The Complete Guide to Employee Recognition in 2025

What Is Employee Recognition?

In short, it's acknowledging a job well done within the workplace. 

Anyone on your team can give recognition, which can take many forms. Recognition is crucial because it makes employees feel valued by their manager, peers, and the organization. Employees who feel valued are 4x as likely to be engaged at work. Engaged employees are more likely to stay at their jobs longer, take fewer sick days, and perform better — engaged employees are more valuable to your company! 

Employees who feel appreciated and recognized are 44% more likely to consider themselves “thriving.” Besides positively affecting your bottom line, employee recognition sets the workplace's expectations and prioritizes kindness and going the extra mile. Recognition is a powerful way to reinforce your company values daily. 

We'll walk you through everything you need to know about employee recognition: how it works, what should be involved in the process, how much it costs (or doesn't), and most importantly, why recognizing an employee's hard work is essential for both them and your company as a whole.

What does recognition look like in practice?

Employee recognition isn't just something that happens once; it's a process. Recognition means showing your employees that you appreciate them and their work. It can be as simple as saying "thank you" or publicly acknowledging their contributions.

Recognition doesn't have to occur in one singular moment or event — it can happen throughout an employee's career with your company and outside the office environment. These moments of recognition can include public acknowledgments (such as awards), sending personal notes to employees' homes, or giving gifts such as flowers or cards.

Who gives recognition?

It's important to note that recognition can come from a supervisor, coworker, or even an external party. Recognition can be as simple as a word of praise or a pat on the back, or a more formal award ceremony that recognizes an employee for outstanding performance.

Top-down recognition

Top-down recognition is robust and can be a motivator for the whole team. The more senior the person who gives the credit, the more impact it can have on everyone.

For top-down recognition to work, you need an authentic relationship between the leader and the employee. When established incorrectly, recognition will not work because employees will not feel genuinely valued or appreciated by their managers.

You can also give awards for specific achievements. For example, they could be for the employee who has been with the company for five years or has shown exemplary behavior during an event. A company-wide event where employees are formally recognized works best for this type of formal award.

Peer recognition

Peer recognition is a great way to encourage and motivate your employees. Employees feel good when they receive praise from their peers and know their colleagues recognize their efforts. Teams can do this type of recognition in various ways, such as through shout-outs or small tokens of appreciation.

Why is Employee Recognition Important in 2025?

Employee recognition is the easiest and most effective tool to increase employee engagement and create a culture of appreciation, trust, and ownership. It's also a powerful way to boost morale and productivity.

Why? Because when employees feel appreciated, they're more likely to go above and beyond for their company — and stay put longer. When you acknowledge an employee's hard work or achievement with praise or rewards, you create an environment where people feel appreciated by managers and peers alike. That boosts motivation on both sides by reinforcing positive behavior from the worker while also motivating managers (who get to see their efforts have positive results). Companies with exceptional employee experience report 23% higher profits. Recognition is an easy step towards these profit margin benefits.

Recognition can help employees feel more motivated, improve their performance, and increase productivity. But how do you recognize your employees effectively? It's essential first to understand why recognition improves these aspects of the workplace before you start thinking about employee recognition strategies.

Increasing Productivity

Employee recognition is vital because it is proven to increase productivity. If workers feel appreciated and valued by the company, they will be much more motivated to work harder and more efficiently. Plus, when employees feel recognized for their hard work, there is a 28% improvement in the quality of work produced.

In addition to increasing productivity, employee recognition will also impact other areas of your business: it can help improve morale and reduce turnover rates as employees feel valued by their employers. A happy employee base is one of the essential parts of any successful business!

Improving Retention

Retention is crucial when you consider that businesses in the United States lose $1 trillion annually due to voluntary turnover alone. While there are many ways to encourage retention proactively, they all start with recognition because it shows people how their efforts contribute to the organization's overall goals — which translates into feeling valued and appreciated by their bosses.

But recognizing employees isn't just about making them feel good; it's also about conveying that their contributions matter within an organization and highlighting what makes each person unique (or at least emphasizing those traits). When done right, recognition helps build trust among staff members, ultimately making them more committed to doing their jobs well — and staying around longer!

Decreasing Absenteeism

One of the most critical ways employee recognition impacts your organization's outcomes is by decreasing absenteeism. Recognition provides employees with a sense of job satisfaction. Job satisfaction is related to absenteeism, as employees who are satisfied with their jobs will be more likely to show up for work regularly.

Some people may feel they don’t get enough out of their jobs, don’t get any special attention from their employers, or don’t feel appreciated at all. A lack of appreciation could make an employee want to leave a position early and avoid returning. This reaction is especially true when there are other options available where the employee might feel they will be happier working elsewhere (even if those options pay less than what you currently offer).

Types of Employee Recognition

Recognition should become natural, a part of your organization's fabric. It can take many forms, including kudos, written praise, verbal praise, and bonuses.

Most importantly, everyone within your organization should give recognition often. The more frequently you recognize your team members, and team members recognize each other, the more likely they will continue to do exceptional work that benefits your organization and themselves. Frequent recognition also creates and sustains a culture of appreciation that motivates high performance in employees.

Employees may also feel appreciated when they see that others have received similar awards in the past or are currently receiving them; this could motivate them to strive for equal recognition themselves!

Written praise

Written praise is a form of employee recognition that allows you to recognize and reward an employee’s contributions. A letter of appreciation for a job well done can acknowledge the hard work, dedication, and commitment that your employees have shown. Managers can give written praise to employees in front of their peers or in private. It’s essential to remember that praise should be personalized, so it reflects the relationship between the manager and the employee and their performance on the job.

Written praise can take many forms:

• A letter from the CEO thanking an employee for their contribution

• An email from a manager thanking an employee for going above and beyond on a project

• An acknowledgment on social media recognizing an associate's service year anniversary

• A message sent in a public collaboration space like Slack

Verbal praise

Verbal praise is a powerful motivator. It can be more effective than monetary rewards, especially in public. Think about the last time you praised someone for a job well done. Did that person smile and say thank you? Did their actions change for the better?

The power of verbal praise comes from the association between what we say and how we feel. In other words, when we tell someone they did something well — no matter how seemingly insignificant — we also tell them they can do things well overall. 

By saying "good job" or "I appreciate your hard work," you're telling employees that they have done something praiseworthy (and not just acceptable). This positive feedback creates an association between themselves and being good at their jobs; over time, this self-image will translate into increased productivity when employees are motivated by internal factors, rather than just income alone.

Bonuses

Bonuses are a great way to reward employees for their performance and work ethic, but they also can motivate your team when used correctly. To get the most out of your bonuses, know how they work and what types of bonuses will benefit your organization the most.

The first step in using bonuses effectively is understanding how an employee earns one. Award bonuses for specific behaviors or outcomes that drive business results, like sales goals or other metrics related to performance. They can be paid out quarterly (or at any pre-determined interval) based on meeting these goals. The strategy of awarding bonuses over time highlights how they can be motivating. Use rewards to recognize productive behavior over time so workers don't lose focus on their objectives as soon as they've achieved them!

When should recognition be given?

Recognition should be given as quickly as possible after the employee does something good. This recognition can be as simple as saying “thank you” or giving a small gift. It’s essential that your recognition includes praise for the person’s accomplishment and shows that you appreciate their hard work, effort, and performance.

Recognition can also be given at any point; it should become a habit throughout the organization to encourage everyone, leaders, managers, and peers, to give recognition when completing a project.

Milestones

Milestones are important to recognize. They mark a significant event in a person's or organization's life, and gifts, rewards, or other forms of recognition are ways to celebrate.

The following are some significant milestones:

• Starting at your company

• Signing their first client/project/promotion

• Getting promoted from one position to another (e.g., from junior manager to senior manager)

• Winning awards for their work

• Work anniversaries

• Completing significant projects

Keys to Effective Employee Recognition

Make recognition accessible.

‍The more easily managers and employees can give recognition, the more they will do it. Companies must prioritize equipping managers with the resources they need — both in time and money.

Embed recognition in the company culture.

Recognition should be fundamental to the core values of your company. Make recognition a daily habit, and set aside designated times and events to highlight and make it memorable.

Prioritize recognition.

‍Give recognition the attention it deserves. Set aside the time, money, and energy needed to get it right. Assess the current state of organizational recognition — is it having its intended impact? Set your investment in recognition strategy up for success by thinking through implementation thoughtfully and making it integral to the culture.

Prepare managers.

‍Managers play an essential role in recognizing the achievements of employees. Teach managers how to recognize their employees and the benefits of doing so.

Leaders must set an example by providing recognition themselves. Recognize the importance of managers, because they often receive less recognition. Be sure to let all employees know that what they do is essential. 

What will it cost?

Recognition is an effective tool to motivate, inspire, and encourage employees — regardless of the size or scope of your team. While it's true that large companies have more resources to put into recognition programs than small businesses do, this doesn't mean that recognition isn't viable for companies with fewer resources.

There are multiple ways to determine the cost of recognition. The first is to look at what it costs when your employees are unhappy or just average performers. That would be an excellent start when budgeting decisions for employee recognition activities.

If you want to have a specific number in mind, go back through your historical data and see how much money employee turnover and replacement costs over the past year, two years, and five years (or longer). If your company has not yet begun tracking employee experience data, an easy way to start is with eNPS.

Once you've determined what percentage of operating expenses goes toward employee turnover, you can apply these numbers as an estimate against future expenditures. You can divide each category by its percentage.

Turnover Costs / Total Cost = Turnover Percentage

Turnover cost informs how much your budget should be towards recognition and other efforts to reduce turnover. 

Building a successful recognition program

When it comes to building a successful recognition program, there are a few things that you want to consider:

Get buy-in from management. Your organization's leadership team must be on board and supportive of the program. If they aren't, it could be difficult for you and your colleagues to implement the culture you want for your workplace.

Involve employees in the process as much as possible. Ask them what types of recognition they like best, how often they'd like something recognized, and by whom (i.e., upper management vs. peers), etc.—and then create an employee survey so that everyone can contribute their thoughts on this topic!

Measure the effectiveness of your employee recognition programs regularly using data points such as the annual turnover rate or average tenure length. This way, you'll know which programs are more effective and can iterate and improve over time. 

It’s essential to understand how employees work, what motivates them, and why specific forms of recognition may be more successful than others. Employees who feel appreciated and recognized are 44% more likely to consider themselves “thriving.” It’s also essential to ensure that your program is aligned with your company's culture and consistent with corporate values. Lastly, everyone in the organization must know what types of rewards are available so they know where they stand regarding recognition.

Employee Recognition Tools

Before you can figure out the best tools for employee recognition, you need to understand and respect your team's needs. Your employees work hard and deserve a workplace that enables them to do their best work. You must find out what motivates each employee on your team — what excites them about coming to work each day? What makes them feel like they are making a difference in the company?

If you can pinpoint what drives your team, you can tailor your recognition program and tools around those risk and incentive points. This allows leaders to give employees what they most need and want so that they are aligned with your company's mission and vision. Chief did a deeper dive into navigating this dynamic as a leader here. 

Do your employees want to learn new skills? What do they need to perform at their best? You can't meet these needs if you don't ask your team what they want.

Once you know what motivates your team, you can create a work environment that supports their needs. You'll also be able to provide them with the tools and resources they need to do their jobs effectively. For example, if an employee is interested in learning new skills and wants more opportunities for advancement within your company, consider providing additional training or education that helps them reach their goals.

HRIS integrations

If you have a large number of employees, it can be challenging to keep track of all the employee recognition gifts sent out by hand or mail. An HRIS is a software tool that allows businesses to manage their human resources and payroll in one place. Your employee recognition tool must integrate with your HRIS so that you can automate sending out gift cards and other rewards promptly.

Integrate rewards into your recognition programs

One of the easiest ways to boost your employee recognition programs is by combining them with rewards. Seek out employee recognition tools that enable both free recognition and reward-based recognition.

Rewards are one of the most effective employee recognition tools for many reasons. First, they're flexible and scalable, allowing you to match the proper reward with each recipient. Second, they can be anything from a gift card or special event to a charitable contribution in honor of an employee's birthday or anniversary at work.

Final Thoughts

No matter what you’re looking for in recognition — to keep your team focused, get more done, or make the office more fun — we hope this article has given you a few ideas to try. Recognition should be an integral part of every company’s culture because if employees feel appreciated and valued, they will feel motivated and engaged with their work; this will naturally lead to better results for everyone involved!

Updated 11/01/2024