Why Formal Recognition Programs Fail to Make Employees Feel Appreciated

If you’ve been waiting for what seems like forever for your manager to give you some sign of appreciation for all the work you’ve been doing lately, you’re not alone.

Financial firms are more likely than other organizations to make use of so-called employee recognition programs, according to new research. Whether those programs are effective or not is quite another story, however.

According to Oakland, Calif.-based membership organization and human resources experts Bersin & Associates, employers in this country spend some $46 billion each year on such programs. Unfortunately, much of it is wasted because employers don’t focus enough on the human touch such as small but highly-valued things like thank-you notes.

Forget the gold watch

For instance, no less than 87 percent of 573 human resources professionals surveyed by Bersin & Associates said that their programs are designed to recognize service or tenure, even though few employees feel rewarded by such moves.

Firms with effective recognition programs have 31 percent lower voluntary turnover than their peers with ineffective recognition programs, Stacia Sherman Garr, principal analyst with Bersin & Associates, tells eFinancialCareers. However, her firm’s research found absolutely “no relationship” between tenure programs and employee productivity or retention, she says.

Interestingly enough, 83 percent of finance, insurance and real estate firms surveyed used recognition programs of some kind—including those involving financial incentives—compared with 74 percent of firms overall utilizing such programs, Garr observes.

Importance of employee feedback

For employees, the most important elements of a recognition program include the ability to receive specific feedback.

And yet generally speaking, “These programs do not meet the needs of today’s employee." The new research, which also surveyed 261 employees, finds that 70 percent of “individual contributor”-type workers with no one reporting to them directly state they are recognized annually or not at all, and 58 percent of managers say they are recognized annually or not at all.

“Certificates or thank you notes” are more in line with what employees are after than service-based programs, says Garr.

The study also found that senior leaders are out of touch with how often employees are recognized:

Nearly 80 percent of senior leaders believe employees are recognized at least on a monthly basis, with 43 percent of senior leaders stating employees are recognized weekly or more often. This finding contrasts starkly with the reports from managers and individual contributors: 40 percent of managers and only 22 percent of individual contributors report that their peers are recognized monthly or more often.