Updated on Feb 08, 2021, for comprehensiveness
Is it worth investing in an employee rewarding strategy or not? What will be the benefits for your organization if you decide to adopt such a system and what impact will such a strategy have on the working environment?
In this article, we will study the importance of appraisal and the fundamental principles of employee recognition both from the business side and through the perspective of employees.
We will also analyze the benefits of employee remuneration but also consider the opposite side (what happens in work environments where there is a lack of recognition and appreciation of employee efforts), and we will look at some very interesting statistics and studies that will lead us to critical conclusions.
So let’s start…
Employee Reward Benefits
From a very young age, I had the good fortune to watch the benefits of rewarding employees in my parents’ business, who without much knowledge had adopted a similar system which had amazing results for the family company.
Even after so many years, they happen to meet people who worked in their business and the feelings of joy and appreciation are evident in the faces of these people.
It’s because they had a good time and enjoyed the work. They were productive because they knew that something good was waiting for them every Friday at the last minute.
Recognition is a basic human need.
When we recognize the efforts, dedication, and actions of employees we create a positive atmosphere which in turn fuels feelings of satisfaction and pleasure.
Their mood uplifts and they smile more. They dedicate themselves to their work and do not consider it a chore.
Dopamine is a neurotransmitter produced in the brain. Dopamine stimulates the parts of the brain (abdominal striatum and nucleus) that process rewards and creates positive emotions such as satisfaction and enjoyment.
Gallup’s article on employee praise states: “Receiving praise and recognition releases dopamine into the brain, which creates feelings of pride and pleasure. Even better, this dopamine extract enhances the knowledge that more of this behavior will generate more praise, resulting in the release of more dopamine and so on.
Otherwise, when people’s efforts are not recognized, they wonder, why should I do that? Nobody cares.
They are committed and loyal to the company and believe that they play a big role in its future. And it’s just like that.
When we recognize and reward accordingly the good performance and diligence, then in turn the employee concludes that we also realize that his efforts play a crucial role in the survival of the company.
The life of a company does not depend only on the decisions made by executives or owners. Each member counts, it is a team. No team can move forward without everyone participating.
And the teams that consist of dedicated and passionate executives are also the ones that stand out.
When employees are committed, they become more receptive to change, discussion, are more focused, and produce better results.
According to a ResearchGate survey
No organization in today’s competitive world can be superior unless each employee is committed to the goals of the organization and works as an effective member of the team. It is no longer enough to have employees who come faithfully every day to work and do their job independently. Employees must now think like entrepreneurs, work in teams and prove their worth. However, they would also like to be part of a successful organization that provides a good income and opportunity for growth and secure employment.
Better Performance, Increased Productivity
Recognition and reward lead to better performance. When employees have something to look forward to and know that their efforts will not be wasted, they deliver the maximum.
If we, in turn, reward their even better performance, we create an atmosphere that inspires even greater returns.
Employees whose performance is often rewarded are also more productive.
They may not use all the breaks at their disposal, they may work half, one, or more hours to complete a difficult order or repair a defective machine, etc.
Conversely, employees who consider their job a chore are not at all interested in results and will do anything to save more time for breaks, absences, and so on.
They will do the least they can to simply secure their salary.
According to TinyPulse, 69% of employees would work harder if they felt their efforts were better appreciated.
The percentage of employees who would work harder if they felt that their efforts were better appreciated
In environments where efficiency is embraced, the production of products and services proceeds without delays and problems.
Everyone is interested in the result and will do everything to overcome anomalies and frictions in production.
They know that if they can produce faster the company will reward them. The company will also gain prestige and satisfied customers will recommend new customers. It is a positive cycle that leads to evolution and progress.
Productive companies operating under a climate of trust and mutual solidarity make greater profits.
Production costs are reduced, employee collaboration reduces production time, and members who are not interested are replaced by new members who adapt to the company’s culture to contribute in turn and further improve team performance.
According to Gallup, employees who are paid and recognized are excited and committed to their work. His extensive research shows that employee involvement is closely linked to the business results necessary for an organization’s financial success, such as productivity, profitability, and customer loyalty. Dedicated employees support the innovation, growth, and revenue that their companies need.
The same article states that…The percentage of employees in the USA. in 2015 when Gallup considered that they attributed their work was an average of 32%. The majority (50.8%) of the employees “were not efficient”, while another 17.2% were clearly uninterested.
Percentage of employees performing well in the US in 2015
Percentage of workers who do not perform well in the US in 2015
Percentage of workers who are uninterested in the US in 2015
Employees who keep up with the work culture of the company that rewards and cares, make extra efforts. They are ready to take on additional responsibilities if necessary.
Turnover costs and vocational education and training are also reduced. Thus, experienced employees continue to grow and increase their skills, instead of spending time showing newcomers the basics.
They also contribute to the creation of innovative solutions to solve various problems and improve productivity or other processes.
According to ProofHub, companies with employee recognition programs have 31% lower voluntary turnover.
The percentage of companies with employee recognition programs that have a lower voluntary turnover
All of the above reasons contribute to increased profitability, reduced costs, and increased revenue.
Motivational & Collaborative Work Environment
In a business where good performance, hard work, and productivity are rewarded on a regular basis, a healthy environment is created that motivates all employees to work even harder for the good of the company that cares for them.
Even the most uninterested employees realize that they have more to gain if they perform than if they continue to be indifferent, and that something better awaits them every time they are rewarded. Maybe a promotion, extra days off, a free insurance plan, etc.
Also, the often paid employees in turn motivate the other team members to follow in their footsteps.
There will be discussions with each other, they will report how well they felt with the bonus and the gift, how much better they feel in the workplace, and in this way, the less committed employees are subconsciously motivated to take immediate action.
They are also beginning to understand that in a company where recognition and reward are the norms, the position of the least profitable members is simply in jeopardy.
Why continue to pay me when they can hire someone else in my position who will produce three times as much and in less time? It is not in their interest to pay me. I am an expense without bringing results.
Also in such work environments, a wave of solidarity and cooperation is inspired.
They help each other and as a team with common goals they move forward with determination and courage.
Businesses in which its members work together on a daily basis gain a competitive advantage, that pushes, improves, and grows them.
Of course, there may be friction between members and some may feel wronged or treat others as competitors instead of partners to win the bonus or gift. But it is up to us to overcome such obstacles with constant monitoring and to deliver justice whenever necessary.
But if some members can not function properly in such a collaborative climate, it would probably be better to replace them or limit their activities to other areas and departments.
According to ProofHub,
- 50% of employees believe that “thank you” from managers improves the relationship and builds trust with superiors.
- 90% of employees who work in organizations with effective reward programs said that “my job makes a difference”.
Percentage of employees who think that "thank you" from managers improves the relationship and builds trust with superiors
The percentage of employees who work in organizations with effective reward programs and are proud that their work makes a difference.
A business is also an organization. Just as the human body with the mind is made up of several cells and organs, and in order for a body to become healthy all its members must be healthy on an individual level, the same is true of business.
When all the members of a company are interested in completing their missions and performing better, then the team/organization performs better as a whole.
A healthy business is able to cope better in difficult times and times of recession as everyone works as a real team, they are “united”.
If a body organ bleeds or malfunctions, the human body/structure suffers and enters a state of defense and repression.
A business too.
According to HRtechnologist.
- 63% of recognized employees are very unlikely to look for a new job
- 40% of employed Americans would work harder and more willingly if they were recognized more often
The percentage of employees who are recognized and who consider it very unlikely to look for a new job
The percentage of employed Americans who would work more willingly if recognized more often
Healthy environments in which devotion, efficiency, and good behavior prevail, create a work culture that functions as an indicator and reference point.
When new members enter such a well-organized space, the older members guide the actions of the younger ones.
Their good mood and performance serve as an example to imitate and report. The younger members realize almost immediately in most cases that they will have to perform well in turn if they want to have a future in business circles.
This way their adjustment period lasts very little and they will soon be able to perform at their maximum.
Also, in companies where the opinion of the subordinates counts and is taken into account, a culture of creativity and modernity is created.
It is these companies that usually come up with innovative solutions and create products and services that the buying public simply adores.
Do not underestimate the ideas of ordinary employees, you never know which idea may become the key to the future development of a new product that can take the company off the ground or reduce costs, and so on.
Listen carefully and then analyze. Do not prevent team members from being creative and innovative. Instead, reward similar behaviors regardless of the results they may bring.
Reduce stress, absences, problems, and accidents
In work environments where prosperity, solidarity, and a cooperative spirit prevail, stress levels are reduced.
Everyone knows that the company and the other partners care about them and that they will do everything to replace them in cases where they are unable to work. They are not absent without a serious reason and when they do, they inform their colleagues in advance to fill the temporary gap they leave.
They are not afraid of losing their job position. Instead, they have something to look forward to as gifts, bonuses and other rewards are the rules and not the exception.
Thus, problems in the workplace are reduced dramatically. The various accidents are also greatly reduced as employees are focused on their subject and do not care about what is happening around them complementing each other.
There are not frequent misunderstandings and frictions between them which can be disastrous for all businesses regardless of size.
Errors in all sectors and branches, such as production, distribution, customer service, product promotion, sales, administration, etc., are also greatly reduced.
According to Smarp, a Gallup study found that high-participation workplaces had 41% lower absenteeism.
The percentage of workplaces with high participation that showed lower absences
Your employees will be proud of the company that recognizes their talent and performance but also of themselves.
They will discuss their experiences with friends during their social activities and the news will be spread by word of mouth.
In this way, we build a strong reputation for the company. A name of prestige in the market that does not go unnoticed by potential customers and competing companies.
For example, you could share a portion of the profits from specific orders or product sales with team members.
Such an event is by no means negligible, on the contrary, it is an event that will be discussed very often between employees and their circle of contacts.
It is not very common for companies to share profits with employees, but consider the impact they can have on the company’s future, viability and profitability.
Talent Retention and Creation
Companies that reward employees and gain a good reputation in the job market are a magnet for new talent.
The more experienced employees are constantly evolving and improving their skills and the indifferent ones leave to be replaced by new members who in turn are motivated to perform, create, share ideas, collaborate, and consequently unfold their talents.
As with sports teams. In cases where a team is made up of very skilled and talented members, the team stands out from all the other teams and manages to outperform the competition.
Improving customer experience, satisfaction and loyalty
When a company consists of efficient, productive members, where a climate of solidarity and partnership prevails, it brings better results and delivers better quality products.
Efficient employees build better relationships with potential and current customers.
They deal calmly and peacefully with any awkward or demanding customers and offer a higher value shopping experience that does not go unnoticed.
In turn, satisfied customers will share their good experiences with their circle and the company will gain new customers.
It is a circle.
On the other hand, we all know how harmful employees who are indifferent can become.
There are many cases in which indifferent and inefficient employees not only do not serve customers properly but also prevent potential customers from becoming customers by their behavior.
Healthy organizations inspire confidence, are more efficient, produce higher quality and value goods and services, and gain an edge over the competition.
It is these companies that act as a magnet for customers, talented executives, and create a name of prestige in the market.
The fair companies that really care about their team members are also the ones that will reap the great rewards.
- Smarp – 8 Employee Engagement Statistics You Need to Know in 2021
- HRtechnologist – 6 Statistics That Confirm Employee Recognition and Retention Are Related
- ProofHub – Surprising Stats on Employee Recognition You Need to Know
- Gallup – Employee Engagement in U.S. Stagnant in 2015
- TinyPulse – 12 Mind-Blowing Stats on Employee Recognition You Need to Know
- ResearchGate – Employee organizational commitment
- Gallup – In Praise of Praising Your Employees
- BucketListRewards – The Psychology of Employee Recognition
- TerryBerry – Benefits of Employee Recognition
- PetaurumSolutions – Why is Employee Reward and Recognition so Important?
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Rewarding and recognizing employees’ efforts is paramount to success for all companies regardless of size.
Companies that embrace reward and recognition programs stand out and gain a competitive edge.
In addition the benefits for the employees themselves are various.
If you do not reward your employees, it’s time to give it a try.
Another article has finished, here on WebMarketSupport. I am waiting for your comments and thoughts. Till next time.
Tasos Perte Tzortzis
Marketing Consultant, Creator of the "7 Ideals" Methodology
Although doing traditional business offline since 1992, I fell in love with online marketing in late 2014 and have helped hundreds of brands sell more of their products and services. Founder of WebMarketSupport, Muvimag, SummerDream.
I enjoy reading, arts, science, chess, coffee, tea, swimming, Audi, and playing with my kids.