The Single Best Way to Retain Talent: Inspire a Culture of Recognition

According to McKinsey, praise and commendation by your immediate manager is more motivating than performance-based cash bonuses

A happy office full of motivated employees is a productive office.
A happy office is a productive office. Joel Beukelman

It is human nature to want to be recognized for our work. Some of us prefer more private recognition by our managers and peers, while others enjoy being praised for our contributions on a virtual megaphone. Regardless of what type of recognition we prefer, most companies do not focus enough on encouraging a workplace culture of gratitude, and employees often feel under-appreciated and disengaged. Sound familiar?

While it’s impossible for one employee to fix a culture lacking recognition, you can start by inspiring change within your own team. When a peer or even a superior goes the extra mile to help with a team project, take note and make sure to call this contribution out at the next meeting. If your company culture doesn’t allow for sharing this type of appreciation in group meetings, write an email to your team to recognize the contribution of your fellow employee. If your company uses a Real-Time Feedback tool, be sure to leverage this to recognize your peers on a regular basis, making a recurring calendar meeting for you to do this at least twice a month.

Many companies invest heavily in motivating employees through paid incentive programs, but these systems clearly aren’t working to inspire employee engagement. In the U.S., companies spend over $100 billion a year on incentive programs. Yet 69 percent of employees say they would work harder if they felt their efforts were better appreciated. Clearly these programs, which offer extrinsic rewards for performance, are not making up for the dearth of recognition. Sure, it’s nice to earn points to win prizes over time for great work, but that is more of a gimmick than it is a motivation for you and your team. Meaningful recognition, when deserved, is the key to increasing output and satisfaction.

The Importance of Building a Culture of Recognition

The workforce is changing. You may have noticed this at your company. Routine jobs are on the decline, while knowledge worker jobs—roles that require cognitive, non-routine work—are on the rise. Since 1985, the number of knowledge workers in the U.S. has doubled from under 30 million to more than 60 million.

Knowledge workers must maintain a consistent level of cognitive performance and progress toward goals in order to contribute to the success of a company. In other words, workers must be motivated to think creatively and solve problems, versus efficiently making the same widget over and over again.

Knowledge workers present a unique set of challenges. Employees no longer dedicate their entire careers to one firm. As knowledge workers gain expertise in their specific roles, their value increases not only for their current company but also for other firms seeking to hire experienced employees. While compensation is a part of retaining and motivating talent with appropriate bumps throughout an employee’s tenure, research proves that once cost of living expectations are met, additional compensation does not increase productivity or loyalty.

What does increase productivity and loyalty is recognition. Countless studies have found that the right kind of recognition is the most important motivator at work. In fact, a study on motivation by McKinsey & Company found that praise and commendation by your immediate manager is more motivating than performance-based cash bonuses. Another industry study found that peer-to-peer recognition is 35.7 percent more likely to have a positive impact on financial results than manager-only recognition.

As an employee, you may not be motivated by knowing that recognition is key to company performance, but what’s even more impactful on a personal level is that recognition has the ability to make you feel more satisfied and fulfilled with your work on a daily basis. We learn early on to respond positively to recognition and praise by parental figures and teachers. Having clear goals and being recognized for our progress increases our intrinsic motivation to complete tasks and increases our satisfaction along the way. Recognition doesn’t always need to happen directly for you to feel motivated. It’s inspiring and motivating for employees to see others recognized and rewarded for their great work.

Fortune boiled down years of research into five specific requirements for job satisfaction: you need to have work that challenges you, a sense of progress, no fear, autonomy, and belonging. Recognition is integral to many of these requirements. For a sense of progress, being recognized for your accomplishments toward a specific and achievable goal, as well as celebrating the end result, can increase your satisfaction immensely. Belonging can be defined as having a “best friend” at work, but being recognized by peers for your contributions provides a more meaningful sense of belonging.

Recognition shouldn’t be a one-time expression of gratitude. For recognition to add value to your workplace and improve your company’s morale and productivity, it should be frequent and ongoing when deserved. In fact, recognition should be given weekly, if not daily, to be the most effective. According to an article in Absolute Global, one of the top reasons employees quit their jobs is they feel unappreciated or taken for granted. One study found that waiting more than a week to follow up with an employee when they’ve done a great job is too long. The Gallup organization has found that recognition for good work has a “shelf life” of just one week.

While changing the culture of your company can seem like a daunting, if not impossible task, it’s easy to get started on contributing to a culture of recognition. Share a thank you message today and copy your team, post it to an internal communication channel, or share on your company’s virtual recognition wall. A few minutes of thoughtful gratitude goes a long way in making your work environment more engaging and rewarding.

Rajeev Behera, CEO of the performance-management startup Reflektive, which has raised more than $17 million in funding from Lightspeed Venture Partners and Andreessen Horowitz, and has a client roster of over 200 customers including Protective Life, Pinterest, Nutanix, MEC, and Jawbone. 

The Single Best Way to Retain Talent: Inspire a Culture of Recognition