formal recognition is any type of recognition that follows a set schedule or structure. Employee anniversary recognition is often included in formal programs, as are employee award ceremonies. The reliability of this type of recognition keeps employees comfortable and reduces the impulse within the workforce to compete unproductively for attention from the boss.
Day-to-day recognition. Unlike formal recognition, day-to-day recognition involves daily actions that show your workforce that you are aware of and appreciate every employee’s contribution. This type of recognition might be small, but it should be meaningful and all but constant - like expressing gratitude during and after meetings or offering positive feedback when surveying a worker’s progress. Frequent recognition is imperative for maintaining engagement, so this type of recognition might be the most important of all.
Leader-to-team member recognition. This is the most widely established form of recognition because praise often flows from the top of an organization down. Leaders must recognize the effort and achievements of their teams; otherwise, team members will become disengaged, believing that their work is unseen and unappreciated by those in charge.
Peer-to-peer recognition. You can encourage your staff to recognize one another’s efforts through peer-to-peer recognition. Recognition from a peer can be as beneficial as recognition from a business leader, but you cannot force your workers to recognize one another. Often, this type of recognition develops as a result of a positive workplace culture, where employees are disincentivized to compete and instead encouraged to collaborate and support one another. Thus, to achieve peer-to-peer recognition, you need to put time and effort into improving your corporate culture.
Profits matter, but people matter more. By focusing most of your attention on the engagement of your organization’s employees, you will almost certainly find financial success.