Recognition: the most powerful component of Reward?

Reward and recognition. They’re like bread and butter. Pasta and cheese. Paying the bill…and leaving a tip. 

To extend the culinary comparisons a bit further, if Compensation is the  substantial, energy-giving main course, Recognition is the seasoning that can bring it to life. Both play a critical role in how employees feel about their employer – a truth writ large in findings from the employer review company Glassdoor. When Glassdoor assessed the reasons why employees resign, the first finding on the list was lack of appreciation. The second was lack of appropriate compensation. 

This emphasis on the value of recognition is echoed by the global analytics firm, Gallup. Their research shows that employees who strongly agree that they receive the right amount of recognition are four times as likely to be engaged at work. Similarly, employees who don’t feel adequately recognised are twice as likely to say they’ll resign in the coming year.

Gallup also found that there’s a generational divide when it comes to recognition. Just under 50% of the baby boomer generation say they want recognition at least a few times a month. This percentage steadily increases through the generations, with 78% of younger millennials and Gen Z saying they want that regular appreciation – and having the confidence to demand it. 

In the UK, Gen Z already makes up 20% of the workplace. That number is only going to rise. On this count alone, recognition is becoming ever-more powerful. But why – and what’s the best way to offer it authentically? 

Why recognition is powerful

There is a telling difference between recognition and other aspects of Reward. Salary is – ultimately – transactional. Do this job and I will give you this. It’s pre-agreed and impersonal. Anyone doing X role could expect to gain Reward. 

Recognition is different. It isn’t pre-agreed. It’s spontaneous and it actively identifies individual contribution – actions taken in in a particular way by a specific person. So, recognition highlights something of value that an individual is bringing to the organisation. It’s personal

Acknowledging an individual’s values has multiple benefits. It boosts self-esteem. It promotes feelings of belonging. And as this article explains, when people feel close to, and part of a group, they tend to adopt the goals of that group: becoming more engaged, more motivated and more productive. 

Recognition moves the contractual relationship between employer and employee onto a different footing by illuminating the positive person-to-person relationships. That builds trust and connectivity: impacting workplace culture, as well as day-to-day team synergy. 

What’s the best way to offer recognition authentically? 

So, the core difference between Reward and recognition is the personal aspect of recognition. What makes that authentic is:

  • Genuine appreciation of the difference that person has made
  • Clearly articulating what has been done, and why it made a difference

At times, this may be simple. If an employee has taken an action that leads to an impactful outcome – winning a tender, building an innovative new app, impressing a client – it’s easy to offer clear and direct recognition. 

What’s often harder is to identify the day-to-day employee actions that make a subtle difference, but which nonetheless show the employee’s commitment and pride in what they do. The colleague whose inclusive nature brings the team together. The colleague who works late to cross-check vital data. The colleague who challenges effectively.

When these contributions are noticed and articulated – particularly by managers – that recognition lands. Why? Because this level of observation shows the employee that their efforts are appreciated: not simply in terms of the ‘big wins’ but in terms of the difference they are making to the team. 

So, there needs to be:

  • Congruence between what an employee does, and what is reflected back to them
  • An expectation of managers that they should look for and think about how every colleague contributes to the team, both in their work, but also in their mindset and behaviour
  • Training to support managers in doing this

A culture of recognition that is led by the senior leadership team: who offer recognition to their teams, and who ask managers to escalate achievements up, so that the CEO can offer direct recognition to individual employees across the organisation.

The form recognition takes can be as simple as a well-expressed thank you. Or it can be made even more impactful by matching the recognition to the actions of the employee. For example, if someone has been working to deliver against gruelling deadlines, recognition could include extra paid time off. If someone goes out of their way to support other colleagues, it could be a hamper of self-care products and a message that explicitly says You always look after us. Now we want to look after you. 

Why does this personalised approach matter? Because – again – if the needs of the employee are thought about, this shows that the team care about this employee. That quickly becomes a virtuous circle, with everyone working to support and encourage one another. 

Less effective is the grand gesture – fixed, annual recognition awards – or token messages of appreciation delivered only at set times of the year. While these may be appreciated by employees, a pre-programmed rota of appreciation lacks authenticity, so it won’t evoke the same sense of connectivity as spontaneous, clear, recognition of their ongoing efforts. 

Recognition: more powerful than Reward? 

Done well, recognition brings a far more potent sense of unity to an organisation than Reward alone. It builds bonds, creates trust, and shapes a culture that will attract, retain, and motivate talent. It may not be the main dish, but it’s the sauce that makes the dish delicious.